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vsa with Malcolm

  • #35,021
  • Edited 2:11am Nov 26, 2021 1:52am | Edited 2:11am
Quoting Macallik
{quote} I think there's a gap between being able to understand VSA in hindsight on a random chart, versus keeping that objectivity during a subjective situation (ie: in a live market w/ money on the line
Yeah mate ive noticed this aswell about hindsight Yesterday I took the day off and was doing some visual backtesting and saw a good few successful trades, but when your stitting there live and pulling the trigger the doubts start flooding in and I try to add in more things to stop me taking the trade.

Its funny because I read David Weiss saying something like " I see shortening of the thrust, then no demand, then I short.....I dont think about it, I dont think about Trend bias", I just started watching Seb Manby last night and he talks about a similair mindset when taking a trade.

Ive mentioned this before but I follow a basic price action group, and the some of the guys there only started looking at trading a month ago and they are blasting out challenges. Averaging around a 50% winrate, 1.5RR-2RR per trade, and around a third of losers are breakevens so pretty good.......and were still here months later trying to grasp VSA, I think my mindset that keeps me away from that is, that they are "the herd" and that over time having an understanding of VSA will surpass them.....

Only time will tell I guess. But, thats the psychology of trading
  • #35,022
  • Nov 26, 2021 10:39am Nov 26, 2021 10:39am
Quoting HiddenGap
{quote} I debated whether or not to post this at all, but we are all here to learn and grow together.
Thanks for posting this.

Soo much good information in this post, both a mechanical trading plan and also key psychological points.
  • #35,023
  • Nov 26, 2021 10:47am Nov 26, 2021 10:47am
Quoting Paulscaff1
5. From what I can see, Bar 5 provided a No Supply entry which was above the trigger and the MA but im thinking the SL would have got tagged here also on the move down if I use the previous swing low for stop placement.
Sorry this post is bugging me.

A NS is a narrow spread down bar on low volume showing no sellers are interested in the down side.

Look at what bar 5 is doing, is it dipping down lower, showing no sellers are interested? If that was the case, would you have a larger upper wick than the lower wick? That looks like price tried to rally and failed. Also look 3 bars prior to the bar 5, you have strength after an UT. Price tried for 3 bars, including the 5 bar to rally above that strength after the UT and just couldn't go any higher.

As a result, price had to drop to find more strength before it could actually start the rally.
  • #35,024
  • Nov 26, 2021 11:03am Nov 26, 2021 11:03am
Quoting Anotan
{quote} Sorry this post is bugging me. A NS is a narrow spread down bar on low volume showing no sellers are interested in the down side. Look at what bar 5 is doing, is it dipping down lower, showing no sellers are interested? If that was the case, would you have a larger upper wick than the lower wick? That looks like price tried to rally and failed. Also look 3 bars prior to the bar 5, you have strength after an UT. Price tried for 3 bars, including the 5 bar to rally above that strength after the UT and just couldn't go any higher. As a result,...
No need to be sorry mate, its there to be commented on.

I see what you mean about price failing to rally above the upthrust, I failed to notice this, thanks for pointing it out.

I must admit that im failing to understand how bar 5 cant be labelled a "no supply", only reason I say this is that it has the narrowest spread in the last 25 bars, and the lowest volume in the last 19 bars. It is also a down bar that closed in the middle.

I notice HG mentioned bar 5 and said it would be his preferred entry. Would be good to find some middle ground on this.

I appreciate your input though mate.
  • #35,025
  • Nov 26, 2021 11:12am Nov 26, 2021 11:12am
Quoting Anotan
{quote} I'm always a little mixed on ADRs, in choppy markets ADR is tends to shrink and trending markets ADRs tends to widen.
Going back to the discussion about ADRs. Today is a perfect example of not putting a lot of weight into ADR.

I realize that today is an exception, Thanksgiving week is a low volume week which makes these large moves achievable with little effort compared to a normal week.

350% ADR would've been nice if you were able to find a short, and you would be in a bad spot if you were trying to catch a falling knife if you decided to buy just because price was over extended.

I didn't place any trades today or this week, I've been glancing at charts on my phone this week for a few minutes a day. Today caught my eye obviously, but unfortunately I wouldn't have had any trades today using HVC either way.
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  • #35,026
  • Nov 26, 2021 11:16am Nov 26, 2021 11:16am
Quoting HiddenGap
{quote} Please post a chart and answer this: Why are you trying to go long after seeing a Buying Climax and an Up Trust? These are signs of weakness. They tell you that the Smart Money is Selling. After the Buying Climax, you should be looking for the market to mushroom over and change behavior. When it does and eventually heads down, you look to enter on a No Demand.
Sorry I was wrong, I mean Selling Climax. Maybe I will send some photos later.
Daytrader
  • #35,027
  • Nov 26, 2021 11:22am Nov 26, 2021 11:22am
Quoting Paulscaff1
{quote} I see what you mean about price failing to rally above the upthrust
Not the up thrust, the strength bar after the UT.. Its like a shakeout, I dont want to call it a test.

Looking at this chart is it still a NS bar? Is this bar showing no sellers are interested in the downside? Or do you see 3 bars failing to rally above strength?

Attached Image (click to enlarge)
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If you're bullish, you have to know where the sellers are. When you see sellers you have to pay attention to how price is reacting to them. There is an up thrust and then the shakeout. You could say that price is stuck between a rock and a hard place and you have to wait and see which side is going to give.
  • #35,028
  • Nov 26, 2021 11:42am Nov 26, 2021 11:42am
Quoting Macallik
For example, when I’m itching to go long, every buying climax feels like an absorption bar and every down bar on increased volume looks climactic... until I get stopped out . I think there's a gap between being able to understand VSA in hindsight on a random chart, versus keeping that objectivity during a subjective situation (ie: in a live market w/ money on the line).
Wow. Such honesty and wisdom in this post. There's a lot to unpack here, and to be honest myself, I think most of it has to do with trader psychology and not trading methodology (i.e. Volume Spread Analysis ((VSA))).

I'm not going to say much on the trader psychology side, although I probably should say more due to its fundamental importance, but this: If you are opening up your charts "itching to go long", you've already lost. You want to be "itching to go in whatever direction the market is going". In other words, you want to free yourself from any directional bias and respond to what the language of the market tells you.

Easier said than done. Maybe. Maybe not. There's a multitude of other aspects surrounding the mental side of trading, and I'm not even going to attempt to say more.

There is something very deceptive about VSA. And this deception exists whether the chart is live or in hindsight. As Tom always said, "if it is there now [in hindsight], it was there then [at the right edge]." This deception, for lack of a better word, is what catches the eye of the newbie trader.

So what is this deception? The deception is that VSA identifies tops and bottoms (or reversals collectively).

Let me explain. It is true that VSA can identify tops and bottoms, which usually occur on Ultra High or Climatic volume. But the true essence of VSA surrounds the concept of Trading Volume At Volume, or more precisely, TRADING THE LACK OF VOLUME AT A PLACE WHERE THERE ONCE WAS VOLUME. What does that mean? It means that the UP bar on Ultra High Volume is not intended to be the entry, the entry is identified when price moves back into the range of this Ultra High Volume interval but now the volume has dried up.

To put it another way: Once you've seen a wide range interval on extreme volume that is not your entry. Your entry is when a Test or No Demand appears within the range of that wide range interval that had the extreme volume. Thus where you once say volume, you are now seeing none (actually just less as there is always some volume).

So while VSA may identify the "top" on an Ultra High Volume bar, which looks good and draws the newbie in, the actual entry with the greatest probability of success will be later when there is a lack of volume in this same area.

The extreme volume bar is usually the start of the distribution or accumulation phase, which by definition is not the ideal place to enter.

Note, I am not saying that one must wait for the change in behavior, although David Wiess would certainly say you should, I'm saying one must wait for a low volume signal after the climatic/extreme volume signal.

Professional Buying and Professional Selling (ultra high volume bars) identify the opportunities but Tests and No Demands identify the entries.
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #35,029
  • Nov 26, 2021 11:54am Nov 26, 2021 11:54am
Quoting Anotan
{quote} Not the up thrust, the strength bar after the UT.. Its like a shakeout, I dont want to call it a test. Looking at this chart is it still a NS bar? Is this bar showing no sellers are interested in the downside? Or do you see 3 bars failing to rally above strength? {image} If you're bullish, you have to know where the sellers are. When you see sellers you have to pay attention to how price is reacting to them. There is an up thrust and then the shakeout. You could say that price is stuck between a rock and a hard place and you have to wait...
Ahh kl mate, I get what you mean about sellers above the hvz.

The bar 5 not being a no supply thing, i must admit that im finding it hard not to define it as that, but I will take your word for it and try and reinforce it with some more studying.
  • #35,030
  • Nov 26, 2021 11:58am Nov 26, 2021 11:58am
Quoting HiddenGap
{quote} Wow. Such honesty and wisdom in this post. There's a lot to unpack here, and to be honest myself, I think most of it has to do with trader psychology and not trading methodology (i.e. Volume Spread Analysis ((VSA))). I'm not going to say much on the trader psychology side, although I probably should say more due to its fundamental importance, but this: If you are opening up your charts "itching to go long", you've already lost. You want to be "itching to go in whatever direction the market is going". In other words, you want to free yourself...
above post combined with https://www.forexfactory.com/thread/...1#post13801251 is complete package, in my humble opinion. wish i could pin these posts for this thread.
  • #35,031
  • Edited 4:26pm Nov 26, 2021 11:59am | Edited 4:26pm
Quoting HiddenGap
{quote} Wow. Such honesty and wisdom in this post. There's a lot to unpack here, and to be honest myself, I think most of it has to do with trader psychology and not trading methodology (i.e. Volume Spread Analysis ((VSA))). I'm not going to say much on the trader psychology side, although I probably should say more due to its fundamental importance, but this: If you are opening up your charts "itching to go long", you've already lost. You want to be "itching to go in whatever direction the market is going". In other words, you want to free yourself...
I know youve commented on Bar 5 in a previous post that Anotan mentions, would you call it a "no supply" mate?

https://www.forexfactory.com/thread/...4#post13798994
  • #35,032
  • Nov 26, 2021 5:08pm Nov 26, 2021 5:08pm
Quoting Paulscaff1
{quote} I know youve commented on Bar 5 in a previous post that Anotan mentions, would you call it a "no supply" mate? https://www.forexfactory.com/thread/...4#post13798994
I would indeed call that No Supply.

But then something very strange happens................ The Market changes its mind !!!!

Okay, it's not that strange. It happens all the time. The Market changes its mind as new information comes in. The fact that price subsequently went below the No Supply doesn't alter the fact that AT THAT TIME there was a lack of selling interest on this interval. A No Supply or a Test does not have to create an absolute floor to be valid.

Once again, I take this trade every day and twice on Sunday. But then again, I, unlike Anotan, suck at trading. So what do I know?
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #35,033
  • Nov 26, 2021 6:37pm Nov 26, 2021 6:37pm
Quoting HiddenGap
{quote} I would indeed call that No Supply.
Thank god for that

I would have been questioning myself on every no supply bar if you didnt confirm that
  • #35,034
  • Nov 26, 2021 8:41pm Nov 26, 2021 8:41pm
Quoting Paulscaff1
{quote} Edit: Sorry, had to add charts after posting as 2 wouldnt upload, so order is a bit messed up Yeah mate, I think sometimes in can get confusing when you see different methods because you may attempt such method without success and are unsure if you either made a mistake..... or it was simply just a losing trade Lets say you post a losing trade using the "TopBot" method or something similair, (im using the Tradeguider term here but basically its just a counter trend or reversal trade). Everyone is trading VSA in their own way, Anotan, Malcolm...
I believe VSA can be traded in different ways so that anyone may adapt it to suit their personality. The trade you highlighted that Gavin took attests to this.

I would not have taken that trade. One of the conditions I look for before taking a trade is identifying strength or weakness on the higher timeframes. Accordingly, I would move to the lower timeframe to look for an entry in the direction of strength or weakness seen on the higer timeframe. In the H1 chart, we see an ultra wide spread upbar on climactic volume with the next bar down (an upthrust). This tells me there is weakness in the market. The M5 chart is where I would look for entry. However, since the M1 chart is also in this picture, I am as conservative as Grigory and would only take the trade on the break of the trigger line low and enter on a low volume test. Note, your trend diamonds were bullish when weakness appeared in the market.

Successful trading is not about being right; it is about being consistent.

Second question. I would advise the person to keep doing what they are doing. For example, my reasoning behind not taking the trade above as Gavin...if I got stopped out of the trade I would accept the loss as part of the game. If the same setup presents itself another time I would take it. I would take it even if I had two or three losses in a row. My confidence lies in the fact that the odds are stacked in my favour with identifying background so that I will always emerge profitable in the long run.

There is actually more to my trading beyond what I have explained but this is the very foundation of the psychology behind any trade I take that validates or invalidates any trade setup.
Fred
  • #35,035
  • Nov 26, 2021 8:51pm Nov 26, 2021 8:51pm
Quoting Macallik
{quote} I'm in the process of figuring things out myself as well. I'm of a mixed mind on branching out to other strategies. This is pure conjecture, but my uneducated guess is that most experienced VSA traders mastered the foundational skills through repetition, and then tacked on supplemental ideas to further optimize VSA such as HVZ, WRB, etc. I worry that if people (myself included) try to ‘optimize’ VSA w/ new strategies before they’ve mastered the fundamentals of VSA to the point of profitability, then combining a new strategy might just make...
True that. One has to make a habit of repeated disciplined trades to the extent it becomes second nature before such a person can make any progress in trading. As long one is familiar with the foundation of volume spread analysis and does not go against them they can adapt it to other methods which are only ancillary to the primary method (the basics of vsa).
Fred
  • #35,036
  • Nov 26, 2021 8:59pm Nov 26, 2021 8:59pm
HiddenGap, your posts are such a treasure. Thank you for your selfless efforts to clear the mists surrounding profitable vsa trading.
Fred
  • #35,037
  • Nov 27, 2021 4:20pm Nov 27, 2021 4:20pm
Great post as always HiddenGap. Not only do I have a Google Doc w/ my favorite posts of yours, but I've also created flashcards based on your chart analyses here... Heck, today I realized that there's a high chance that a chunk of flashcards/notes I made from a +10 year old TL thread were actually posts you made when you had a different username/chart layout. Your consistent, unpaid contributions to the VSA community are second only to the MtM pdf .
  • #35,038
  • Edited 9:57am Nov 28, 2021 9:36am | Edited 9:57am
Sorry guys I couldnt edit my previous post.

Made a mistake with the settings.

The ATR Stop Histogram (medium term trend) should be set to 2.5 and not 2.
  • #35,039
  • Nov 28, 2021 12:01pm Nov 28, 2021 12:01pm
Quoting Paulscaff1
Sorry guys I couldnt edit my previous post. Made a mistake with the settings. The ATR Stop Histogram (medium term trend) should be set to 2.5 and not 2.
How to set it because I cant write dot there.
Daytrader
  • #35,040
  • Edited Nov 29, 2021 2:14am Nov 28, 2021 12:46pm | Edited Nov 29, 2021 2:14am
Quoting trezo
{quote} How to set it because I cant write dot there.
Not too sure mate im not at my PC so not had the chance to look at it yet. Wont be till tomorrow.

Could probably get away with 3, it would just make it slightly less sensitive, wont be too much different, probably better/more conservative.
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