vsa with Malcolm

Thanks Anotan, I'll put it on my notes.

1. UHV up bar as a potential SoW
2. Multiple bars eating up supply
3. Bottom reversal (with no subsequent test for supply)
4. Weak up bar on reduced volume, closing off the highs
5. Weak up bar on reduced volume, closing off the highs
6. Weak up bar on reduced volume, closing near its highs
7. Absorption bar after weakness over the last few bars. Above average volume suggests supply present. Potential exhaustion bar
8. Price enters overbought territory on a low volume up bar.

Thoughts
I feel like the 'bullish' price action from 3-8 is actually pretty tepid and masking overall weakness in the market:

1. In a stronger market, wouldn't the weakness @ 4 & 5 be tested away so that market professionals wouldn't encounter excess supply @ higher prices
2. In a stronger market, wouldn't the absorption bar @ 7 be followed w/ a test to confirm strength. My guess is that if market professionals aren't checking for supply before continuing higher prices, it's because they expect price to fall pretty hard and so they don't care if the rally is unsustainable.

Anyone else wants to weigh in? The best case scenario is always to wait for UHV & LHs/LLs before going short but I am curious if others see weakness throughout the chart or if it is just the contrarian in me? I don't think that the pair is going to turn bearish but a return to $116.2 seems probable imo.

Sorry about the cluttered chart, basically showing 2 days worth of trading, both on UC.

Yesterday was an easy short, during Asia we saw a wide spread up bar on high volume with the next bar down. What does VSA tell us that means again? Just looked to the left and found an HVC. UCad is essentially the inverse of AU because of that I use Asia as its honorary home session. Price rallied back up to the HVC and stalled a 2nd time. Easy short, I think this trade worked out to be close to 3.5:1.

Today first round of shorts I got stopped out. I saw that HV potential selling back into the close of the 2 bar reversal and went in and got stopped out. At the top was an up thrust which gave me a little confidence to short again. So far so good, see what happens at 2807.

I was hoping for more than 30 pips, a more than 2:1 RR.

Every time I think I'm out, It pulls me back in.

The last few days have been really nice using the Trigger Number Matrix (TNM).

1. I identified a Market Structure Shift and the subsequent Fair Value Gap Zone. I know I only want to go long as price is above HB and price is above both the daily and weekly GTH Open.


2. Price revisits the FVG ZONE and HB. TBH I entered a little late. I should have entered after the No Supply was confirmed. Instead, I entered after the Test appeared and price started trading higher on the next candle. My stop was placed at the 25% TNL. Target is placed at the TNM Target level.


3. Price move up and then makes a move back down. This is where patience, belief, and understand come into play. Price never comes close to my stop, but it takes me into a small drawdown. Price enters another FVG Zone (not highlighted) and rockets back up.


4. Being right and sitting tight. That's where the money is. Price makes it way to the TNM Target level. This was a M1 chart. You don't have to go for 10 pips just because the timeframe is small....

Dare I say that was one of the easiest FOMC trades I've had

1 old top to the left
2 high volume closing off high, next bar down climatic action
3 volume lower than previous 2, spread small, in you go

Normally the day after FOMC Wednesday is an aggressive trending day. Not sure whats going on today though, PA seems very underwhelming and not worth trading.

Daily chart, the vertical lines are FOMC days, the day after is usually a wide bodied bar showing a trending day.

Interesting! I hadn't noticed it before. I will remember it.

We're a couple of hours into London now. Looking for a trending day today, right now price is above the daily open but seeing a ton of supply entering the market. You don't want to be long, but you don't want to be short either.

Hard to ignore the supply, took a short. Have to watch for any testing or HV down bars. If so I'll reduce my risk.


Took off 1/2 the position and brought stop down, trade is at virtual break even. Just wait now and see if price will collapse.

I'm shocked!

See what happens at the HVC at 1002. Should be about 50 pip win, with taking off 1/2 the position it will be around 3:1 RR. Thats all trading really is, get your RR to at least 2:1 or 3:1 and grind trades.

USDJPY is losing momentum @ the top of the channel. The two bars after #8 are struggling to make progress higher, even as volume increases:

The hourly looks more telling than the Daily. Unsure if that means that a sell off will be short-lived, or that the hourly is leading the Daily in terms of sentiment:
A - Light distribution/early profit-taking occurring. Wyckoffians would characterize it as preliminary supply
B - Supply breaking through support on increased volume. Bearish but there isn't excessive supply in the background previously, so proceed w/ caution.
C - Still substantial volume but the spread has dropped. Supply is being absorbed at the lows
D - Subtle (but successful) 'long-term test'. The bar isn't testing the two bars immediately before it, but it can be seen as testing the heavy volume @ B & C. Price rallies from here.
E - A normal test suggesting price is not interested in retesting the selloff level again
F - Ultra High Volume Upthrust. A much clearer sign of distribution than A.
G - Upthrust retesting F on reduced volume. Demand is drying up
H - (Wyckoff-related) Bearish thrusts are becoming longer. Bullish thrusts are becoming shorter. This signals a potential Change of Character.

Sitting on my hands for now, but if I see some No Demand as price approaches the Distribution line, I might throw some $$$ at it and see what happens.

Note: This is not a jab at the previous post. I find it illuminating and worthy of study. I sincerely hope the poster continues to impart his knowledge and understanding of VSA in this thread.

A lot of people are under the misconception that in order to trade one must be able to figure out what the Market will be doing sometime in the future. Hence the term, speculation. I do not believe it can be done (certainly not by me), so I focus on what is happening now.

* Price was above both the weekly and daily GTH Opens.
* There was a Market Structure Shift
* There was an orderflow imbalance that created a Fair Value Gap (aka HiddenGAP).
* The Trigger Number Matrix was applied to the highest volume interval (H1).

1.


2.

3. Full disclosure. I went to sleep so the photo was taken a bit late. I was taken out on the first interval to trade thru the Trigger Number Target Level.


The two real takeaways are summed up in one of my favorite trading books The Adam Theory of Markets.:

a. Predictions are great, but when predictions and reality divulge, as they usually do, we must always go with reality. And what is reality? What the Market is doing right now.

b. Never let the opinion of others get in the way of your trading.

Sad part is that the people who understand this statement probably had to figure it out the hard way. I don't think I would have really understood it when I was still fresh.

ICT really seems to have stepped up trading, I hope that you continue to share it. I may watch some of their stuff this weekend.

Isnt trading simply about making a prediction though?


The above quote looks like evidence was gathered in order to make a prediction on the direction of the price move?

Unless im missing something.

I'm not trying to speak for HiddenGap, I'm sure he will have a lot more to add.

Predictions are different, I think its the way our minds are wired. We automatically try to learn and adapt to our surroundings. When price doesn't do what a trader anticipated that trader will want analyze and that particular situation and adapt their trading plan on a single trade. "Oh man, if I only had seen this"

I forget who the quote is from, some famous trader: "A good trader learns nothing, and forgets everything".

When that trader moves away from predictions and solely relies on their trading plan its different. That trader doesn't try to rationalize the losses anymore, that trader doesn't run into analysis paralysis or anything else. That trader will realize that single trades don't matter and only focuses on trades as a whole and pays more attentio to overall win rate / RR.

When you're down this path, you move away from that single trade prediction and now youre more focused on any repeating patterns in your losses/wins.

*Edit*

Its a really good idea to screenshot of every trade you take and back them up too. Screenshots are extremely helpful at keeping track you're overall progress as well as identifying any patterns.

Always great to hear others perspectives, especially those as talented as HG & Anotan.

Avoiding predictions is a recurring VSA theme (Great post from another forum I saved). But, similar to Paul's perspective today, in theory I understand what is being said, but in practice, I still don't quite grasp the nuance.

Is it as simple as "don't trade when price action doesn't confirm your bias"? If so, I think I did that since I avoided taking a position after price failed to sustain the lows below the distribution line.

If it is not creating a bias at all, then imo, that feels like it runs contrary to the idea of the chart's background. I guess in the general sense, I am predicting that distribution is taking place, but I don't know when the markets will reverse and so I'm looking for additional cues (ie thrusts length) to stay on the right side of the market.

If it is being able to change your bias and participate in the markets, then I definitely struggle with that. I will sit on the sidelines indefinitely and avoid longs if I see weakness (ie: USDJPY). i know that this type of bullheadedness is a poor trading mindset when people refuse to sell a loser, but (in my head at least) it seems more acceptable when you don't have a position.

I don't have a position as of yet, but the price action that I see still doesn't instill faith in the rally personally. Weis had a line in his book about certain bars being stuck with a wad of peanut butter. For me, there are a lot of bearish wads on this chart, so unless a new UHV bar forms that I can reframe my analysis off of, I'm content with waiting for price to retrace back to 118.5 and establish a position there ♂

Just thought I would add tthat ICT does often make predictions, on the previous mentorships daily commentaries he would often "predict" (his own words) the next days high/low, often within 5 pips, and then the next commentary would say the result of the prediction

I guess its all to do with how we interpret what "prediction" actually means. I always thought I was making a prediction based on the evidence given by the trading method, and it either works out, or doesnt.

Leave it Paulscraff1 to ask the hard questions.

Allow me to present two concepts.

Concept 1:

Concept 1 embodies Einstein's "laziness principle". Einstein's first law of motions states that a body in motion will remain in motion until some opposing force acts upon it. And a body at rest will stay at rest until some opposing force acts upon it.

This is true of all things in the Universe. Another way of stating this principle is, all things follow the path of least resistance In other words everything in the Universe wants to keep doing what it is already doing. Laziness, therefore, is defined as doing that which takes the least amount of effort, and the thing that takes the least amount of effort is the thing already being done.

This principle not only covers large celestial bodies, it covers Markets.

Therefore, there is no need to guess, or prognosticate, what the Market will do next. You only need to recognize what the Market is doing now. Universal law, as we have just seen, tells us that all things, including the Market, tend to keep doing what they are already doing, so rather than spend time trying to figure out where price will be in 10 minutes or 10 weeks, time is better spent understanding what price is doing in the moment.

I submit that only trading long above HB is not a prediction of future movement, but rather a recognition of current movement.

I submit that only trading away from the GTH Open is not about extrapolating price in the future, but rather an understanding that the path of least resistance from the GTH Open is away from it.

I am not suggesting that Markets do not turn or that they trend forever, we know that is not the case. What I am suggesting, however, is that going long when the Market is going higher is not a prediction, it's more of a submission to the fact of what the Market is doing at that moment. Born out of an understanding that the Market, like all things in the Universe, is predisposed to keep doing what it is already doing.

Rather than state Concept 2 next, I going to define the three phases of a trader and then circle back to Concept 2 (although I most likely will not need to ).

1. Discovery

All would-be traders start in this phase. They come to the Markets wide-eyed and full of excitement. This phase is hallmarked by the "discovery' or the "Hypothesis". The would-be trader looks at a chart and sees "x". He then looks to the right and see "y"*. He posits, if "x" appears, the Market will do "y". And there enters prediction. He scours a multitude of charts looking for instances of "x" followed by "y". He might even start looking for instances of "y" and then work back to find "x".

The key is that this is the prediction phase. When the would-be trader hears that a Test leads to higher prices, he interprets this to mean, "if a Test appears prices will rise". He is impressed when somebody on FF calls tomorrow's closing price in the Yen, or the weekly high for the EURO. Because, he thinks this is the way to make money. He believes in order to make money one must know where the market is going before it does. Granted, that sounds reasonable, but it's false.

Most traders get stuck in this phase. They find perdition is not as easy as some would have them believe. FF is overflowing with individuals in this phase.

2. Verification

There are lots of opinions on how much this phase is needed. However, that discussion is beyond the scope of this brief synopsis. The verification or testing phase is where the would-be trader utilizes back-testing, forward testing, and observation to prove that his hypothesis has merit. "x" appeared 200 times over the last 3 years, how many times did "y" follow? If I went long after seeing "x" how much could I have made? On the times when I went long and prices fell, how much would I have lost?

Some would be traders will demo trade in this phase. But this is not true trading, and not because the account is not real money. This is not true trading because there is still an element of prediction. The trader is going long after seeing "x" because he is predicting "y".

Many individuals get tripped up in this phase as well. Especially the ones that can't get away from the " every time I see 'x', 'y' must follow" crowd.

3. TRADER

The elusive final phase. Trader.

The trader does not predict. He has gotten to the point where he understands from the previous phase that going long after seeing "x" is a statistically more advantaged option than the other two options: 1. going short and 2. staying out.

The trader understands that 8 times out of 10 when he goes long after "x", he loses. But he also understands that on the two times he wins, he wins 10 Xs more than he lost on the 8 combined. Thus, the trader is not going long after seeing "x" because he predicts "y", he is going long after he sees "x" because it is statistically correct to do so.

In the trader phase, the individual has surrendered to the notion that if "x" is the long signal in his trading plan, then his only two jobs are to take "x" when it appears and then manage the risk. Predicting the outcome of "x", was what the previous two phases were about.


*assume "y" means prices rise.

And trust that HG will come up with a good answer

I never really thought of it all like that, although I guess thats because when everyones in lectures and head in a book...I was out in the rain turning a spanner

Ive seen those trader phases before, or something similair, although not with the detail that you presented which has been really insightfull.

....I guess I would put myself somewhere on Phase 2 if im honest, if I see "x" then I do predict "Y" to follow.......although I can accept that it sometimes it may not based on the probabilities.....but im happy to put money on it and see what happens.

Good post HG