Current trade I'm in saw weakness, was failing to break the high
- #36,063
- Jul 17, 2023 11:22am Jul 17, 2023 11:22am
I bought off a high volume down bar like a sucker.1. Initial Sign of Strength - High volume down bar
into fresh new ground. Fresh ground being nothing to the left of the body of the bar for the previous 5 bars (wicks are ok!) 2. Higher time frame confirmation - H1 chart, next bar closes up showing price is reacting to the initial sign of strength. 3. Change of trend - Two consecutive up bars with the second bar making a higher high and higher low. 4. Price reacting positively to strength - Hidden test with the next bar closing...
I have a question. When trading vsa everyone mentions to look at 2 bar combo. The first bar being the high volume bar and the second the confirmation.
The confirmation bar needs to be up? ( in your example the big volume bar is down)
I have seen many times that the following bar is down but not able to close below. So not able to make progress and then it moves up. So is not exactly big volume bar down and then up. Which takes me to the next question
Does the high/ low of the big volume bar needs to be pierced to for it to be confirmed?
And las question
Following your example would you trade before the bar after the big volume bar ends on the high timeframe. Let say that you have your big volume bar and then inside the following hour you have a low volume test or a no supply. Will you trade it or you wait for the confirmation. Basically the next 1 hour candle needs to finish before you enter?
Thanks for your help in advance
- #36,065
- Jul 17, 2023 9:54pm Jul 17, 2023 9:54pm
- Joined Jan 2015 | Status: Trader | 1,461 Posts
I apologize about the hindsight chart, but there are some good points on this chart. This weekend family was in town so I was up all day Sunday and couldn't stay up Sunday night to trade.
1. Initial Sign of Weakness - No demand Up thrust, I would've liked that ND volume to be below the MA, but you can't be too picky about the volume in the first few hours of the day.
2. Trend Change - Two consecutive down bars with the second bar making a lower low and lower high.
3. Higher Time Frame Confirmation - H1 chart, next bar closing down confirming the weakness from the No demand up thrust.
4. Price ignoring strength/responding to weakness - At this point I'm looking for price to show me its weak, we have a problem at Bar 4 though, price is responding to strength. Easiest way to deal with this is to wait for price to close below the low of the strength bar. Which Bar 5 gives you a heads up that price is still weak, but its safest to wait for the low of Bar 4 to be taken out before looking for an entry.
What I'm trying to show is price turning on low volume, it isn't always going to be on climatic volume. Also notice how long price grinds sideways, from start to finish its 14 hours before price drops. Stop and think a minute, yesterday price was in distribution for 14 hours and dropped something like 50 pips. Does a 50 pip drop make sense for a 14 hour distribution? Hopefully a light went off, on what you can expect to happen today.
1. Initial Sign of Weakness - No demand Up thrust, I would've liked that ND volume to be below the MA, but you can't be too picky about the volume in the first few hours of the day.
2. Trend Change - Two consecutive down bars with the second bar making a lower low and lower high.
3. Higher Time Frame Confirmation - H1 chart, next bar closing down confirming the weakness from the No demand up thrust.
4. Price ignoring strength/responding to weakness - At this point I'm looking for price to show me its weak, we have a problem at Bar 4 though, price is responding to strength. Easiest way to deal with this is to wait for price to close below the low of the strength bar. Which Bar 5 gives you a heads up that price is still weak, but its safest to wait for the low of Bar 4 to be taken out before looking for an entry.
What I'm trying to show is price turning on low volume, it isn't always going to be on climatic volume. Also notice how long price grinds sideways, from start to finish its 14 hours before price drops. Stop and think a minute, yesterday price was in distribution for 14 hours and dropped something like 50 pips. Does a 50 pip drop make sense for a 14 hour distribution? Hopefully a light went off, on what you can expect to happen today.
- #36,066
- Edited 1:34am Jul 18, 2023 1:17am | Edited 1:34am
- Joined Jan 2015 | Status: Trader | 1,461 Posts
- #36,068
- Jul 27, 2023 4:08am Jul 27, 2023 4:08am
- Joined Jan 2015 | Status: Trader | 1,461 Posts
I'm very bored so I thought I through some charts out into FF. Been a really slow week for me, even though there has a been a ton of high impact news. Not sure if my slow week during a busy week is a good thing or not.
Monday was the only trade I've taken soo far.
USDCAD short.
1. Initial SoW - No demand or failed test depending on how you look at it. Fresh new ground nothing to the left of the body for the previous 5 bars.
2. Trend Change - 2 consecutive down bars with the 2nd bar making a lower high and lower low. I didn't market it, but H1 chart the next bar is down confirming the initial SoW.
3. High volume up bar - After you've seen that initial SoW you want to see low volume up bars and high volume down bars. This high volume up bar is bullish, but you don't want to buy the pair with the initial SoW behind you.
4. Bar 4 takes out the low of the high volume up bar, when that happens I'll start looking to short it.
Soo Tuesday there was a short on AUDJPY, I didn't take it because of AUD CPI news early Wednesday. If you trade with a stop loss those high impact AUD news events like CPI/Interest rates are almost always violent and will take out any stops. I tend to not trade AUD the day before big news.
1. Initial SoW - No buying pressure bar into fresh new ground. Nothing to the left of the body of the bar for the previous 5 bars (wicks are ok!)
2. Trend Change - 2 consecutive down bars with the 2nd bar making a LH/LL.
3. Higher Time Frame Confirmation - Next H1 bar closes down confirming the initial weakness on M15.
4. Sign of Strength - Shakeout type bar with price reacting positively to it. Ideally you want to wait for price to close below the low of this bar.
5. Sign of Weakness - Obvious no demand into the close of the initial sign of weakness, the safest thing is still to wait for price to close below the low of bar 4.. But if you follow PA along the close of Bar 1 you can see multiple failed attempts to break higher. I could see myself shorting the 2nd up thrust after bar 3.
Monday was the only trade I've taken soo far.
USDCAD short.
1. Initial SoW - No demand or failed test depending on how you look at it. Fresh new ground nothing to the left of the body for the previous 5 bars.
2. Trend Change - 2 consecutive down bars with the 2nd bar making a lower high and lower low. I didn't market it, but H1 chart the next bar is down confirming the initial SoW.
3. High volume up bar - After you've seen that initial SoW you want to see low volume up bars and high volume down bars. This high volume up bar is bullish, but you don't want to buy the pair with the initial SoW behind you.
4. Bar 4 takes out the low of the high volume up bar, when that happens I'll start looking to short it.
Soo Tuesday there was a short on AUDJPY, I didn't take it because of AUD CPI news early Wednesday. If you trade with a stop loss those high impact AUD news events like CPI/Interest rates are almost always violent and will take out any stops. I tend to not trade AUD the day before big news.
1. Initial SoW - No buying pressure bar into fresh new ground. Nothing to the left of the body of the bar for the previous 5 bars (wicks are ok!)
2. Trend Change - 2 consecutive down bars with the 2nd bar making a LH/LL.
3. Higher Time Frame Confirmation - Next H1 bar closes down confirming the initial weakness on M15.
4. Sign of Strength - Shakeout type bar with price reacting positively to it. Ideally you want to wait for price to close below the low of this bar.
5. Sign of Weakness - Obvious no demand into the close of the initial sign of weakness, the safest thing is still to wait for price to close below the low of bar 4.. But if you follow PA along the close of Bar 1 you can see multiple failed attempts to break higher. I could see myself shorting the 2nd up thrust after bar 3.
- #36,072
- Aug 14, 2023 5:15am Aug 14, 2023 5:15am
- Joined Jan 2015 | Status: Trader | 1,461 Posts
Boring PA today. 
You can see the strength there at Bar 1, but its not really into fresh new ground. If you look the left of the body of Bar 1 there is PA within the past few bars. But with a 35 pip range so far today doesn't seem like it would've been worth the effort.
You can see the strength there at Bar 1, but its not really into fresh new ground. If you look the left of the body of Bar 1 there is PA within the past few bars. But with a 35 pip range so far today doesn't seem like it would've been worth the effort.
- #36,076
- Aug 17, 2023 10:59am Aug 17, 2023 10:59am
- Joined Jan 2015 | Status: Trader | 1,461 Posts
I've decided to write this in multiple posts and a lot of this is based on experience and I may not communicate that experience well. If you have questions ask me I will answer them as straight forward as I can.
So lets start with this, if you're trying to follow what I'm doing.. I'm looking for the main move, I'm not interested in scalping, this is more of swing trading. That is a whole mindset you have to put yourself into. You have to be ok with price coming back on you. Personally I don't want to chase 1:1 setups all month long, especially when you can easily get 3 or 4 trades a month that are 3:1 or higher.
When you go into a trade you have to be prepared for draw down, don't get me wrong you will get more than your fair share of trades that go your way immediately but that isn't always this case. If you look at USDCAD on the previous post, you would've dealt with 10-15 pips of drawn down.
When you initially set your stop loss it has to be beyond the close of your initial sign of strength/weakness. In this case of USDCAD it has to be beyond 1.3545. Theres a few things I like to do, if you can look to the left and see previous PA in the prior days then I would look for trapped buyers. Look for a shakeout type bar above that close of 1.3545.. Find that bar that suckered in buyers then dropped price on them. Forex loves to do that, and rarely returns to let those trapped buyers out of their bad position. Use that to your advantage.
But on USDCAD we don't have any PA from the previous days. So I'd us my expansion zones I talked about here. These aren't my go to for finding stops, but what else can you do in this situation? Using the zone on the M15 you can set your stop a level or two above the highest point here to give this trade some room to breath while professionals continue to distribute.
So lets start with this, if you're trying to follow what I'm doing.. I'm looking for the main move, I'm not interested in scalping, this is more of swing trading. That is a whole mindset you have to put yourself into. You have to be ok with price coming back on you. Personally I don't want to chase 1:1 setups all month long, especially when you can easily get 3 or 4 trades a month that are 3:1 or higher.
When you go into a trade you have to be prepared for draw down, don't get me wrong you will get more than your fair share of trades that go your way immediately but that isn't always this case. If you look at USDCAD on the previous post, you would've dealt with 10-15 pips of drawn down.
When you initially set your stop loss it has to be beyond the close of your initial sign of strength/weakness. In this case of USDCAD it has to be beyond 1.3545. Theres a few things I like to do, if you can look to the left and see previous PA in the prior days then I would look for trapped buyers. Look for a shakeout type bar above that close of 1.3545.. Find that bar that suckered in buyers then dropped price on them. Forex loves to do that, and rarely returns to let those trapped buyers out of their bad position. Use that to your advantage.
But on USDCAD we don't have any PA from the previous days. So I'd us my expansion zones I talked about here. These aren't my go to for finding stops, but what else can you do in this situation? Using the zone on the M15 you can set your stop a level or two above the highest point here to give this trade some room to breath while professionals continue to distribute.
- #36,078
- Aug 17, 2023 11:31am Aug 17, 2023 11:31am
- Joined Jan 2015 | Status: Trader | 1,461 Posts
A couple of posts ago I said that I take 2-3 partial losses per week.
As trades move your way you need to protect yourself. From a business perspective partial profits seem counter intuitive, especially if you start taking partials close to your entry point. At first it seems like all you're doing is reducing the amount of profit that you can potentially make meanwhile keeping the same risk when a trade completely fails and hits your stop loss when you get things wrong.
Here's the deal, when you have a 500 dollar account you don't give a shit about capital preservation, all you care about is making money. Change that account to 100,000 account and suddenly capital preservation means a whole lot more. Develop those habits sooner rather than later.
As price moves your way, protect yourself.. Using USDCAD as the same example with those expansion fibs, take partial profits as price tests those levels and bring that stop down to above the high of Bar 5, the entry bar. Congrats, if you take a partial profit of 10% of your position at the blue box then bring your stop down to just above the high of bar 5. then you just reduced your risk by 70-90% of the original risk.
I want you to notice something at this point. When you take a trade on Bar 5, the bar I colored with the green horizontal box. At first it appears this bar failed, price dips a little bit.. then price pushes up and through the high of Bar 5. But after when price pushes down to the profit area marked in blue, notice how price does not touch the high of bar 5 again. This is not accidental, this happens more than you think.
Yes sometimes you will get taken out because you took that partial profit too early.. but think about this for a bit.. price dropped 5 pips and you removed 70-90% of your risk from a tiny move. Thats huge.
My TPs are still a little weak, but I'll take a bit about them tomorrow. Ask questions, I will answer them best that I can.
As trades move your way you need to protect yourself. From a business perspective partial profits seem counter intuitive, especially if you start taking partials close to your entry point. At first it seems like all you're doing is reducing the amount of profit that you can potentially make meanwhile keeping the same risk when a trade completely fails and hits your stop loss when you get things wrong.
Here's the deal, when you have a 500 dollar account you don't give a shit about capital preservation, all you care about is making money. Change that account to 100,000 account and suddenly capital preservation means a whole lot more. Develop those habits sooner rather than later.
As price moves your way, protect yourself.. Using USDCAD as the same example with those expansion fibs, take partial profits as price tests those levels and bring that stop down to above the high of Bar 5, the entry bar. Congrats, if you take a partial profit of 10% of your position at the blue box then bring your stop down to just above the high of bar 5. then you just reduced your risk by 70-90% of the original risk.
I want you to notice something at this point. When you take a trade on Bar 5, the bar I colored with the green horizontal box. At first it appears this bar failed, price dips a little bit.. then price pushes up and through the high of Bar 5. But after when price pushes down to the profit area marked in blue, notice how price does not touch the high of bar 5 again. This is not accidental, this happens more than you think.
Yes sometimes you will get taken out because you took that partial profit too early.. but think about this for a bit.. price dropped 5 pips and you removed 70-90% of your risk from a tiny move. Thats huge.
My TPs are still a little weak, but I'll take a bit about them tomorrow. Ask questions, I will answer them best that I can.