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Volume Spread Analysis (VSA) Discussion 2 replies

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Learn to Trade using VSA (Volume Spread Analysis)

  • #81
  • Feb 22, 2009 7:59pm Feb 22, 2009 7:59pm
Quoting Petefaders
haha, you're funny man..a devoted naysayer. I can respect that. But for me and my little scalping method, I use mt4 volume and make pips. It's all live in my journal if you want proof. If you come buy I can keep you updated on what I'm seeing...if you still disagree, that's cool.
Gee thanks, I'm a funny guy but you are not NYSE1982.
  • #82
  • Feb 22, 2009 8:06pm Feb 22, 2009 8:06pm
Quoting SunTrader
Gee thanks, I'm a funny guy but you are not NYSE1982.
Ok, good luck with your trading, bye.
  • #83
  • Feb 22, 2009 9:08pm Feb 22, 2009 9:08pm
Quoting Petefaders
Maybe it's best kept a secret anyway.
this is where I'm at so far trading VSA for you non-believers and the orange mark is where i went short on the chart...

624163332009.02.23 02:02buy0.50eurusd1.27931.27940.00002009.02.23 02:361.28060.000.000.00 65.00

624205402009.02.23 02:47sell0.50eurusd1.27861.28060.00002009.02.23 03:031.27950.000.000.00 -45.00

624226332009.02.23 03:03buy1.00eurusd1.27961.27810.00002009.02.23 03:301.28270.000.000.00 310.00

624297522009.02.23 03:49buy0.10eurusd1.28941.28850.00002009.02.23 04:031.29090.000.000.00 15.00

as you can see i have an open order as indicated by the orange sell line

24389612009.02.23 04:35sell1.00eurusd1.29241.29400.0000 1.2915 this trade is stiil open

Ill post again once it closes...
Attached Image (click to enlarge)
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  • #84
  • Feb 22, 2009 9:11pm Feb 22, 2009 9:11pm
Quoting nyse1982
this is where I'm at so far trading VSA for you non-believers and the orange mark is where i went short on the chart...

624163332009.02.23 02:02buy0.50eurusd1.27931.27940.00002009.02.23 02:361.28060.000.000.00 65.00

624205402009.02.23 02:47sell0.50eurusd1.27861.28060.00002009.02.23 03:031.27950.000.000.00 -45.00

624226332009.02.23 03:03buy1.00eurusd1.27961.27810.00002009.02.23 03:301.28270.000.000.00 310.00

624297522009.02.23 03:49buy0.10eurusd1.28941.28850.00002009.02.23 04:031.29090.000.000.00 15.00

as you can see i have an open order...
waiting for it to break 1.2908 so it can fall like a rock if not then at best close out with 8-10 pips
  • #85
  • Feb 22, 2009 9:18pm Feb 22, 2009 9:18pm
Quoting nyse1982
waiting for it to break 1.2908 so it can fall like a rock if not then at best close out with 8-10 pips

still in the trade up 14 pips trading on tick volume..
Attached Image (click to enlarge)
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  • #86
  • Feb 22, 2009 9:19pm Feb 22, 2009 9:19pm
Quoting nyse1982
still in the trade up 14 pips trading on tick volume..
no indicators necessary and using only tick volume from meta trader..looking to close out..
  • #87
  • Feb 22, 2009 10:02pm Feb 22, 2009 10:02pm
Quoting Petefaders
Ok, good luck with your trading, bye.
Oh don't go. Well send a postcard when you get there.
  • #88
  • Edited 11:03pm Feb 22, 2009 11:03pm | Edited 11:03pm
Quoting Turhovach
You're missing the point. There is no reliable feed for volume data because it (volume data) does NOT exist.
Well, we're kinda on the same page here... I agree with you that using the tick data from (say) IBFX would lead you astray, as it only incorporates their in-house data. But if you used an ECN-type broker that offers feeds from multiple providers, wouldn't that give you a better idea? After all, surely what we're after here is a reliable source with quantities of data, no?
  • #89
  • Feb 22, 2009 11:11pm Feb 22, 2009 11:11pm
Quoting freedom30
Well, we're kinda on the same page here... I agree with you that using the tick data from (say) IBFX would lead you astray, as it only incorporates their in-house data. But if you used an ECN-type broker that offers feeds from multiple providers, wouldn't that give you a better idea? After all, surely what we're after here is a reliable source with quantities of data, no?
i agree..
  • #90
  • Feb 23, 2009 4:47am Feb 23, 2009 4:47am
OK we all can agreed that there is no central clearing place for all forex trades and hence true measure of volume is not available.

We also know that there are a number of retail forex brokers out there and they feed a tick data which some people use to approximate volume.

We also know that retail brokers prices are not all the same but are more or less in line with the overall market (This is of course not taking into account some of the practise such are stop hunting, unexplained spikes, delay in feeds etc.). However, at the of the day if the "true" market price when up 10 pips, some brokers may show 9 pips and other may show 11 pips. So, even though there is no central clearing place we can place a high degree of reliance on the price.

Now what about the volume? I did a simple comparation between 2 brokers, IBFx and FxPro. I recorded the tick volume as reported by each broker and compare the % change of the latest closed bar to the one before it. With exception to the % change of the 2nd bar to the 1st bar, the rest of the bars % change are almost identical as shown in the line chart. I attribute the anomaly of the 2nd bar to the scattered opening from the week-end close when not all the particpate are present. (see attached pdf file).

So, what conclusions can we draw from this. The tick volume, like the price is a reliable indication of the direction of the volume. When one broker show a increase in vol, other brokers also show increase in vol and that the vol shown by each broker is proportionate to their size of the transactions handled. Price is not derive from a central place but we accept it as reliable and I think the vol data can also be relied upon. I realize that this is a small sample and is not statistically valid, but I believe if we expand the sample both in number of brokers, different pairs and more bars that the results will not different much.

For the purpose of this system, where the change in vol is being compared, the tick values does approximate that.
Attached File(s)
File Type: pdf Forex Vol Comparsion.pdf   43 KB | 1,723 downloads
  • #91
  • Feb 23, 2009 12:05pm Feb 23, 2009 12:05pm
I plan on getting an MT4 indicator developed for VSA. If anyone is interested in going in with me on the cost of it, send me a PM.
  • #92
  • Feb 23, 2009 12:24pm Feb 23, 2009 12:24pm
Quoting fxtrader2k7
OK we all can agreed that there is no central clearing place for all forex trades and hence true measure of volume is not available.

We also know that there are a number of retail forex brokers out there and they feed a tick data which some people use to approximate volume.

We also know that retail brokers prices are not all the same but are more or less in line with the overall market (This is of course not taking into account some of the practise such are stop hunting, unexplained spikes, delay in feeds etc.). However, at the of the day if...
A man after my own heart... Nice work.

I would take it one step further and say that the goal perhaps should be to aggregate volume information from multiple sources to increase the number of data points and therefore the reliability. I would think that it wouldn't matter whether you are accounting for every last penny being exchanged in the market - we simply need a big enough snapshot to see what's going on.

Am I wrong here? Open to suggestions, but I'm curious about this concept.
  • #93
  • Feb 23, 2009 12:28pm Feb 23, 2009 12:28pm
Quoting eagle4x
I plan on getting an MT4 indicator developed for VSA. If anyone is interested in going in with me on the cost of it, send me a PM.
PM coming at ya.
  • #94
  • Feb 23, 2009 4:29pm Feb 23, 2009 4:29pm
Quoting freedom30
A man after my own heart... Nice work.

I would take it one step further and say that the goal perhaps should be to aggregate volume information from multiple sources to increase the number of data points and therefore the reliability. I would think that it wouldn't matter whether you are accounting for every last penny being exchanged in the market - we simply need a big enough snapshot to see what's going on.

Am I wrong here? Open to suggestions, but I'm curious about this concept.
Point take well the basis of VSA is mapped utilizing some kind of volume and tick volume is sufficient. To people who actually have interest in this process. I'll break it down

Selling Climax:An imbalance of supply and demand causing a bear market to transform into a bull market.
Explanation: This is the exact opposite of a buying climax. The volume will be extremely high on down-moves,accompanied
by narrow spreads, with the price entering fresh low ground. The only difference is that on the lows, just before the
market begins to turn, the price will be seen to close in the middle or low of the bar.To create this phenomenon requires
a huge amount of selling. (Basically your calculating the spread per each bar during an exhaustion of selling you will notice how the volume steadily increases and creates a doji with a body. This means simply that smart money has now accumulated the maximum amount of shares or currency. Thus a spike in the volume in the last down bar) Once this happens smart money will began to mark up the prices which will occur on the following bar. Which will be green.

How to calculate spread

EUR/USD
1.4570H
1.4530L
--------
H/L = 40

1.4570H
1.4560C
-------
H/C = 10

SPREAD= 30

YOU TRACK EACH SPREAD ON A PER BAR BASIS WHILE WATCH THE VOLUME. THIS BASICALLY HELP YOU TO DETERMINE SWING LOW AND SWING HIGH OF MOVEMENTS.

NOW FOR BUYING CLIMAX:An imbalance of supply and demand causing a bull market to transform into a bear market.Explanation: If the volume is seen to be exceptionally high, accompanied by narrow spreads into new high ground, you can be assured that this is a ‘buying climax’.It is called a buying climax because to create this phenomenon there has to be a huge demand for buying from the public, fund managers, banks and so on. It is into this buying frenzy, that syndicate traders and market-makers will dump their holdings, to such an extent that higher prices are now impossible. In the last phase of the buying climax, the market will be seen to close in the middle or high of the bar.(Same process and remember you may get faked out as smart money will trap you with a doji body which closes on low volume, but don't be fulled, it's smart just accumulating more shares on a brief pause.)

You would be looking for a doji at the top with green bar with high volume and a spreads which are getting smaller.
  • #95
  • Feb 23, 2009 4:32pm Feb 23, 2009 4:32pm
Quoting eagle4x
I plan on getting an MT4 indicator developed for VSA. If anyone is interested in going in with me on the cost of it, send me a PM.
my friend sounds like a great idea, so your thinking of having a programmer write code right? Are you in NYC? I'm going to check out what kind of fees there charging..The IT market is in a downturn so I'm sure that we can find some smart IT geeks looking for extra cash!!
  • #96
  • Feb 23, 2009 6:13pm Feb 23, 2009 6:13pm
Quoting eagle4x
I plan on getting an MT4 indicator developed for VSA. If anyone is interested in going in with me on the cost of it, send me a PM.
Username "FerruFx" on this forum is an excellent coder...send him a PM...He does great work.
  • #97
  • Feb 23, 2009 9:12pm Feb 23, 2009 9:12pm
Hey NYSE,

Question with regards to the doji formation... which timeframe chart are you referring to? I think I read earlier that you referenced a 15 minute chart? If that's correct, how did you arrive at that timeframe?

Just curious, because obviously the patterns will be different from 5min to 15m to 1hr to 4hr etc...
  • #98
  • Edited 2:24am Feb 24, 2009 1:59am | Edited 2:24am
Quoting freedom30
Hey NYSE,

Question with regards to the doji formation... which timeframe chart are you referring to? I think I read earlier that you referenced a 15 minute chart? If that's correct, how did you arrive at that timeframe?

Just curious, because obviously the patterns will be different from 5min to 15m to 1hr to 4hr etc...
Well I usually utilize a 15 min chart, the good thing about this is to protect yourself on your entry point you can always straddle the market, which I usually do with a 5 pip differential. So lets say I get a signal on swing low and I checking the volume and spreads are narrowing, I can take my entry and go in with a straddle and when the trade goes, in my way by more then 20 pips, I usually close out the opposit position and whatever you can just ride out the trend...As you can see I straddle the market on my entry which is a backstop just incase your wrong on the swing low..Once it moves in my favor by more then 15-20 pips I close out my opposite trade..I've posted two charts are you can see with the fibo chart to see how many pips your looking to gain which is well over 3oo(pips)

Truth is this system is solid and its not necessary to utilize any ta charts, because your watching price action and tick volume..once you learn to actually learn to read the chart you can tell when the accumulation point of the smart money actually ends, which is 1.2622 on EUR/USD.Once you enter the trade your riding it out to the top of the fibo.
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  • #99
  • Feb 24, 2009 2:54am Feb 24, 2009 2:54am
Hi NYSE,

I've attached a M15 chart of EJ. How would go about determining entry and to trade this? Point J is a swing high and Japanese Candle pattern tells you that this is shooting star and usually signals a trend change. Your spread and vol analysis confirms this. Thanks for you input, just trying to learn this system.
Attached Image (click to enlarge)
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  • #100
  • Feb 24, 2009 3:37am Feb 24, 2009 3:37am
Quoting fxtrader2k7
Hi NYSE,

I've attached a M15 chart of EJ. How would go about determining entry and to trade this? Point J is a swing high and Japanese Candle pattern tells you that this is shooting star and usually signals a trend change. Your spread and vol analysis confirms this. Thanks for you input, just trying to learn this system.
well I've actually checked out this chart for myself and I drew a fibo from 117.88 feb20@9:45 to the swing high which happens to be around the J area, because the spread narrowed to and increased in volume, clearly a sign that smart money has noticed an exhaution in the buying. So I'd actually sell at that j(high)

The Buying Climax
Brief Definition: An imbalance of supply and demand causing a bull market to transform into a bear market.
Explanation: If the volume is seen to be exceptionally high, accompanied by narrow spreads into new high ground,
you can be assured that this is a ‘buying climax’.It is called a buying climax because to create this phenomenon
there has to be a huge demand for buying from the public, fund managers, banks and so on. It is into this buying
frenzy, that syndicate traders and market-makers will dump their holdings, to such an extent that higher prices
are now impossible. In the last phase of the buying climax, the market will be seen to close in the middle or high
of the bar.

So by definition there will probably hover around that swing high for some time before taking a nose dive..but it won't be prompt. So a good technique to do might be to straddle the market using a 5 pip spread..then once it moves in your favor 20 pips close out..You can also tell when buying starts to stop based on the fibo line..

I have a free copy of t.williams e-book to send just pm me, it's to big to send as file on here..
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