Trading W/ Smart Money

I've been trading utilizing a method called VSA or volume spread analysis which I've learned from Tom Williams, a former syndicate trader, who resides in Europe. His main theology is based on 3 principles.

1.Following and understanding volume which shows the true activity of professionals, which matter the most because professionals move the market not retail traders.

2.Following the spread, which is the high/low of each occuring bar, this alerts a trader to the bullishness or bearishness of a particular price movement.

3.Following closing price, or price action which tells you how the price reacts to the volume and spread.

Using these 3 techniques you can successfully trade on the rightside of the market, with the professionals. Once you learn to understand these priniciples you will see that your decisions to enter a trade are rationalized by what your actually seeing and not a phony indicator.

Tom Williams enhanced the studies of Wycoff another great trader to create a conventional software program which can be used to trade, called tradeguider. Which run for about 3K. However, I don't suggest spending your money on this b/c you can take the principles you've learned and trade successfully without coming out your pockets.

I trade any pair based on what I gather from the daily charts, and I look at the spreads and volume when you me enter a trade it's based on the fact that I either see a no demand bar which closed up on weak volume or no professional support on that move. Or a down move that has no professional support. As a way to better understand VSA, you can access the volume and your accelerator pedal to a car and your spread is the actual motion, the chart represents the hill your car must climb. You may have extremely high volume however your spread is low, which basically means that gas was stepped on alot but the actual movement of your car didn't move far.

I'm currently short EUR/JPY, which I've looked at the actual daily chart, the movement of the current downmovement is more then likely going to end after this current down red bar. Based on the fact the volume was high but the spread was extremely low. I'm predicting this current red bar will close down but will more then likely reverse either on this current bar or after the daily bar closes. I'm going to attempt to catch both movements, I'm currently in the money by 63 pips, which I'll probably get around 80-90 pips on this movement before we get a reversal. I'm going to post 15m and 1Daily charts as analysis.Feel free to ask questions or email me your skype and we can chat on thier.

Ive opened a basket trade of eur/usd and usd/chf still following daily chart.Closed out all positions.

This is the corresponding move I'm trading on the basket trade, just going long eur/usd and short usd/chf, the opposite from my previous trade which I've posted. Looking to make around 130 pips total for both pairs. Just waiting for US open to push that bullish volume and hit my targets.

STILL IN THIS TRADE..

Well, I entered basket trades on that EUR/USD & USD/CHF at the price of
1.3362 long on the EUR/USD and 1.1302 on the USD/CHF. So far I'm sitting on on 420 pips profit total for the account. This is one of my smaller accounts. This is showing how you can trade starting with a small account and double it in 1 day. Most people don't have the income to open standard account. So this gives you some hope that you can successful double your account. Happy trading people.

Hi brother.. thanx for open this thread.. hope to learn from you..
i just want to know how you diceide to go long in EU ?? i mean what is your signal in your chart ??

thanx in advance.

Do you have/use some VSA indicators for MetaTrader4 platform,pipsr4kids?I want to learn your trading method,too!

Well I'm looking at a Daily chart, I'm looking at the volume,spread and closing price. If, I notice that the spread is low and the volume is low on a down move on the daily chart, I know that the selling pressure is slowing, so I would be looking to go long.Likewise if I see the spread decrease on a down bar and the volume is low I'd be looking to go long based on the daily chart. I then go to a 5m or 15m chart and look for entry points, preferrably either overshoot areas either on the downside or upside

pm me your skype name and we can speak in more detail

Here are just a few the spread indicator and vsa v4 i use as a indicator to measure the time lapsed on each candlestick. Ill post more

I also use murray math lines, which plot support & resistance, oversold and overbought levels.The other indie is the VSA rsi indicator which you plot over the spread indie. So you can see the relative strength of the volume. Thats all I use, most other indies lag. I agree it's' somewhat useful to plot MA'S but im don't use them as entry points, more or less for points of reference. Same thing with ADX.

I have a video which I use as reference which is useful in trading VSA. just shoot my over your email addy and I'll send it.

Be mindful as a tidbit the Murray Math lines do retrace, if you get a big move to the upside of the overshoot or a big down move of the overshoot. So what I like to do is plot a thick line over both overshoot areas, to help keep a reference of where the overshoot areas where. Because as point of reference if the pair trades back above that level, I know thats a strong indicator that pair has strength behind it.

This is a great incept from Tom Williams book regarding
High Volume on Market Tops:

Many newspaper journalists and television reporters assume that when the market hits new highs on high volume, that this is buying and a continuation of the up-move (the news is ‘good’ and everybody is bullish). This is a very dangerous assumption. As we have already touched upon during this text, high volume on its own is not enough. If the market is already in a rally and high volume suddenly appears during an up-day (or bar) and immediately the market starts to move sideways or even falls next day, then this is a key indicator of a potential end to the rally. If the higher volume shows an increased effort to go up, we would expect the extra effort to result in higher prices. If it does not, then there must have been something wrong. This principle is known as effort versus results.

A high volume up-day into new high ground with the next day level or down is an indication of weakness. If the high volume had shown professional buying, how can the prices not go on up? This action shows
that buying has come into the market, but be warned that the buying has most likely come from potential weak holders who are being sucked into a rally top! It happens all the time.
If there is no professional interest to the upside, the market will fall, or at best, go sideways.

There are two main principles at work in the markets which causes a market to turn. Both these principles will arrive in varying intensities producing larger or smaller moves.

Principle One
The herd will panic after substantial falls and start to sell usually on bad news. Then ask yourself. Are the trading syndicates and market makers prepared to absorb the panic selling at these price levels? (must be on a down bar). If they are, then this is a strong sign of strength .

Principle Two
The herd will at some time after substantial rises as seen in a bull market become annoyed at missing out on the up-move and will rush in and buy, usually on 'good news'. This includes traders that already have long positions, and want more. Then ask yourself. Are the trading syndicates and market makers selling into this buying? (must be a up-bar) If so, then this is a strong sign of weakness.

Well I've been studying the EUR/USD charts and thier's been a slight change of sentiment and thier is a lot of weakness apparent in the background, which will more then likely manifest in today's trading day. I like profits so, I'm going to lock in my gains on both pairs.

I've outlines on the chart where we have decreasing spreads on the up move as well as decreasing volume on the chart, which implies that their is no professional support to the current up-move.

I'm more then likely going to look for good point to go short, on the EUR/USD and looking for point to go long USD/CHF.

You can see from the chart where I identified, weakness on the current up move, which was currently in the overshoot area, their was no professional support, the pair is going to fall. I've identified how the selling has steadily decreased on the downmove. This signals that a possible reversal is near. I'm going to lock in my profits on the pair at market open. Coincendently the fibo level of 0 has also been hit.

I've closed out both my positions for profit.

Like I called it EUR/USD pulled back and the USD/CHF advanced. I'm going to closeout these positions soon.

It's a great idea to check out daily charts, to find out the sentiment of the overall market, by analyzing the volume and spread on the daily charts, you can predict the market activity for the upcoming day. You then want to be on the rightside of the markets, with professionals so, if the overall market is bearish red candle on the daily, then you want to be looking to enter shorts and if it's a bullish green candle, your looking for pullbacks to enter long on the market.