Trade Using VSA (Volume Spread Analysis)

The extent of black pools in forex is fairly limited. They play a greater role in stock markets, but even there exist regulations that prevent it from askewing the market too much. Alternative trading systems (ATS) like dark pools have a 5% ceiling on daily trading volume. Another words, anything over 5% needs to be declared and goes public.

Now we all know forex is not regulated and is not your typical market per se. So volume does vary from broker to broker. However, as already discussed earlier in the thread, there are brokers that offer representative/scalar volume/tick feeds. This is simply because movements (price and volume) in the market is followed and echoed similarly on most market-maker(MM) feeds. Most being they key. Definitely not all - so know your broker. Real forex dark pools come in flavours of ECNs. These are crossing systems that match sellers with buyers without the need to go publicizing such fact. Your trading activities are disguised behind your provider's name, and large volumes are usually broken into smaller fragments to avoid too much attention. However, volume still adds up so it plays a vital role from a cumulative perspective. Furthermore, ECN feeds pool best bid/ask data from the liquidest of sources, all within 100ms, so it plays a very representative role in painting a true picture.

So ideally you want to have an ECN volume feed, and ideally you want to trade 5m time frames or higher (due to fragmenting and cumulating I mentioned above), but you definitely want to trade on volume. As outlined here numerous times, and in MTM, volume/VSA truly idenitfies the fx pressure points.

-Marco

Thank You Marco, good post.

How is possible to get ECN Volume feed ?

B,
Tom

An ECN Demo acct. FXCM and IBFX are both ecn's, there are others which a simple google or FF search should provide.

Shamus mentioned 2. Then you have true ECNs: MB Trading and Dukascopy that offer demos. Interactive Brokers is ECN but offers no real-time demo. eSignal is super but $$$.

Marco

Thanks for the reply. Based on the research I did on dark pools it seemed like they definitely did play a larger role in the stock market. I'm going to stick with VSA for now, but in the back of my mind I'm still a little wary. Price is king, so these VSA patterns may help me discover new price patterns I'd never seen before.

Check out this text-book perfect VSA setup...happened right around big news (better than expected eurozone PMI).

Marco

Hello Hybrid,

Could you please post stochastic signal bar indicator...?

Thank you

Yep. Here it is.

-Marco

Thanks man

I agree 100 % ...this is what I have said for a long time now.

eventually they will work out a way ( and seems sooner rather than later ) that they will take away true market volume from us

well, i suspect they already DID. otherwise we wouldn't have found out about vsa, they couldn't afford it.

As I said earlier forex is already decentralized and ECNs are black pools comprising of billions of fragments of larger orders disguised behind inconspicuous bank names. Follow higher time frames and you will still get them (see my example few posts back on a 30m chart). Unless they trade in-house, they can't escape it. And no one can trade large orders in-house due to liquidity and overhead costs. The way fx ECNs work is very much like a crossing network in stocks, they match BEST suppliers with providers. Again, try to get an ECN data feed for VSA.

Marco

Sign of weakness in a weak market. Daily Fib 0.618 @ 0980 is broken.
Will wait for an low vol. test, then go short. Well we will see.....

Just out of interest, it's a dull Friday, so, volume divergence anyone?

nice spot yuppie, did you take it?
if you sold right on resistance you would have had zero DD.

No, I had a poor week, so just observing today.

Also, it's Friday... ... or should that be...


Just been a high-vol bullish pin on 5-min so perhaps not going to follow-through.

This was the pin I was talking about... seems to be following-through quite well...

Hello all ,

Great work on this thread.

Is there a summary list of VSA signals & properties available?.

Such a list would enable anyone to build the indicators in his (hers) preferred language (I use Easylanguage)

Below a list of what I have already found, maybe al it takes is confirmation of the properties. Anyone?

List could ideally look like
UpThrust (SOW 58) : BAR down, Close low, Volume avg, Spread vwide, Change wide. Trend ?

etc for other know bartypes

Help is greatly appreciated

Cheers, Dutchy

--------------------------

Below a list of the pros already found: Please confirm Ok's or report errors..


NAME # NAME # BAR # CLOSE # VOLUME # SPREAD # CHANGE
UP-THRUST # (SOW-58)- Trap up move # down # low # avg # vwide # wide
UP-THRUST # (SOW-2) -Basic Up-Thrust # up # low # vhigh # vwide # avg
UP-THRUST # (SOW-2)- Basic Up-Thrust # up # low # high # avg # narrow
UP-THRUST # (SOW-2)- Basic Up-Thrust # up # low # low # avg # narrow
UP-THRUST # (SOW-2)- Trap up move # down # low # vhigh # uwide # wide
UP-THRUST # (SOW-29)- Up thrust after weakness # down # low # avg # wide # narrow
REVERSE UP-THRUST # nop # up # high # high # wide # nop
Shake out # (SOS-125)-Shake out # up # high # high # wide # vwide
LIKELY MARKET TOP # nop # up # high # high # narrow # narrow
ABSORPTION VOLUME # nop # down # high # uhigh # uwide # unarrow
STOPPING VOLUME # (SOS-3)-Stopping volume # Gap down/down # high # high # narrow # narrow
FALLING PRESSURE # nop # down # low # low # wide # wide
BUYING CLIMAX # nop # up # high # vhigh # vwide # nop
EFFORT TO RISE # nop # up # high # high # wide # nop
EFFORT TO FALL # nop # down # low # high # wide # nop
SELLING PRESSURE # (SOS-131)- Selling Pressure # up # high # high # vwide # uwide
SUPPLY COMING IN # (SOW-26)- Supply coming in # down # low # high # vwide # wide
END OF A RISING MARKET # (SOW-22)- End of rising market # Gap up/up # middle/high # high # narrow # vwide
NO DEMAND # (SOW-55)- No demand # up # middle # low # narrow # vnarrow
NO DEMAND # (SOW-55)- No demand # up # high # vlow # narrow # vnarrow
NO DEMAND # (SOW-37)- No demand # up # high # low # average # average
No progress on up volume (this is not a tradeguider indicator) # nop # Gap up/up # middle # high # average/wide # vwide
INCREASE SELLING- SUPPLY PRESENT # (SOW-92) # down # low # uhigh # uwide # uwide
SELLING CLIMAX # nop # down/up?(doubts) # high # high/vhigh # wide/vwide # nop
NARROW SPREADS AND HIGH VOLUME (SQUAT BARS) # nop # up # high?(doubts) # high # narrow # nop
BAG HOLDING (not sure if this is a TG indicator. I´ve seen it in a forum) # nop # down # low # high/vhigh # narrow # nop

Hi guys,

Great topic on VSA. Phew, I just finish reading this extraordinary long thread.

I am aware on VSA methods as I have been trading on the principles of tests into congestions areas then price move aways, looking at volume of course, in another software I've been using for the past year. I normally trade 10 min on eu, gu and ej and I was always told to go for the big moves such as 90 pips because the ccy pairs I've mentioned normally does get target. But I've never been good with reading long moves and I get mixed results from this software. It's prob a operator problem Anyway, this VSA thread has brought new ideas in and I hope I can catch better, consistant profitable moves from these ideas. Now, I still have a lot of reading to do over the weekend

Thank you Shamus and all!

Pab

Below is a weekly look at GU, I think it provides an interesting picture of what is happening.
For the past couple of weeks we have had rising volume and rising prices backed by the equity markets and reflected in increasing risk appetite from investors. The Dollar has been sold off and the Dollar Index is weak and making new recent lows. It all looks very bullish.

Question is are the 'green shoots' we are seeing in the economy real or a trap set by the SM to lure investors back into the markets? We are hearing rumours of Sovereign Wealth Funds looking to invest into UK Banks, Investment Houses setting up massive new property Funds, Goldmans saying that GU was undervalued by 15% and lots more bullish news.
Is this recession going to be W, U, V or L shaped?
Has the market stayed in Accumulation phase for long enough to create a bull market and have all the weak holders been shaken out?

My feeling is that it hasn’t. Looking back over the GU weekly chart accumulation and distribution phases seem to happen over a longer period of time.

Looking at the chart I think there is definitely some more upside potential but we need to start looking for the signs of weakness in the market.

Watch out for :

1. An up day in the market with narrow spread and high volume into new ground. A buying Climax
2. A failed Test
3. Upthurst (Higher the volume the better)
4. Sudden High Volume upday with the next day is down on a wide spread closing below the low of the previous bar.

Look for this at places of Resistance -1.600, 1.6055, 16350,16780.

You might get the opportunity to make a big long term trade down.