Trading W/ Smart Money

True weakness always appears on an up-bar, and true strength always appears on a down-bar. Uninformed traders acting on emotional urges are rushing into the market and buying in huge amounts, while the professional money is busy selling to them.

Quote from MTM:Tom Williams

Okay, just broke through my trendlines on higher volume,still weak

I found another news update on bloomberg, Dollar Set for Weekly Gain on Concern Recession to Be Prolonged Last Updated: July 2, 2009 22:31 ED, Look how the market is reacting thus far, but notice on the 1HR the volume is parltry and below the average and is only dropping slightly.

update

UPDATE, im short off the upthrust

update

update on short eur/usd

I highlighted two upthrusts which occurred in the background on the 15M chart for EUR/USD sure signs of weakness, the first upthrust was on lower volume and the second upthrust was on higher volume.

I'm reading a 1HR chart and I highlighted first bar which is stopping volume and smart money stopped in to support the price, now during stopping volume you want to wait to see green candle before going long. The next highlighted candle is no supply which is a test bar to confirm that supply has been removed from the market. SM tests the market to see if sellers are still around if successful on low volume then prices are clear to move higher. The next highlighted bar, is a mini-stopping volume,however it doesn't look like enough volume on the stopping volume bar to support a full price reversal to the upside, but you could have bought and set in tight stops.

I'm watching the 5M chart from EUR/USD just going over some signs to help newbie's understand the VSA strategy. If you can correctly identify signs and watch volume then smart money shows you the right opportunities to enter the market,successfully. I've outlined that absorption volume bar, where smart money steps in to absorb the selling.Notice the color and length of the bar on a wide spread, immediately your next bar is up, and you could have rode it to the top for about 14 pips before that upthrust would have noted it was time to get out. It's not about the pips but noticing the signs of each bar so, you can understand when these bars appear they are great opportunity tot buy or sell in the market.


I'm going to be having a free webinar on vsa trading, I'd like to gauge the interests of members who might be interested just shoot me over a pm.

Here's another example from GJ off 5m chart,

1.the first highlight you have a weak stopping volume bar with low volume but stopping volume nonetheless, so the next bar is up so you could buy on next bar.

2. You have two no supply test bars which both failed so naturally, the prices will not respond to the upside

3.Next is another stopping volume bar this time on lower volume and next bar is upbar, so you could buy on up bar

4. You have two no supply test bars, which this time are successful and prove supply has left the market and the pair continues to rise.

5.Where, I added the arrow is where your watching the spreads begin to narrow especially near the top of the, which means a cap is applied which is going to prevent the market from moving higher.

6. Then you get that upthrust which is a sure sign of weakness,however the upthrust is on low volume so be aware the down move could be limited.

7. Sure enough several bars later you get another stopping volume bar and the next bar is up which signifies strength.

Hope you learned from this little lesson, if you have questions let me know.

Here's an older 5m chart, I pulled from USD/JPY, just wanted to show some more examples to newbie's to understand. The first chart

1.shows the top of a trend which I outlined, this is where the actual distribution occurs, in MTM book Tom Williams he states"For example, once a market has finished distributing, the ‘smart money’ will want to trap you into thinking that the market is going up. So, near the end of a distribution phase you may, but not always, see either an up-thrust (see later) or low volume up-bars.At the potential top of a bull market, many professional traders will be looking to sell stock bought at lower levels to take profits.

2. That's what occured and then finally you see the upthrust bar which signifies a reversal and it took nearly 4 hours for the distribution phase and about 6 hours for the markdown phase to end, amazing.

3.Finally on the second continuation chart, we see some stopping volume however, the market didn't immediately move up so wait again for the next bar which is an up bar to buy, now keep in mind, where going to need another stopping volume bar to signify smart money stepping and you could have rode it up for 30+ pip gain before another upthrust.

In VSA your taking a holistic view of the market as it unfolds bar by bar, especially great times to trade VSA is during news, best time for s/m to manipulate market through new media outlets online and off. Once you can learn the signals what they use and how it correlates to the volume you can be in the top 5% of traders,period.

I have free copies of Master the Markets by tom williams just pm if you want one

Here are some inserts from MTM by Tom Williams, which explain accumulation and distribution phases.

Accumulation
To accumulate means to buy as much of the stock as possible, without significantly putting the price up against your own buying, until there are few, or no more shares available at the price level you have
been buying at. This buying usually happens after a bear move has taken place in the stock market (which will be reflected by looking at the Index).
To the syndicate trader, the lower prices now look attractive. Not all of the issued stock can be accumulated straight away, since most of the stock is tied up. For example, banks retain stock to cover loans, and directors retain stock to keep control in their company. It is the floating supply that the
syndicate traders are after. Once most of the stock has been removed from the hands of other traders (ordinary private individuals), there will be little, or no stock left to sell into a mark-up in price (which would normally
cause the price to drop). At this point of ‘critical mass’, the resistance to higher prices has been removed from the market. If accumulation has taken place in lots of other stocks, by many other professionals, at a similar time (because market conditions are right), we have the makings of a bull
market. Once a bullish move starts, it will continue without resistance, as the supply has now been removed from the market.

Distribution
At the potential top of a bull market, many professional traders will be looking to sell stock bought at lower levels to take profits. Most of these traders will place large orders to sell, not at the current price available,
but at a specified price range. Any selling has to be absorbed by the market-makers, who have to create a 'market’. Some sell orders will be filled immediately, some go, figuratively, 'onto the books‘. The marketmakers
in turn have to resell, which has to be accomplished without putting the price down against their own, or other traders’ selling. This process is known as distribution, and it will normally take some time for the process to complete. In the early stages of distribution, if the selling is so great that prices are forced down, the selling will stop and the price will be supported, which gives the market-maker, and other traders, the chance to sell more
stock on the next wave up. Once the professionals have sold most of their holdings, a bear market starts, because markets tend to fall without professional support.

Well, I'm going to focus on two pairs, EUR/USD=USD/JPY just to keep things simple and I'm going to be issuing trade alerts. I'm going to be posting the trading alerts on my twitter page or via skype and by ff. I got one person to sign up and were going to test this out. It's obvious VSA works and I stand by it.

I'm going to be concentrating on trading 5,15 and 1HR charts

I'm posting more examples of VSA method from USD/JPY from the past week.

1. We have a stopping volume with strength in the background on average volume,followed by Up bar. You always wait for confirmation in the form of an upbar after stopping volume to buy.

2.Upthrust, which is S/M capping and trapping weak holders into thinking the price is going to rise higher. Upthrust is great weakness signal, wait for confirmation in the form of red bar.

3. Upthrust again, same situation,weakness in the background

4.Stopping volume with strength in the background. if you followed through on the VSA method.

Total Pips: 66+

This is hypothetically speaking, b/c you won't catch every top or bottom but thats just fine.

i recommend caution when assimilating information from news feeds. You would be naïve to think that news cannot be ‘manufactured’ to manipulate the actions of the masses. Frequently, this is why the news is released in the first place. The professional operators are often aware of a particular piece of ‘news’ hours, days, or sometimes weeks before it is released to the public. Making money is a serious matter in any business, and in this particular case, having accurate and timely knowledge before the masses is crucial. To this end, professional groups have a number of methods and contacts at their disposal to glean commercially sensitive information for the benefit of trading

timebars--

I see possible stopping volume on EUR/GBP on strong volume, depending if nxt bar is upbar, then go long, if not wait for up bar to go long.