Trade Using VSA (Volume Spread Analysis)

Ari, Malcomb,Islander, Chalk,Yuppie and anyone else:

Do you see an entry signal to get long on this chart? If so where and why? Thanks very much.

hi hidden gap,

i've looked at the 15 min TF and thought this might be a reversal; although i see it is shortlived.

HG, I watched a long-entry occur, but it had pretty much nothing to do with VSA.

I have analysed this chart, but cannot see any [obvious to me] long entry with respect to VSA.


Magnus

Dont know but took a short and got stoped out for 12 pips after being up about 4!!! yuck

wow it took off like a bat out of hell!!!!!

Sure did. But not without giving a "second chance" entry. Three consecutive down candles on volume less than the previous two candles.

stupid markets stopped gu be , eu be and took 150 gj ,,,, was hoping for 800 pips lol .. knew i was being to greedy

O wow!!! I see but on my charts my volume bars are different. I will look for those setups in the future!!!!

At least you ate!!!!!! lol nice call though!!!

The German data was good - and usually known by the insiders, hence the continual buying of the Euro - and IMO this also dragged cable back up to its 6500 level where I've just sold...

I should have taken more notice of my own 5 min system which told me to buy earlier when price bounced up off todays S1 at 6434....

took advantage of up move to 155 gj to sell ....

hiddengap
It is prob the 3rd time i'm asking how do u define the S/D zone...

thanks

hi,

mark up on EU till NY cut ?

EU upthrust on 5M

Must of missed those posts.

The S/D zones I am primarily concerned with have BOTH a price action component and a volume component.

1:The first price action component, as previously discussed, is that the candle/Bar be an expansion body 7 (EB7). That is to say, the absolute range of the body (open to close) most be the largest in the last 7 periods. Please note that Expansion bodies have nothing to do with Japanese candlesticks, and therefore they can be seen on a regular OHLC bar chart. These large bodies represent the activity of the Smart Money. They are also indicative of increased volatility in the market.

2:The next price action component has to do with the intervals prior and immediately after the appearance of the EB7. Take a look at the chart from my previous post. What do you notice about those two cyan lines?

3:Next we want our EB7s to also be either buying or selling candles. A buying candle makes a higher high and not a lower low, while a selling candle makes a lower low and not a higher high. (At least for the type currently being discussed)

4:This varies with the amount of volume, but we want the close to be either in the upper 80,85,or 90% of the range and the open to be in the lower 20,15, or 10% of the range for white EB7s (Close>Open). The opposite would be true for dark (Close<Open) EB7s.

5:The mid point of the range (H-L) should be greater than the high of the previous candle or less than the low of the previous candle depending on whether it is an up candle or a down candle. This coupled with 4 and 3 and volume tell us we have "Effort" bars.

6. Unless volume is climatic, it should be increasing. Which is another sign of Big Boy activity in the market. And as has been noted before, generally speaking increasing volume is bullish on up bars and bearish on down bars. It's when the volume gets excessive that this relationship changes.

7. When volume is not climatic, MFI (Market Facilitation Index) should be increasing. This is another way of saying there should be "ease of movement of price".

Take another look at the chart from the previous post. You will notice that the volume on the candle marked "Effort to Fall" is both large and dark blue. Dark blue means it is climatic action (as defined by better volume: highest volume x range in the last 20 intervals). Something must be going on in a bar like that. Range increasing, volume increasing, closing on its lows. Opening near its highs. Making a lower low and not a higher high than the previous bar. This candle is indicative of BB activity.

Simply, this is candle represents a key change in the supply/demand dynamic in the market. The area to be most concerned with will be the area of the body (open to close) of the interval. In this instance we can see something very clearly.

Where there were once sellers creating an Effort to Fall, we now see no sellers as prices close down on volume less than the previous two bars for three consecutive periods. The supply/demand dynamic has changed.

With all that said, one can come up with his or her own rules to define the significant EB. One does not have to use 7 or 4. I explained the logic behind both of these numbers but any number greater than 4 would work. One can simply look for EB4s, for example, that are 1 of the 5 bars in a fractal pattern. The real key comes from the relationship of the previous and immediately following periods. News events are another way. EB7s with the proper price action prior and after that are the direct result of a news event or data point release (like GDP) also define significant changes in the supply/demand dynamic and therefore ultimately become idea areas to look for entry signals regardless of method used to enter. But isn't that something we already know from VSA?

I'm pretty tired tonight, so sorry if I haven't answered the question. I would be glad to revisit it again later.

Sorry for my absence in the thread and chat lately. Chuck and I have been hammering out the finishing touches on the VSA trainer. We just have a couple of odds and ends to tie up and she's ready for beta testing.

If you haven't signed up yet for beta you can do so from the chat (link on first post in resources section)

Hope everyone has a great weekend.

Hi Hiddengap thanks for your post.. but bit confused what do u mean b last 7 periods..
thanks

If I may?... The last 7 periods are the last 7 bars/candles on whatever time-frame you are looking at.


Magnus

...show me, are you real or not.

see the chart...

eur futures.

5 min.

lumesh,

I'm admittedly not too great at explaining stuff (and certainly not proficient at VSA).

However, the bars you have marked as No Demand I don't think are.

As far as I am aware, No Demand must have a narrow range and closing mid to low of bar. These bars don't fill these criteria.

Two points:

- The bars prior to the bars you mark as No Demand are falling on decreasing volume - this is probably what sticks out at me the most here.

- Also, the last bar on the chart is an up bar on increasing volume.

If sellers were coming into the market then these two points invalidate that.


If I've got stuff wrong here I hope someone will put me right.


Magnus


EDIT:

Looking further at your chart. The bars you have marked as 'first signs of weakness' are actually the opposite. They are signs of strength in this case as the bars are closing at [or near] their highs and the subsequent bars are closing up - this confirms a lack of sellers coming in (i.e. mainly buyers in there).

I also watch the futures and watched this happening in real-time today.