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Trade Using VSA (Volume Spread Analysis)

  • #3,381
  • Sep 18, 2009 5:14pm Sep 18, 2009 5:14pm
dx .. for all my fellow vsa'ers

also on wave 5 of my new best friend elliot wave , on weekly ...

eu 1000 pips drop ?
gu 1.5500 ?
gold head fake ? or does gold and usd head up meaning market tankage

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Blogging daily now at www.volume.zone
  • #3,382
  • Sep 19, 2009 12:05am Sep 19, 2009 12:05am
Quoting malcolmb14
DR G was and still is my mentor and friend .... awesome trader and knows this VSA stuff inside and out.

He is a busy guy..so no time to post. Also does not suffer fools well and ff is abundant with those lol
Hi Malc
thanks to DR G if he is your mentor(I only heard about him from your response to my post before)
thankyou very much(our Dean)
thanks very much for HG(our best teacher).
about your post of eu and gu , its very generous from you.
(you are spoiling us man!...hehe)
  • #3,383
  • Sep 19, 2009 12:41am Sep 19, 2009 12:41am
Quoting HiddenGap
I was afraid you would say this.

Expansion body analysis is about an understanding of the price action but generally speaking, it does not dictate trade direction. So a white candle (open<close) does not necessarily mean you look to take longs. And a dark candle (open>close) does not necessarily mean you look to take shorts.

Simply, the zones themselves are neither bullish nor bearish. A zone may be created after bullish price continuation price action, but the zone itself in not necessarily bullish.

Although expansion body analysis is independent...

Hello Dear HiddenGap and thanks for this great post. This post, as all others you write, is very helpful in using WRB as a great tooL for spotting great S/R zones that are more in relation with what price is doing.

On the attached chart, the zone that you see, is the exact same zone that you posted in the quote above. Price did travelled down through that zone and we did get close inside the zone and close below the zone. The only missing equation for negating the zone was a close above the zone which we got after the long trade being already initiated.

On the attached chart:

1. We get a down candle closing on the low on relatively high volume but not ultra hight volume. This is and effort to fall candle. This is a WRB7 or EB7. This candle tell us to be alert as there could be a change in the supply/demand dynamic in the future. Potential sign of weakness. However, next candle close off its low and with higher volume. This effort to fall is not backed up with the corresponding result. First warning of potential change in the current downtrend.

2. This candle closed on the low and this time volume is very high. We could certainely be in the presence of stopping volume. Also, again, this candle is a WRB7 or EB7. Again, another sign that supply/demand dynamic could be changing. Potential sign of strenght here and second warning of potiental change in the current down trend.

3. This candle close on the upper portion of its range and volume is also very high but less then the stopping volume candle. We are in the presence of a shakeout and this gives us a 3rd warning of a change in the supply/demand dynamic of the current down trend.

4. Candle tried to go up but closed lower then previous candle close and closed in the lower portion of its range. Volume is less than previous 2 candle. Here, we have no supply and a test. This is our confirmation that sellers are no more interested in the previous current down trend and a confirmation candle to go long on open of next candle.

5. This is our entry candle after the no supply/test candle.


What does this chart and VSA teach us? It tells us that using previous WRB as a S/R zone is a great idea as this zone does really represent a change in the supply/demand dynamic. Looking for a VSA setup inside that zone is a great idea as we will be looking to trade in a zone where the market did try to tell us (when that WRB was formed) that this zone could (in the future) shows an important area that will be revisited by price and a new decision of either continuing the current trend direction or changing it will be made.

I am all saying that because, after having tried to study all kind of support and resistence technics, using the WRB S/R zone is the one that make most sense to me.

Also, HiddenGap, I do agree that once we get a close above, inside and below the zone, the zone is not really any more valid as price did showed us what was its intend when entering, staying and exiting that zone.

Hope that post was helpful.

Sincerely

Shreem
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  • #3,384
  • Edited 3:10am Sep 19, 2009 2:31am | Edited 3:10am
Quoting malcolmb14
DR G was and still is my mentor and friend .... awesome trader and knows this VSA stuff inside and out.

He is a busy guy..so no time to post. Also does not suffer fools well and ff is abundant with those lol
We all have to start somewhere I suppose.
Kind Regards zol
  • #3,385
  • Sep 19, 2009 4:12am Sep 19, 2009 4:12am
Nice post Shreem.

I have attached a shot of what I saw. First, you are correct about that zone. It is not shown on my chart as it is closed and I do not remember the numbers. There was another zone that overlapped it and that zone remains open.

There was a nice short prior to the trade you showed.

Take a look at the chart. Zones 1,2, and 3 (shaded green areas) are closed as they all have closes below, closes above and action thru them. Zone #2 is a very interesting zone. We see our low volume signal within the range. of a high (climatic) volume candle. Of course for me it is not the range but rather the body that is key. We have weakness in the background which started with a climatic up candle closing off its high with the next bar down. Things get interesting with the candle just prior to the first effort to fall. It is either a no demand or a failed test. Either way it speaks of weakness and is immediately followed by a bearish candle in the form of effort to fall.

3 down (and dark) candles later we see another effort to fall candle on climatic volume. While the close is off the low, the next candle is down. Having seen 4 down (and dark) candles, the price action is showing strong downside momentum. This is more background weakness. Zone #2 is created by this effort candle. Within the zone we see an Up Thrust followed shortly by an NR7 up candle closing near the low on volume less than the previous two candles. No Demand.

How an individual trader manages a trade is up to him or her. So some might be out by the time the long trades sets up (yours or mine). Some might choose to stop and reverse. Some might simply use the long signal to exit the short.

The long entry shown on my chart is a bit aggressive for many. In truth I prefer your entry. As luck would have it, your entry doesn't set up on my platform as the test is not less than the previous two candles.

The aggressive entry was aided by recognition of a candle pattern formation. That's one of the "powers" of Supply/Demand Delta Zones. They are ideal places to look for trade set ups whatever a trader's trade methodology may be.

Going back to Zone #2, notice the action as price re-entered the zone from below (right side of chart). Of course Supply/Demand Delta Zones don't always act like this, but it is clear that something changed in this area when the effort candle first appeared.
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Without VSA, you're playing checkers while the Smart Money plays chess.
  • #3,386
  • Sep 19, 2009 5:23am Sep 19, 2009 5:23am
Here's a couple of trades I took yesterday on GJ.
This was particularly nice because it had VERY nice confluence with Fibs.
I dont use them for entry but I do use them as potential exits.
The low used was the last low seen.
Probably many of you spotted this trade also due to the declining volume on the approach to the resistance line.

 

  1. Volume declining as PA approaches resistance
  2. Two bar upthrust. Yes it was an upbar with high volume but the next bar was down, indicating the upbar contained selling.
  3. I took a short after I could see a couple of no demands.
  4. I covered at 50% Fib. I didnt do it perfectly though... I took 50% profit at 50% Fib and closed the other half at the close.
  5. Again the PA approaches the resistance line. I shorted here but its not a VSA trade; the volume is very similar for all three bars. I think in candlestick terms its a evening star?

The PA went all the way to 100%!
But to be honest I closed everything at 38.2% after chickening out at what looked like support...
Theres always next time...

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  • #3,387
  • Sep 19, 2009 9:04am Sep 19, 2009 9:04am
I have been working on learning EW .. wow is all i can say been knocking both gj and gu aroud all week (most posts in asulanos threads on targets) , using ew as potential reversal spots and vsa to see if the spots are true or not

any way here is a nice set up for gu for Friday that netted me 160 pip

1.6240 was wave 5 down of the 1st move , now looking for retrace no higher than 1.6400 if this happens it is a correction ...next wave could be 600 pip down in 5 waves .. 1.5800

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  • #3,388
  • Sep 19, 2009 9:56am Sep 19, 2009 9:56am
Quoting HiddenGap
Nice post Shreem.

I have attached a shot of what I saw. First, you are correct about that zone. It is not shown on my chart as it is closed and I do not remember the numbers. There was another zone that overlapped it and that zone remains open.

There was a nice short prior to the trade you showed.

Take a look at the chart. Zones 1,2, and 3 (shaded green areas) are closed as they all have closes below, closes above and action thru them. Zone #2 is a very interesting zone. We see our low volume signal within the range. of a high (climatic) volume...

Hello HiddenGap. Thanks for your post. Another nice one! Yep, do certainely agree with you that looking for trade setup (be it VSA setup or candle formation) in a WRB S/R zone is the way to go.

In fact, your long entry is also a great one. Tom Willams, by his entry style, would certainely have entered near there as he like entry around the bottom of a stopping volume. Of course, for that kind of entry, only a true VSA master, as Tom is, would be confortable to do it.

But I do like your white hammer pattern formation entry too eventhough it is not pure VSA. In fact, this entry would make you entered earlier and the test after would be a nice confirmation of the established trade to the long side.

As time will go by, will try to post more and more VSA setups in WRB S/R zones as I trade them during the next few weeks as I am off works for another 12 weeks and have lots of time to trade those setups.

Again, HiddenGap, thanks a lot for your contribution to this forum as it is much appreciated by many which, of course, include me.

Sincerely

Shreem
  • #3,389
  • Sep 19, 2009 12:44pm Sep 19, 2009 12:44pm
Quoting malcolmb14
I have been working on learning EW .. wow is all i can say been knocking both gj and gu aroud all week (most posts in asulanos threads on targets) , using ew as potential reversal spots and vsa to see if the spots are true or not.......
An even more acurate malcolmb .

Save some pips for the rest of us..........
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #3,390
  • Sep 21, 2009 3:53am Sep 21, 2009 3:53am
Quoting malcolmb14
I have been working on learning EW .. wow is all i can say been knocking both gj and gu aroud all week (most posts in asulanos threads on targets) , using ew as potential reversal spots and vsa to see if the spots are true or not

any way here is a nice set up for gu for Friday that netted me 160 pip

1.6240 was wave 5 down of the 1st move , now looking for retrace no higher than 1.6400 if this happens it is a correction ...next wave could be 600 pip down in 5 waves .. 1.5800

Attachment
be careful with EW. its not the best(you will discover that after years)
hope for you success.
  • #3,391
  • Edited 5:02am Sep 21, 2009 4:45am | Edited 5:02am
If it always worked, we would all be rich.

Pretty nice set up here. The result, not so much.

Take a look at the chart below.

A: Climatic Action down candle closing in the upper portion of its range. The high volume and close hint that buyers are stepping in. When strength appears it appears on down candles.

B: Volume falls off a bit as this candle closes down. The close is in the lower portion of the range, but VSA teaches us that in general decreasing volume on down candles is bullish.

C: Interesting candle here. We make a lower low and not a higher high than the previous candle. The volume is less than the previous two candles and the close is almost in the middle of the range. Making a lower low and then closing off the low shows some demand entering to support price.

D: No Selling Pressure (NSP). Wide spread down candle closing on the low but with volume less than the previous two candles. If the SM was bearish then the volume should be higher. 80-90% of the volume bar represents the SM and from the volume here we don't see their active participation. If they are not interested in lower prices, they might be interested in higher prices.

E: This is Stopping volume. Wide spread candle on climatic volume closing near its high. The long shadow shows Sm support coming in and demand swamping supply.
The signs of strength seem to be in place.

F: Key Reversal Bar (KRB). Here again we see a candle make a lower low than the previous candle, but this one closes near its high. It also opens higher than the previous close and closes higher than it opens. Note also that the low doesn't trade into the shadow of our stopping volume candle. Looks like a shake out.

We can look to put a long entry on just above the high of this candle and a stop loss a couple of pips below it. The very next candle brings us into the market as it makes a higher high. It also closes down. However, the volume is less than the previous two candles so this looks like no supply. The candle after this, closes up on less volume on a narrower range. This is no demand. Not what we want to see.

Eventually, price moves down and stops us out.

***Edit*****
Please feel free to comment on what you see and why you would or would not have taken this trade.
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Without VSA, you're playing checkers while the Smart Money plays chess.
  • #3,392
  • Sep 21, 2009 4:53am Sep 21, 2009 4:53am
Quoting HiddenGap
I received a video message from Gavin Holmes yesterday about a trading contest. In that video he specifically references this thread. I think that is a testament to the work of Shamus, Malcolmb, Yuppie and all the other great posters here. Good job guys.......Big Brother is watching.
Thanks for informing us.

Quoting Dr.Geppynius
how come i did not receive that videomessage?
Sir Dr.Geppynius & others,
if interested, this was it: (approx. 2-3mins. long)
Gavin's video message

Quoting adriann
i received video message too. but where he refrences this tread ???
he mentioned it right at the last part of the vid.message.
(".....'chat room'.... ForexFactory.com.....")
  • #3,393
  • Sep 21, 2009 5:10am Sep 21, 2009 5:10am
HiddenGap,
questions about your recent post: (others can comment too )

VSA wise,
-is your long position the best place to enter a buy? how many pips above the KRB candle was your long entry?
-at least two entry options, are above the a. white bar 2 bars prior KRB & b. the white bar 3 bars prior A. aren't these two better entry options?
-reviewing that particular chart & trade, have u seen a better place to enter long? or perhaps u realized u should've not entered a long position at all?

Thanks!
  • #3,394
  • Sep 21, 2009 10:42am Sep 21, 2009 10:42am
Pardon, just in case this has been mentioned before...

just saw the eSignal's 200+ Contributors List (found in the middle to the bottom part of the page)
  • #3,395
  • Sep 21, 2009 11:10am Sep 21, 2009 11:10am
Supreme - Link is opening blank page.


Best,
Tom
  • #3,396
  • Sep 21, 2009 11:50am Sep 21, 2009 11:50am
tfflyer/Tom,
No, it's not.
I immediately edited the link, so it's working already

btw, here it is again
List
  • #3,397
  • Sep 21, 2009 2:25pm Sep 21, 2009 2:25pm
Hi Malcomb,
i remember You saying that You exit Your position, if Your are not in direction of Your position within 2 bars - Are You using the same strategy also now ?


Thank You.

Best,
Tom
  • #3,398
  • Sep 21, 2009 2:50pm Sep 21, 2009 2:50pm
Quoting rockk
be careful with EW. its not the best(you will discover that after years)
hope for you success.
ew is suggestive of targetsanmd why it does not work on its own ...and I have founbd , after reading much on ew, that these tragets are based on fib reatracements and fib exotensions based on prior move.

The beauty with VSA is that we can see if the fib expansion or reatrcements are going to hold

for example a very sexy trade off the 78.6 fe....

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Blogging daily now at www.volume.zone
  • #3,399
  • Sep 21, 2009 8:07pm Sep 21, 2009 8:07pm
Quoting malcolmb14
ew is suggestive of targetsanmd why it does not work on its own ...and I have founbd , after reading much on ew, that these tragets are based on fib reatracements and fib exotensions based on prior move.

The beauty with VSA is that we can see if the fib expansion or reatrcements are going to hold

for example a very sexy trade off the 78.6 fe....

Attachment
the problem of EW is relabling,and re relabling of the waves.
i was a fan of ew long time ago , i read tons about it.not only this but i was subscriber of their most known official site E.W.I(E.W.International)long time ago( i dont remember who was the head at that time). but now Prechter is the one.there was quite of drawbacks about the forcasts.the difference between ew and fib is that when you draw a fib it will never change after days or weeks or monthes, but if you label a wave you can relable and re relable it after sometime.the conclusion i reached about it is to use the most simple form of it as counts 5and 3 ees.
as one known syndicate trader said.
if one want to stick to it , stop loss will be huge(specially on larger TF) and take very long time to know that the count is not right and decide to change it.
prechter is genious and his intimate stedents are smart. one should be like him to be consistantly profitable over years(in a contest he turned 10.000 into one mill. in one year using only ew as he claimed.)
  • #3,400
  • Sep 21, 2009 8:28pm Sep 21, 2009 8:28pm
[quote=rockk;3078259]the problem of EW is relabling,and re relabling of the waves.
i was a fan of ew long time ago , i read tons about it.not only this but i was subscriber of their most known official site E.W.I(E.W.International)long time ago( i dont remember who was the head at that time). but now Prechter is the one.
adding,not padding, to my previous post. as we are talking about the methods we use in trading,i found that vsa is very nice,as it tries to trace what SM or BBs are doing.
they dont have to be right, as humans can make mistakes ,they also do. but the beauty of vsa is you are working as if you are undecover of them, they are leading you or protecting you. you enter when or after you think they entered and exite when you think they are going to leave or already left. its as if you are trading covered by their money wheather they are right or wrong.
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