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Trade Using VSA (Volume Spread Analysis)

  • #3,601
  • Oct 1, 2009 7:58pm Oct 1, 2009 7:58pm
Quoting Dr.Geppynius
S&P500 30 point drop today! i was predicting the wrong move, sincei was expecting the major drop later. i was biased bullish, when a massive 30 point drop occured that's why predicting is worthless, just trading the charts

nevertheless, i took the time to draw some on a 60m es chart for you.
DR g ...thanks for the chart. i will put it in my new EA .. you know the one !!! lol
Blogging daily now at www.volume.zone
  • #3,602
  • Oct 2, 2009 1:56am Oct 2, 2009 1:56am
Quoting Srikanth
Could anybody explain me what is the meaning of this bar in the below chart?
Hi,

that is to me a Stopping Volume. You should expect the market being knocked at least sideways and, if the Stopping Volume was successful, even rise - after a bit of consolidation and potential revisit of the low area on Volume ideally less than this.
You could look for a down bar accompanied by much less Volume than this one is.

Good trading!
Kind Regards zol
  • #3,603
  • Oct 2, 2009 2:48am Oct 2, 2009 2:48am
Quoting Srikanth
Could anybody explain me what is the meaning of this bar in the below chart?
Quoting zoli
Hi,

that is to me a Stopping Volume. You should expect the market being knocked at least sideways and, if the Stopping Volume was successful, even rise - after a bit of consolidation and potential revisit of the low area on Volume ideally less than this.
You could look for a down bar accompanied by much less Volume than this one is.

Good trading!

Yes, this was a nice example of Stopping Volume. Demand is swamping supply on this candle.

A few candles later, there is a Shake Out. Notice that the low of the Shake Out dips into the lower shadow of the Stopping Volume candle and then gets rejected. Volume is increasing, but is much lower than the Stopping Volume candle.
Attached Image (click to enlarge)
Click to Enlarge Name: Current2.png Size: 86 KB
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #3,604
  • Edited 4:08am Oct 2, 2009 2:54am | Edited 4:08am
Dr.G.,
there was up bar on high volume after that last down bar which was on high vol and wide spread. That folowing upbar would tell me that this downmove was not real and i would look only longs..
How You look to it ?

Also, other expierenced traders could answer to my question.

Thank You.

Best,
Tom

Quoting Dr.Geppynius
S&P500 30 point drop today! i was predicting the wrong move, sincei was expecting the major drop later. i was biased bullish, when a massive 30 point drop occured that's why predicting is worthless, just trading the charts

nevertheless, i took the time to draw some on a 60m es chart for you.
  • #3,605
  • Oct 2, 2009 3:20am Oct 2, 2009 3:20am
Hi all,

today was a really nice opportunity for a short trade at Open of Frankfurt and London. Good day so far for U traders!

Attached Image (click to enlarge)
Click to Enlarge Name: VSA_156.gif Size: 51 KB
Kind Regards zol
  • #3,606
  • Oct 2, 2009 3:27am Oct 2, 2009 3:27am
Guys,

Anyone knows what the story is with the Volume on the 60m on the Ninjatrader platform? How to do it right?


Attached Image (click to enlarge)
Click to Enlarge Name: VSA_157.gif Size: 60 KB
Kind Regards zol
  • #3,607
  • Oct 2, 2009 4:16am Oct 2, 2009 4:16am
Hidden Gap,

You said that Tom Williams is using 2 bar close technicue for exiting..
I have question regarding it.

Lets say, we got long... Volume 10.

First bar down - close at the lows, lower volume ( Volume 8 )

Second bar - close at the lows, lower volume ( Volume 7 )

Third bar - close in the midle and high volume ( Volume 15 )

My question is - Third bar mainly would suggest to me that there was demand, but from Tom Williams trailing method, it also says we need to close this long trade because we got 3 down closes..


Thanks.

Best,
Tom
  • #3,608
  • Oct 2, 2009 4:26am Oct 2, 2009 4:26am
Dr. Gep,

Its the same question to You

You said about 1 candle stop.

Lets say we saw UP bar, wide spread, close of the high... Next bar down.. Then 2 up bars un low volume... Nd. We enter short.

So, if next candle will be Up, You will exit.. BUT.. What if next candle will be on low volume ? OR next candle will be UT ? Will You exit also no matter what ?

Thank You.

Best,
Tom
  • #3,609
  • Oct 2, 2009 11:52am Oct 2, 2009 11:52am
Everyone, how was this NFP trading day ? How was week ?

For me it was good WITH a bit of luck in this week ( i dont like luck in fx.. ).


Have a nice weekend everyone

Best,
Tom
  • #3,610
  • Oct 2, 2009 12:50pm Oct 2, 2009 12:50pm
I gave up VSA because being a newbie my achievement is BE or really slow gains so far.
It is disappointing because I have been learning to trade for 5-6 months already! This should be easy and fun, after 5-6 months i should b rich by now, yet I am having a hard time.
But I found this beauty here:

Inserted Video


This solves everything. All I need to do to get ultra rich is to buy this thing, plug it on and watch the money come.

PS: For guys who are serious: I apologize for the fun, could not resist. For other newbies who might believe me: Please note I am not being serious.

Have a great weekend!
Kind Regards zol
  • #3,611
  • Oct 2, 2009 1:12pm Oct 2, 2009 1:12pm
lol...what a muppet.
  • #3,612
  • Oct 2, 2009 1:17pm Oct 2, 2009 1:17pm
Quoting Barry Cade
Thx Chief. Very useful. Ive saved it for reference.
hi Barry, good to see you in this nice thread.
by the way how to save a post..can any body tell?
  • #3,613
  • Oct 2, 2009 1:22pm Oct 2, 2009 1:22pm
Quoting tfflyer
Everyone, how was this NFP trading day ? How was week ?

For me it was good WITH a bit of luck in this week ( i dont like luck in fx.. ).


Have a nice weekend everyone

Best,
Tom
NFP was nice(very nice .. traded after the news ).
i dont like luck in forex also.
happy weekend for all.
  • #3,614
  • Oct 2, 2009 1:33pm Oct 2, 2009 1:33pm
Today I have seen differences in the Interbank FX data on MT4 in comparison with Ninja Trader with eSignal data feed. The candle previous to the big drop at 12:30 GMT was an up one on my Ninja Trader and was a down one on MT4 (IBFX), the difference was about five pips on the close price.

Now, looking at my dbFX demo account I have seen it was an up one too so I suppose IBFX data is not just exact that I supposed it was.
You make money by waiting, not by trading.
  • #3,615
  • Oct 2, 2009 3:11pm Oct 2, 2009 3:11pm
Hello to all contributrors of that excellent thread. I have few questions. Is it possible to have Ninja trader platform demo or for free and how long? Does Ninja trader platform has depth of market and volume in mean of levels too, not just time? Does it has fx instruments? If all those anwers are affirmative, how to get that platform?
Thanks a lot!
Best ragards!
  • #3,616
  • Oct 2, 2009 4:56pm Oct 2, 2009 4:56pm
Hey fxspain,
please post picture for esignal and ibfx for comparing.

Thanks !

Best,
Tom

Quoting fxspain
Today I have seen differences in the Interbank FX data on MT4 in comparison with Ninja Trader with eSignal data feed. The candle previous to the big drop at 12:30 GMT was an up one on my Ninja Trader and was a down one on MT4 (IBFX), the difference was about five pips on the close price.

Now, looking at my dbFX demo account I have seen it was an up one too so I suppose IBFX data is not just exact that I supposed it was.
  • #3,617
  • Oct 2, 2009 6:13pm Oct 2, 2009 6:13pm
Quoting tfflyer
Hidden Gap,

You said that Tom Williams is using 2 bar close technicue for exiting..
I have question regarding it.

Lets say, we got long... Volume 10.

First bar down - close at the lows, lower volume ( Volume 8 )

Second bar - close at the lows, lower volume ( Volume 7 )

Third bar - close in the midle and high volume ( Volume 15 )

My question is - Third bar mainly would suggest to me that there was demand, but from Tom Williams trailing method, it also says we need to close this long trade because we got 3 down closes.....
Good question Tfflyer. I can always count on you to keep things interesting.

As I said, I do not use this particular technique. The way I understand it, the focus is on the close and not the volume. That is to say, if you are short and the third close is a narrow range up bar on volume less than the previous two candles, you would exit. Not withstanding the fact that this candle is No Demand.

As a trader becomes more comfortable with volume, I would make sense that exception would be made when the volume is "screaming" stay in the trade.

In your example, the third bar could indeed be a sign of further strength. If you recognize this, then maybe you don't exit the entire position, but only a partial.

The good Dr. mentioned that he would exit prior to the formation of all the up candles is he saw climatic action. So if one does have a certain level of understanding, deviations of the idea are to be expected.
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #3,618
  • Oct 2, 2009 6:47pm Oct 2, 2009 6:47pm
The last time I made a post like this, it set off a firestorm.

I hope we don't get a repeat.

News trading has a special place in VSA. However, VSA is not about trading the news. It is about a fundamental concept. Indeed, a "first principle".

The Smart Money uses news releases to take positions against the herd. They need such news releases because the usually increased volume surrounding them allows the SM to get into a positions cheaply. Because the Sm trades in such size, they run the risk of bidding up (or down) price against themselves on a typical candle.

Therefore, a news release is the ideal opportunity for the SM to show their true intentions and is almost always a key change in the supply/demand dynamic.

Currencies are especially good in this way.

Take a look at the chart below:

On the NFP report, we see ultra high volume on a down candle closing off its low with the next candle up. This is clear strength. The report was worse than "expected" and would seem to be bearish. We can debate what the true Smart Money knew and when they knew it, but the candle speaks for itself- THEY WERE BUYING.

The next candle is on volume less than the previous two and the range is increasing. The volume should not fool you. We have just seen strength, this can't be a no demand worth shorting. It represents a pause. The SM is taking a breath if you will.
Then we get the candles in the yellow ellipse.

The first candle is a narrower range candle on volume less than the previous two candles and a slightly lower close. This is a Test. The aggressive trader could be looking to get long on a breach of the high on the next interval.

The next interval makes a slightly higher high, which may bring in the aggressive. However, the interval is down. The down close does not confirm the test. But check out the volume. It is lower and less than the previous two candles. This is No Selling pressure.

The third candle confirms the Test and the No Selling Pressure candles. Remember, for a Test to be valid we need 1 of the next 2 candles to close higher. This candle in conjunction with the prior candle forms a 2 candle reversal pattern. Again, we are seeing bullish price action. Now we can look to get long on a breach of the high of this candle.

For those who need more proof, we do get a nice Test bar where a reasonable entry could take place. Note how the candle marked Pt1 is actually a No Buying Pressure candle as it has an increasing range on volume less than the previous two and closes up and near its high. Now note that the Test is testing the validity of this candle. If there was no buying pressure, than there must a reason. That reason might be residual supply in the market. So the SM tests for that residual supply and finds none. Off to the races.

Reaction to Action.
The news candle is the action. The reaction is a rejection of lower prices as the SM was buying into the news.
Attached Image (click to enlarge)
Click to Enlarge Name: Current2.png Size: 97 KB
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #3,619
  • Edited 11:10pm Oct 2, 2009 7:23pm | Edited 11:10pm
Quoting emios
I for one, follow this thread. I use methods that are similar to that of HG, so I certainly am not unhappy with this thread in that sense. Some people have already noticed that the volume provided with mt4 on the ibfx platform has been tampered with. That was our free platform of choice. No many people have no choice but to spend money on an expensive feed, like esignal.

I think that the topic should be continued, but in a more secure environment, such as in the chatroom.
Dude,
Try looking at fxcm's mt4 volume.

I compared it to trade-guider with e-signal data feed. The volume bar relationships on mt4 bar to bar were spot on with that of trade-guider.
I looked at 3 different time frames over a 3 day period.
m1/m5/ and m30
  • #3,620
  • Oct 2, 2009 7:54pm Oct 2, 2009 7:54pm
Quoting chief1oar
Found this to be a very interesting study in price action as it relates to previous high volume zones.

I find it to be very valuable when analyzing charts.

Thought this might help someone.

Sincerely,

Chief

P.S. AUS the same also
So interesting, and so clearly laid out.
Thankyou for taking time to show this.
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