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Trade Using VSA (Volume Spread Analysis)

  • #4,141
  • Edited 11:21am Nov 20, 2009 9:23am | Edited 11:21am
Hello ...

I am new to this forum, but I have been studying this thread for a couple of days. This thread is so enormous that I might have missed the answer to my question, so my apologies in advance if this was discussed before.

I have been taking a look at TradeGuider, and my main question is: which method do they use to divide the spread/range, and the volume, into ...

zerro, unarrow, vnarrow, narrow, avg, wide, vwide, uwide ???

I have been testing dividing the median over 20 bars into zones and making a range with multiple zones stacked up, but my calculated zone-range often doesn't match up with the zone descriptions TG is giving for the same bars.

I have been playing around with Fibonacci levels, but I don't seem to it right with that as well.

What do you think is the best method ?


Edit: Second question ...

I realize this is a forex forum, but this is the biggest thread I have found on the topic.

For stock traders: the big institutions are probably not trading in many stocks.
I was reading in some messages that VSA could give misleading signals on low volume stocks.

Did some one here ever thought of adding VSA signals of the NYSE (price vs. $UVOL, $DVOL, $ADVN, $DECN)
to stock charts to know when big institutions are active in the market, either on the up side or
the down side ???

Take a look at this video. I expect eotpro is using NYSE VSA data in their indicators to know when the
big institutions are active. http://eotpro.typepad.com/my_weblog/...umb-money.html

I am not a forex trader, but I assume high NYSE market activity (manipulation) has an effect on
forex markets as well??? Perhaps this could give early warning signals ???

Thanks in advance for your help and replies.

- Marco.
  • #4,142
  • Nov 20, 2009 10:45am Nov 20, 2009 10:45am
Quoting giraia_br
like in his example, the candle is a down bar on great volume but not so great. It has less volume than bar 1 for example. Then i saw a ND whitin the range of the big bar and took a short after the down close in the bar after the ND.

before read this post i would wait a test to go long.

bar 4 is a squat, right? Should i close the short there? And after bar 5, wich is a test? Or in the bar after that, wich confirms the test? Or sould i stay in the trade until the high of the bar 2 is violated?


any comments would be appreciated
Hi,
I have been using VSA for a few weeks. It is not my primary method of trading and I only use it to complement my other method.

If my understanding of VSA is correct, No demand occurring at the end of an uptrend would signal weakness in the uptrend and it usually occurs after some up bars going up on reduced volume.

In your screenshot, as volume increases (4 compared to 3,2 and 1), price managed to close near the high of the candle. To me, it looks like a "No supply" test. If after the increased volume, price is not falling, then it means that there is buying strength.

Again, my knowledge of volume/VSA is only few weeks old. I am posting this reply to see if my thought is valid. I'd wait to see what the experts think.

Either I'm right or I can increase my understanding of VSA (I'd not say I'm wrong ).
  • #4,143
  • Nov 20, 2009 11:38am Nov 20, 2009 11:38am
Quoting marcovth
Hello ...

I am new to this forum, but I have been studying this thread for a couple of days. This thread is so enormous that I might have missed the answer to my question, so my apologies in advance if this was discussed before.

I have been taking a look at TradeGuider, and my main question is: which method do they use to divide the spread/range, and the volume, into ...

zerro, unarrow, vnarrow, narrow, avg, wide, vwide, uwide ???

I have been testing dividing the median over 20 bars into zones and making a range with multiple zones stacked up,...
I also am a VSA novice, but a couple of comments for what they're worth. I presume you have read "Master the Markets"? If you haven't, then by all means do, and that should answer most questions, but if you have, then I'm wondering what it is you're talking about really. "Divide the spread"? "Dividing the median over 20 bars into zones"?? With all due respect, I have no idea what you're talking about.

I don't remember reading about those kinds of terms in MTM. Like I said I'm new, so it's possible I missed something, but even in reading the thread I've not heard anyone talking about that kind of stuff or any of those terms. So possibly it will help to read a bit more on the nuts and bolts of VSA?

A shorter, easier, and uncopyrighted VSA read is VSA Basics (attached). It's posted other places in the thread, but I attached here also. Maybe that will answer some of your questions.

If I'm way off base here, then my apologies, but honestly I'm just not really sure what you are asking above...
Attached File(s)
File Type: pdf VSA BASICS[1].pdf   665 KB | 1,399 downloads
  • #4,144
  • Nov 20, 2009 12:47pm Nov 20, 2009 12:47pm
Hello ...

Thanks for the VSA Basics guide. It's one I haven't seen yet. I have a lot of reading to do. Is the script used in this guide available?


I am calling [ unarrow, vnarrow, narrow, avg, wide, vwide, uwide ] zones.
If the spread falls within a zone, you can give it a name, e.g. spread=wide.

My question was, how do you determine the boundaries of each zone?

I am trying to write a TG-like VSA script for ThinkOrSwim

I have tested the following, which seems to work reasonably well, it's getting very similar to what TG is showing me.

- Calculate the 30 moving-Median of the spreads == Fibonacci 50%.
- Then I calculate boundary for ...
* Fibonacci 178.6% == vwide=(median*178.6)/50
* Fibonacci 138.2% == wide=(median*138.2)/50
* Fibonacci 61.8% == average=(median*61.8)/50
* Fibonacci 38.2% == narrow=(median*38.2)/50
* Fibonacci 23.6% == vnarrow=(median*23.6)/50
* Fibonacci 11.8% == unarrow=(median*11.8)/50

if (spread == 0){ zone="zero"; AddSpread=false;
} else if (spread < unarrow) { zone="Unarrow";
} else if (spread < vnarrow) { zone="Vnarrow";
} else if (spread < narrow) { zone="Narrow";
} else if (spread < average) { zone="Average";
} else if (spread < wide) { zone="Wide";
} else if (spread < vwide) { zone="Vwide";
} else { zone="Uwide"; AddSpread=false;
}

if(AddSpread) {
// Add the current spread to the array to calculate the 30
moving-Median of the spreads for the next bar.
} else {
// Don't add a zero-spread or a ultra-wide spread to calculate the 30
moving-Median of the spreads for the next bar.
}

To make a VSA script, you have to describe the status of the ...
- Bar [down,up,GapDown,GapUp]
- Close [low,high,middle, etc?]
- Volume [zero, unarrow, vnarrow, narrow, avg, wide, vwide, uwide]
- spread [zero, unarrow, vnarrow, narrow, avg, wide, vwide, uwide]
- change [zero, unarrow, vnarrow, narrow, avg, wide, vwide, uwide]

With different combinations of these (combined with the status
of previous bars) you can make a ton of rules for when to show signals.

Here are many of the signals described.
http://www.forexfactory.com/attachme...02009%208:53am

But the initial challenge is to find the correct boundaries that determines
the status of e.g. the spread of a bar.

I hope this explains it well?
  • #4,145
  • Nov 20, 2009 1:53pm Nov 20, 2009 1:53pm
Quoting marcovth
Hello ...

Thanks for the VSA Basics guide. It's one I haven't seen yet. I have a lot of reading to do. Is the script used in this guide available?


I am calling [ unarrow, vnarrow, narrow, avg, wide, vwide, uwide ] zones.
If the spread falls within a zone, you can give it a name, e.g. spread=wide.

My question was, how do you determine the boundaries of each zone?

I am trying to write a TG-like VSA script for ThinkOrSwim

I have tested the following, which seems to work reasonably well, it's getting very similar to what TG is showing me.

- Calculate...
Ok, sounds like you are a programmer. There are several posters on this thread that have programmed various indicators and such, but I'm not versed in that area myself.

I'm actually doing my best to "trade naked" with no indicators. But as for the "zones" for spreads, I'm not sure there are set parameters for determining what is narrow, very narrow, etc., because as I understand it, a spread being narrow, wide, etc. is relative to other bars in the background, rather than a set value.

I doubt that's helpful, but you can click the paperclip at upper right to see all of the indicators posted in the thread, and maybe you could ask one of those guys who did the coding...
  • #4,146
  • Nov 20, 2009 2:04pm Nov 20, 2009 2:04pm
vsa sucks .... go not believe everything you read that is works ...lol

hope you all have a great weekend ... what a week , love it when trends form and we can just play reatrces and no demand bars on 15 min charts
Blogging daily now at www.volume.zone
  • #4,147
  • Nov 20, 2009 4:45pm Nov 20, 2009 4:45pm
Was nice week for VSA student too - me

p.s.

To get with trend - that not so easy as it sounds lol

Have a great weekend everyone!


Best,
Tom




Quoting malcolmb14
vsa sucks .... go not believe everything you read that is works ...lol

hope you all have a great weekend ... what a week , love it when trends form and we can just play reatrces and no demand bars on 15 min charts
  • #4,148
  • Nov 20, 2009 4:51pm Nov 20, 2009 4:51pm
Quoting marcovth
Hello ...

Thanks for the VSA Basics guide. It's one I haven't seen yet. I have a lot of reading to do. Is the script used in this guide available?


I am calling [ unarrow, vnarrow, narrow, avg, wide, vwide, uwide ] zones.
If the spread falls within a zone, you can give it a name, e.g. spread=wide.

My question was, how do you determine the boundaries of each zone?

I am trying to write a TG-like VSA script for ThinkOrSwim

I have tested the following, which seems to work reasonably well, it's getting very similar to what TG is showing...
hey marcovth, any chance of doing this same thing for the mt4 platform?
  • #4,149
  • Nov 20, 2009 6:08pm Nov 20, 2009 6:08pm
Quoting farizu
hey marcovth, any chance of doing this same thing for the mt4 platform?

why do you need this ? do not rely so much on this stuff ..... learn to read and understand the charts / candles and volumes yourself ...ok with the help of the better volume indie to flag when something odd is going on . If you spend the time on this now for the rest of your life your traidng will only get better and better

trades like this will come automaticaly to you as they do to me. Since learning vsa 10 % on account per week is easy

6 more months till I give up my highly over paid job to trade full time

Attached Image (click to enlarge)
Click to Enlarge Name: gud.gif Size: 28 KB
Blogging daily now at www.volume.zone
  • #4,150
  • Nov 20, 2009 6:10pm Nov 20, 2009 6:10pm
Quoting malcolmb14
why do you need this ? do not rely so much on this stuff ..... learn to read and understand the charts / candles and volumes yourself ...ok with the help of the better volume indie to flag when something odd is going on . If you spend the time on this now for the rest of your life your traidng will only get better and better

trades like this will come automaticaly to you as they do to me. Since learning vsa 10 % on account per week is easy

6 more months till I give up my highly over paid job to trade full time

I do not even really know the...
wrong chart
Blogging daily now at www.volume.zone
  • #4,151
  • Nov 20, 2009 7:21pm Nov 20, 2009 7:21pm
Quoting malcolmb14
vsa sucks .... go not believe everything you read that is works ...lol

hope you all have a great weekend ... what a week , love it when trends form and we can just play reatrces and no demand bars on 15 min charts
-
yeah guess vsa only goes so far..

great weekend to all-----
  • #4,152
  • Nov 20, 2009 8:04pm Nov 20, 2009 8:04pm
Quoting marcovth
Hello ...

I am new to this forum, but I have been studying this thread for a couple of days. This thread is so enormous that I might have missed the answer to my question, so my apologies in advance if this was discussed before.

I have been taking a look at TradeGuider, and my main question is: which method do they use to divide the spread/range, and the volume, into ...

zerro, unarrow, vnarrow, narrow, avg, wide, vwide, uwide ???

I have been testing dividing the median over 20 bars into zones and making a range with multiple zones stacked...
FWIW I bought the TG RT (and returned it)- while it was enticing the software itself is not good for Forex. The differences between Esig and mt4 are negligable for novices-- pattern recognition-- recognizing accumulation and distribution patterns with volume are key (IMHO)
TG RT does not do this-- but it wil teach you that upthrusts in the futures market are BULLISH (LOL the final one is always a BEAR). I'm a trader that needs to see multiple currencies and TF's at near the same time something I can scan quickly with MT4 platforms. I find it faster and easier to pull up a chart (like GBPUSD) and quickly scan the daily- down to M5 and get a good overall pic- even with my premier esig acct I don't get the same "feel" for the mkt.

If you trade and want to use Fibs or EW then TG is also not for you. VSA is good - but you still need trend lines, FIBs, EW levels to know WHERE to look for correct entries- for intraday trading or swing trading TG wasn't for me in forex. (if you want to trade channels or TL's then is VSA really necessary as a 200 sma??

If I was trading 1K shares of IBM over 6mos it might work out though. (LOL still waiting for IBM to recover since there shake out at 130.00 before their Q3 earnings)-- 9pts over 1mos is less than 8%...

I looked into mtpredicator as well- they seem to like EW as well and give R/R ratios...
  • #4,153
  • Nov 20, 2009 8:59pm Nov 20, 2009 8:59pm
lol Jeff .... you just need more monitors .where esignal excels over mt4 is the ability to have multiple charts and then float them and put them anywhere you like ( I have 6 x 22 inch bad boys ) i watch indexes , fx , futres , gold and oil

vsa does not work for futures.... sachsbots do not take any notice of what pros are up to .....I have been trading alot of es these last few weeks with some charts that measure market internals ....doing very very well at it

for fx ... good old esignal is fine

Attached Image (click to enlarge)
Click to Enlarge Name: chart1271.png Size: 199 KB






Quoting Jefftrader
FWIW I bought the TG RT (and returned it)- while it was enticing the software itself is not good for Forex....
Blogging daily now at www.volume.zone
  • #4,154
  • Nov 20, 2009 9:56pm Nov 20, 2009 9:56pm
Quoting malcolmb14
lol Jeff .... you just need more monitors .where esignal excels over mt4 is the ability to have multiple charts and then float them and put them anywhere you like ( I have 6 x 22 inch bad boys ) i watch indexes , fx , futres , gold and oil

vsa does not work for futures.... sachsbots do not take any notice of what pros are up to .....I have been trading alot of es these last few weeks with some charts that measure market internals ....doing very very well at it

for fx ... good old esignal is fine

Attachment
Mal, what do u think about the chart? Do u think buyers are coming in now? Thanks.
  • #4,155
  • Edited Nov 21, 2009 1:40am Nov 20, 2009 10:48pm | Edited Nov 21, 2009 1:40am
Quoting marcovth
.......

With different combinations of these (combined with the status
of previous bars) you can make a ton of rules for when to show signals.


But the initial challenge is to find the correct boundaries that determines
the status of e.g. the spread of a bar.

I hope this explains it well?

Marco;

As an old Systems Analyst, I understand what it is you are attempting... The first question you must answer, in your code, is "compared to what?".

VSA is all about Background.. Background is another word for relative. In VSA everything is relative and 'Relativity' is something computers don't do very well.

Answering this question is why TG software costs $3000, and why they are constantly promoting it. It requires thousands of man hours of programming to accomplish this one 'simple' task.

Until one understands the subject of VSA thoroughly, trying to program it is futile. One cannot program something that isn't completely understood.


The indi's posted here, Better Volume, Hidden Gap, Volume Teacher and others each attempt to present the concept of 'Relativity' to the individual in different ways, but ultimately, the trader must make the final determination of what something is.... relative to what he/she is seeing .. (the Background).

My best advice to all new VSA students is to read MTM, watch Tom Williams and study your charts until the "relative" differences start to jump out at you... once that is accomplished, there is no need to program anything...and understanding what is happening becomes second nature, ...like riding a bike....

Just my 2 cents worth, hope this helps..

Sincerely,

Chief
  • #4,156
  • Nov 21, 2009 2:08am Nov 21, 2009 2:08am
Quoting malcolmb14
lol Jeff .... you just need more monitors .where esignal excels over mt4 is the ability to have multiple charts and then float them and put them anywhere you like ( I have 6 x 22 inch bad boys ) i watch indexes , fx , futres , gold and oil

vsa does not work for futures.... sachsbots do not take any notice of what pros are up to .....I have been trading alot of es these last few weeks with some charts that measure market internals ....doing very very well at it

for fx ... good old esignal is fine

Attachment
--------

Malcolmb- what are the main charts you find useful to watch in order to measure market internals when trading ES?

Thanks man---
  • #4,157
  • Nov 21, 2009 8:28am Nov 21, 2009 8:28am
Quoting malcolmb14
lol Jeff .... you just need more monitors .where esignal excels over mt4 is the ability to have multiple charts and then float them and put them anywhere you like ( I have 6 x 22 inch bad boys ) i watch indexes , fx , futres , gold and oil

vsa does not work for futures.... sachsbots do not take any notice of what pros are up to .....I have been trading alot of es these last few weeks with some charts that measure market internals ....doing very very well at it

for fx ... good old esignal is fine

Attachment
Yes I like eSig for it's versitality- The ability to make any TF chart (like 3M, 10M and 120M)- (as a side note esig is free for me through my broker)
One feature I did like on TG was the relative difference in volume bar displays over mt4. During Asia the volume doesn't look like stuble like it does in MT4.
I understand the older version of TG also could potentially recognize dist/accum (placing X's high/low over bars) during tight consolidation periods -the newest version do not have this feature (it has H bars).

Yes - I need more screens- or just one really large 60" I can display everything on.

Happy pipping to all - my intent was not to knock TG or any other platform- I may have been a bit snockered last night
  • #4,158
  • Nov 21, 2009 8:38am Nov 21, 2009 8:38am
Hi folks,

I'm new to forex but have read Tom Williams book on Volume etc twice, Richard Arms book "Stop and make Money" and many web articles both for and against the merits of using VSA. I have to say that I am persuaded that a good understanding of how volume tells you the story of price moment is very important to my trading profitability. So I am a beliver

That said I trade stocks so when I looked at forex and was interested to trade this I was disappointed that there was no "real" exchange supplied volume. I read the tick argument and was not really sure, I can see each sides point of view. But overall I'm willing to give tick volume on forex I fair chance and I am hopeful it will help me like it seems to have helped many others on this thread. Trading without volume makes me feel I'm trading blindfolded.

Right to the help I need and I'd be very grateful for this.

I read either from Gavin or Todd (the vsa guys) that tradeguider uses esignal and GTIS for their volume supplier data feed. Has GTIS got the best data? I'm thinking with Tradeguider using esignal GTIS and volume being their main point GTIS must be worth the money. What do you think?

I have noticed on this tread (must admit I have read pages and pages but not it all yet) some charts with Better volume on them. Is this a script for MT4 and is it worth trying this out? It certainly looks the part!

At present I have a micro account with FXCM but they do not have a volume indicator. Which broker do most of the VSA forex guys on this thread use and do any use the GTIS feed or just the brokers tick feed?

Any other info or advice on how I can get started using volume in my forex trading would be appreciated..........thanks!
  • #4,159
  • Edited 2:54pm Nov 21, 2009 2:36pm | Edited 2:54pm
Hello all
Currently i like my system and it's working very good but found this thread so thought to take a look about this Tech
I download the indicator better volume 1.4
read this
http://www.forexfactory.com/showpost...&postcount=171

My view and correct me if I'm wrong
1- Like others tools must use another tool with it can't use it alone
2-Not really the best but one of the top tools
I use harmonic trading with ichimoku and looks better but i will keep test it another 2 weeks and see if it can add something to Me

This is my view and everyone has his own trading style like finger print

PS:I put the indicator on weekly not show something to me with G/U AND E/U! BUT with my tools say down!
I could be totally wrong but let's see

Thanks
Looking forward to your comments
  • #4,160
  • Nov 21, 2009 3:32pm Nov 21, 2009 3:32pm
EGkind, nothing personal,
but i am not sure You understand what means VSA.

Best,
Tom


Quoting egkid
Hello all
Currently i like my system and it's working very good but found this thread so thought to take a look about this Tech
I download the indicator better volume 1.4
read this
http://www.forexfactory.com/showpost...&postcount=171

My view and correct me if I'm wrong
1- Like others tools must use another tool with it can't use it alone
2-Not really the best but one of the top tools
I use harmonic trading with ichimoku and looks better but i will keep test it another 2 weeks and see if it can add something to Me

This...
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