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Trade Using VSA (Volume Spread Analysis)

  • #5,321
  • Feb 21, 2010 1:27am Feb 21, 2010 1:27am
Quoting malcolmb14
at last tradeguider you can lease a plug in for esignal

this is tradeguider plugin with a volume histogram . look how we had strength coming in on the doji , with trend candles blue ( up ) right of Thursday point of control and trend diamonds were green .. perfect long that I did not take as I am a muppet ..lol

well to be honest I had enough of the market by Friday and did not trade

Attachment

Very nice system they have made available for esignal customers.
  • #5,322
  • Feb 21, 2010 2:03am Feb 21, 2010 2:03am
Quoting malcolmb14
at last tradeguider you can lease a plug in for esignal

this is tradeguider plugin with a volume histogram . look how we had strength coming in on the doji , with trend candles blue ( up ) right of Thursday point of control and trend diamonds were green .. perfect long that I did not take as I am a muppet ..lol

well to be honest I had enough of the market by Friday and did not trade

Attachment
Hey malcolmb, your posts makes VSA trading seem to be lot easier than it is for me
  • #5,323
  • Feb 21, 2010 2:52am Feb 21, 2010 2:52am
Quoting Shamus
There was some discussion on here about the Ninja system a long time ago but apparently it had some errors in the code so the results were a bit weird. They may have fixed them though. Double check signals manually to be sure they are correct.
There are a few versions around and that thread is inactive. Here is snap of ninjatrader VPA for EU to compare with Malcolmb's recent tradeguider post (#5319). Overall I think it picks some important moves. I am not very good in VSA yet and unable to figure out if the indi is good enough. So any suggestions will be highly helpful.

The description of symbols..

Blue Diamond - Reversal possible, yesterday was high volume wide spread up bar, but today we reached 10 days high with low close wide spread down bar.
Lime Square - Strength bar (either strength is showing in down trend or a supply test in up trend).
Lime Diamond - Stopping volume. Normally indicates end of bearishness is nearing /OR/ No supply.
Blue Square - Psuedo UpThrust, A Sign of Weakness /OR/ A High Volume Up Bar closing down in a uptrend shows Distribution /OR/ No Demand.
Blue Triangle Down - A Down Bar closing down after a Pseudo Upthrust confirms weakness.
Yellow Triangle Down - High volume Downbar after an upmove on high volume indicates weakness.
Aqua Triangle Up - High volume upbar closing on the high indicates strength (in short term down trend).
Deep Pink Square - Test for supply.
Red Square - UpThrust bar.
Red Triangle Down - UpThrust confirmation.
Yellow Diamond - Effort to Fall. Bearish sign.
Turquoise Diamond - Effort to Rise. Bullish sign.
Yellow Triangle Up - An Upbar closing near High after a Test confirms strength.
Lime Triangle Up - The previous bar saw strength coming back, This upbar confirms strength.
Attached Image (click to enlarge)
Click to Enlarge Name: ninjavol.jpg Size: 702 KB
  • #5,324
  • Feb 21, 2010 10:05am Feb 21, 2010 10:05am
Quoting akkubhai
Hey malcolmb, your posts makes VSA trading seem to be lot easier than it is for me
trust me last 2 weeks I have been getting kicked around left right and centre .... even with vsa , what used to work in this 200 up and 200 down market on eu is not working , what looks like accumulation on weekly and daily could take a 600 pip draw down before it works , etc etc.

Markets are not normal right now.....look at the swings in gold this week... no direction at all ... bull flag broke on daily since then we have had these whakcy swings of $20 per day.

do not get disheartened.

Last 2 weeks follow the daily trend ... take the sells on a 30 min

Odd thing is the markets are heading up now gold is heading up and usd is still getting stronger.... correlation has gone
Blogging daily now at www.volume.zone
  • #5,325
  • Feb 21, 2010 10:26am Feb 21, 2010 10:26am
Quoting malcolmb14
trust me last 2 weeks I have been getting kicked around left right and centre .... even with vsa , what used to work in this 200 up and 200 down market on eu is not working , what looks like accumulation on weekly and daily could take a 600 pip draw down before it works , etc etc.

Markets are not normal right now.....look at the swings in gold this week... no direction at all ... bull flag broke on daily since then we have had these whakcy swings of $20 per day.

do not get disheartened.

Last 2 weeks follow the daily trend ... take the sells...
It is good to hear that others also found this week to be harder...
Live happens 5 minutes at a time...
  • #5,326
  • Feb 21, 2010 10:35am Feb 21, 2010 10:35am
I've read the Tom Williams' Master the Markets- book, and it really has opened my eyes for this VSA trading. This thread has also been a great source of information for me, so thank you very much for all you contributors!

Now what I really would like to have is an MetaTrader indicator that marks out the patterns mentioned in the book (Stopping Volume, Up Thrust, Shake Out, Selling Climax, etc.). There has been lots of discussion about the Better Volume indicator in this thread, and many of you seem to use it for the VSA- method, but if I understood correctly, it is not based on these MtM- patterns. At least the pattern names are different, and I think that the patterns are not exactly the same. Or did I misunderstand it...?

But, is there such MetaTrader indicator for MtM patterns??
  • #5,327
  • Feb 21, 2010 11:35am Feb 21, 2010 11:35am
Hi everyone. I have been using vsa/wyckoff's methods for more than a year now and just recently i realized that this thread is quite active on VSA. It feels good to be here and looking forward to interact and discuss VSA.


Cheers
Lalit
  • #5,328
  • Edited 1:20pm Feb 21, 2010 11:42am | Edited 1:20pm
Quoting chief1oar
Hello Dutchy,
Interesting zones you have there... do they work for you?
Cheers,
Chief
Hello Chief

Thanks for reply. Added Volume bars for you. Volume on the 4th was indead high, as well as the 5th (bounce up), as you had guessed.
Image: slightly heavier volume overhead, as shown in blue Volume on Price bars on the left.
Between 10.500 and 10.700 low volume is required to go up.

Do they work ? Yes. Holy Grail? No. Still need to take a step back.
It is a slightly different use of the Better Volume Indicator, as used in this thread.

Q: When does price bounce on a band, and when doesnt it ?

It seems that the colour of the bar that sets the band, if proven by the next bar, shows direction. Also take position of close into account..
This idea used by Eminis (explained below) is similar to VSA

What I dont grasp is why people want to buy for price x the one day, and dump it for that price a few days later. On dec 18th people fight for the stock, indicated by a high volume, low range bar, fixing the blue band for the near future. It jumps outof the band on low volume, so resistance is gone. It jumps out of the purple band on low volume on the 28th, too low since its pulled back in. Then on jan 4th it jumps out of the purple band with just enough volume to make a run upto 10.700. Volume did not support the move (did not go up with price), so the move stopped (at 10.700). A High Volume downmove sets a down move in motion, where a low volume upbar on 19th cant hold the bears. Now a high volume downbar on the 21nd has only 3/4 of the volume on dec 18th, the day that fixed the blue band two weeks earlier.

Concluding the above : I dont get why a area that was set by high volume, is broken by a lower volume bar, still this happens very often.




The main difference with VSA is that in Eminis approach (below) Volume and Range are multiplied and divided, instead of looking for areas above or below average range and Volume.

To clarify: VSA uses things like
AverageRange = Average[Period](Range)
HighRange = HiFactor * AverageRange
LowRange = LoFactor * AverageRange

Now this system heavly depends on the setting of Period, as well as the Hi/LoFactor. To me this makes VSA infinitly tweakable, and for me that does not work.

The charming thing about Eminis approach (explained below) is that only the Period matters. Even better if that was radicated too


This is how the bands work (idea: http://emini-watch.com/):

v1 = Volume * Range
v2 = Volume / Range (provide Range <> 0)
Then find highest en lowest of each set, and when found, project them on the High & low of that bar. That results in 4 sets. The set of highest V*R and Highest V/R are projected as coloured bands, the lowest of each are projected as dots on a candle.

Yellow dots = Low V*R (Low volume & range)
White dots = Low V/R (usually high range bars on low volume)
Blue = Churn, High Volume / Range (usually low Range)
Red = High Vol, High Range

The bands seems to fix the price, but more info is needed about conditions when price jump out of it.


Cheers, Dutchy
Attached Image (click to enlarge)
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  • #5,329
  • Feb 21, 2010 11:40pm Feb 21, 2010 11:40pm
Quoting Dutchy
Hello Chief

Thanks for reply. Added Volume bars for you. Volume on the 4th was indead high, as well as the 5th (bounce up), as you had guessed.
Image: slightly heavier volume overhead, as shown in blue Volume on Price bars on the left.
Between 10.500 and 10.700 low volume is required to go up.

Do they work ? Yes. Holy Grail? No. Still need to take a step back.
It is a slightly different use of the Better Volume Indicator, as used in this thread.

Q: When does price bounce on a band, and when doesnt it ?

It seems that the colour of the bar...

Dutchy,

To answer your question as to why price bounces on a Band one time and not the next, I would say that it is in the Supply vs. Demand of the SM & public. Remember, price MUST be kept moving up and down to generate profits and create a market. The volume is simply a reflection of the changing views of those in the marketplace, whether that be smart money or Joe the trader.

Quote
What I dont grasp is why people want to buy for price x the one day, and dump it for that price a few days later. On dec 18th people fight for the stock, indicated by a high volume, low range bar, fixing the blue band for the near future. It jumps outof the band on low volume, so resistance is gone. It jumps out of the purple band on low volume on the 28th, too low since its pulled back in. Then on jan 4th it jumps out of the purple band with just enough volume to make a run upto 10.700. Volume did not support the move (did not go up with price),...

There are as many reasons as there are traders, brokers, investors, school teachers, parents and grandparents.... each share traded had a reason behind that trade...some were for a profit, some because the broker called up and said so, some because a son or daughter needed tuition money, some because a house payment had to be made out of a retirement fund...and not all that traded one day, trade the next..just as not all who traded made or lost money.

Momentum plays a role in this as well... SM is not always able to hold the price to an exact figure...once a move has been successfully started, it will continue until a counter-force is appled to stop it.

And as Tom Williams states repeatedly, it is a question of SM's participation in the market that we are interested in. That participation leaves a footprint (volume), and it is usually a large one.

I view Volume Zones as nothing more than an area to be aware of when price approaches them. The reaction or NON-reaction to that area signals the concensus of smart money. Is that price still attractive or not. If not, it means that those who count are now interested in a different price. When that occurs, it's up to us to figure out what price they are interested in.

I also attached a pic.. after reviewing your chart, I think you may want to re-examine your indi. The area indicated by the bars marked A & D is a High Vol Zone. The zones you are trying to use are apparently a combination of volume and price or range.

If you use the zone created by A & D, you can see that price does react to it twice before supply/demand changes, on significantly less volume.

Hope this helps answer your questions....

Sincerely,
Chief
Attached Image (click to enlarge)
Click to Enlarge Name: DOW JONES 2021-02-2010 B.png Size: 54 KB
  • #5,330
  • Feb 21, 2010 11:42pm Feb 21, 2010 11:42pm
eu test of vwap ... just waiting for confirmation to re-open long above the poc



Attached Image (click to enlarge)
Click to Enlarge Name: chart1799.png Size: 111 KB
Blogging daily now at www.volume.zone
  • #5,331
  • Feb 21, 2010 11:43pm Feb 21, 2010 11:43pm
Quoting chief1oar
Dutchy,

To answer your question as to why price bounces on a Band one time and not the next, I would say that it is in the Supply vs. Demand of the SM & public. Remember, price MUST be kept moving up and down to generate profits and create a market. The volume is simply a reflection of the changing views of those in the marketplace, whether that be smart money or Joe the trader.



There are as many reasons as there are traders, brokers, investors, school teachers, parents and grandparents.... each share traded had a reason behind that...
Another fantastic post. Thanks Chief.
The trend always ends.
  • #5,332
  • Feb 22, 2010 12:01am Feb 22, 2010 12:01am
Hi Shamus ,Malcom I have been following this thread for a month (background),enjoy every post from you guys. Finally I have a better idea about the market movement, that after reading Master The Market and watched the seminar video about VSA posted by someone ,Thanks to that nice guy.
Great thread
  • #5,333
  • Feb 22, 2010 12:13am Feb 22, 2010 12:13am
Quoting malcolmb14
eu test of vwap ... just waiting for confirmation to re-open long above the poc



Attachment
test on 30 then potential shake out ....

long 1,3630 stop 1.3615 target no idea ....1.3660 major r ...


Attached Image (click to enlarge)
Click to Enlarge Name: chart1800.png Size: 111 KB
Blogging daily now at www.volume.zone
  • #5,334
  • Feb 22, 2010 1:55am Feb 22, 2010 1:55am
beauty shake out 30 min long 1125,2
Blogging daily now at www.volume.zone
  • #5,335
  • Feb 22, 2010 2:55am Feb 22, 2010 2:55am
Didn't take much for the euro & gbp sellers to take over
"Hate the sin, love the sinner." - Gandhi
  • #5,336
  • Feb 22, 2010 5:17am Feb 22, 2010 5:17am
Quoting silverwhite1
Hi Shamus ,Malcom I have been following this thread for a month (background),enjoy every post from you guys. Finally I have a better idea about the market movement, that after reading Master The Market and watched the seminar video about VSA posted by someone ,Thanks to that nice guy.
Great thread

Hi,

Could you post the link on seminar video done by VSA. I have been seaching high & low for the link but still can't find, thanks.
  • #5,337
  • Feb 22, 2010 5:34am Feb 22, 2010 5:34am
Quoting lnangia
Hi everyone. I have been using vsa/wyckoff's methods for more than a year now and just recently i realized that this thread is quite active on VSA. It feels good to be here and looking forward to interact and discuss VSA.


Cheers
Lalit
Frankly I have never used VSA, but I'm interested in looking into it.
  • #5,338
  • Feb 22, 2010 5:52am Feb 22, 2010 5:52am
Quoting nico28
Hi,

Could you post the link on seminar video done by VSA. I have been seaching high & low for the link but still can't find, thanks.
I posted them a while back http://www.forexfactory.com/showpost...postcount=4687

Gez
Seek not to change the world; seek only to change your mind about the world
  • #5,339
  • Feb 22, 2010 6:22am Feb 22, 2010 6:22am
Quoting gez40
I posted them a while back http://www.forexfactory.com/showpost...postcount=4687

Gez
Gez,

thankyou very much.
  • #5,340
  • Feb 22, 2010 2:25pm Feb 22, 2010 2:25pm
Hi guys,

Haven't posted for a while cos I'm re-reading the thread

Should be done by christmas

I figure that if I go through the whole thing again learning more along the way, and taking on board everything it has to offer.........I might end up with maybe 0.5% of Lord Malcombs knowledge

p.171
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