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Trade Using VSA (Volume Spread Analysis)

  • #7,101
  • Apr 28, 2010 5:40pm Apr 28, 2010 5:40pm
Quoting dvarrin
How do we apply VSA? If on the chart I see a special bar, for example a stopping volume bar. What should I do? What gives me then the confirmation that I should enter the trade?

In Tradeguider they are drawing channels. Do we have to to that? Price is not always moving nicely in a channel and if it did for sometime, then right when I enter the price could go in the wrong direction.

For example I see no-supply bars all along the chart. and sometime price is moving up and other times it is moving down?

Daniel
At least what I do, is I watch the next few bars. For example:

If after the stopping volume that you see, you see (one or several) tests of that area, then I would see if the tests are on low vol (if there are multiple tests, then vol has to be lower on each test to show the supply is drying up) and finally a no supply bar would be the confirmation (or even a shakeout).

I also take into consideration the time it is and what session we are in. Beacuase as I'm sure you know, vol is pretty low a couple of hours after London closes and picks up during Frankfurt. So if I see a setup when vol starts to dry up due to the time, I usually dont trade, and if I do, it's for a smaller gain than if it were during high vol hours.

You also have to take into consideration the background. At least that is how I trade and understand VSA to work.
On a journey to consistency.
  • #7,102
  • Apr 28, 2010 6:00pm Apr 28, 2010 6:00pm
awesome response ...



Quoting Tataocb
At least what I do, is I watch the next few bars. For example:

If after the stopping volume that you see, you see (one or several) tests of that area, then I would see if the tests are on low vol (if there are multiple tests, then vol has to be lower on each test to show the supply is drying up) and finally a no supply bar would be the confirmation (or even a shakeout).

I also take into consideration the time it is and what session we are in. Beacuase as I'm sure you know, vol is pretty low a couple of hours after London closes and picks up...
Blogging daily now at www.volume.zone
  • #7,103
  • Apr 28, 2010 6:08pm Apr 28, 2010 6:08pm
Quoting dvarrin
How do we apply VSA? If on the chart I see a special bar, for example a stopping volume bar. What should I do? What gives me then the confirmation that I should enter the trade?

In Tradeguider they are drawing channels. Do we have to to that? Price is not always moving nicely in a channel and if it did for sometime, then right when I enter the price could go in the wrong direction.

For example I see no-supply bars all along the chart. and sometime price is moving up and other times it is moving down?

Daniel

couple of trades showing what to look for . I did not take either of them as was in my sleep time

Attached Image (click to enlarge)
Click to Enlarge Name: chart04d.jpg Size: 167 KB
Blogging daily now at www.volume.zone
  • #7,104
  • Apr 28, 2010 8:32pm Apr 28, 2010 8:32pm
Hey

I am wondering whether every VSA term has its own counterpart on the other side. for example, UpThrust is a sign of weakness, its counterpart is shake-out which is a sign of strength.

Maybe we could summarize a list as follows:

WEAKNESS STRENGTH
===============================
up thrust vs. shake out
no demand vs. no supply
buying climax vs. selling climax
<not sure> vs. stopping volume
<not sure> vs. test

What do you think of this? Any feedback would be appreciated.
  • #7,105
  • Apr 29, 2010 1:39am Apr 29, 2010 1:39am
i see a indicator on 1 template with on chart words where is supply or demand can anyone tell me that indicator .. i think it's something volume analyze but it's in direct in the chart and draw words no supply or demand or other i cant remember where i see this rly but it is on this forum if someone know it please send me pm or post directly in this volume tread thanks in advice.
  • #7,106
  • Edited 4:20am Apr 29, 2010 3:53am | Edited 4:20am
What are Buying/Selling Climax exactly? Some say that the spread should be bright and other say that it should be narrow.

Are there many kinds of climax?
  • #7,107
  • Apr 29, 2010 5:30am Apr 29, 2010 5:30am
Buying/Selling Climax is nothing but extreme levels of demand and supply displayed on one single bar/candle. Richard D Wyckoff used the word climax in context to volumes and not range (irrespective of wide or narrow).

This means that when we see sudden surge in volumes we term this as climatic volumes or potential climatic volumes. And when this extreme volume is seen on an upbar we call it buying climax as long as it is not pushing up through a resistance zone on the left hand side of the chart , in that case it is Absorption Volumes.

Similarly extreme volumes spotted on a downbar are climatic volumes as long as the background is in place. This would be Selling Climax as long as panic selling is seen in the background.

When the range/spread is analyzed with extreme volumes then a bar/candle is basically getting labeled. Examples of this is Bag Holding , End Of Rising Market , Stopping Volumes etc. Its better not to get caught up with the label and rather focus on spotting imbalances between Demand and Supply.

Hope This Helps

Cheers
Lalit
  • #7,108
  • Apr 29, 2010 7:10am Apr 29, 2010 7:10am
Quoting malcolmb14
not every candle has a VSA set up ... you have hidden buyers in candles that are just a nautral progrsseion of pa and with normal volume

do not overthink it
malcolmb, i always read hidden buying or selling here, but i dont have any idea what about it.

if possible, could you give an explanation ? i mean, how we can detect a hidden buying or selling..

thanks a lot...
  • #7,109
  • Apr 29, 2010 8:20am Apr 29, 2010 8:20am
Quoting polomine
Hey

I am wondering whether every VSA term has its own counterpart on the other side. for example, UpThrust is a sign of weakness, its counterpart is shake-out which is a sign of strength.

Maybe we could summarize a list as follows:

WEAKNESS...

Strength:
Bottom Reversal
Stopping Volume
The Test
Selling Climax
Pushing up through Supply
Shakeout

Weakness:
End of a rising market
Upthrust
No Demand
Buying Climax
Top Reversal

Supply and Demand:
At the top of the chart:
End of a Rising Market
No Demand
Upthrust
At the bottom of the chart:
Climactic Action
No Supply
Test in a rising Market


Trade Set-ups:
Shake Outs and Herd Mentality
Beware of News – Be Contrarian
Identifying Background Trigger Bars.
Shake Out & Climactic Action.
Stopping Volume.
Moving Down a Timeframe.
Overbought/Oversold Zones
Lack of Buying Interest at Top of Channel.
No Selling Pressure at Base of Channel.
Ultra-High Volume Down Bar – WHY???
  • #7,110
  • Apr 29, 2010 8:40am Apr 29, 2010 8:40am
How relevant are VSA signals in the middle of a range? Is it better to wait for price to reach a prior level of support or resistance and then look for VSA setups or what? I've found that many times when I take a setup at a place where there wasn't any significance previously... price will react slightly but then continue on to the other side of the range it was previously heading towards. I will see if I can find an example...

What say you VSA experts?

Thanks very much.

-SK-
  • #7,111
  • Apr 29, 2010 8:44am Apr 29, 2010 8:44am
Most Professional stock traders don't like to take positions against
the DOW jones index , they would rather trade with the prevailing trend/OR know what the dow is doing..

why not fx, i think i found a pretty Good representative index for FX.
A basket Chart , for those that would rather trade with the trend.

The ONLY thing missing is the BASKET VOLUME INDICATOR that can read from the First indicator's Data..

can anybody/programmers come up with a basket volume indicator ?
could be interesting...

thanks......
Attached Image (click to enlarge)
Click to Enlarge Name: basketindex.gif Size: 22 KB
Attached File(s)
File Type: mq4 BsktBrs HL.mq4   8 KB | 887 downloads
  • #7,112
  • Apr 29, 2010 9:04am Apr 29, 2010 9:04am
Here is an example of what I was talking about...
Attached Image (click to enlarge)
Click to Enlarge Name: VSA question 1 new.jpg Size: 435 KB
  • #7,113
  • Apr 29, 2010 9:20am Apr 29, 2010 9:20am
In fact, I have combined two indicators, the most famous BetterVolume 1.3 and Volume Analyzer plus some thoughts from lascavel, hope it makes sense.

//+------------------------------------------------------------------+
//| iPolo - Volume Analyzer.mq4 |
//| Written by: Polomine |
//| version 0.9 2010.04.22 22:05 GMT+8 |
//+------------------------------------------------------------------+
//| Release Notes: |
//+------------------------------------------------------------------+
//| v0.9 2010.04.22 22:05 GMT+8 |
//| - I'd like to thank Obaidah & GodfreyH for their method of |
//| seeing volumes by low and high levels, thank thatwasme for |
//| BetterVolume MQ4 indy, thank lascavel for his idea of |
//| seeing volumes session by session. |
//+------------------------------------------------------------------+


Quoting polomine
Hi all,

Regarding volume analysis, IMHO I don't like using moveing average to identify ultrahighvolume, veryhighvolume, highvolume bars and so on. I know somebody draws horizontal levels in the volume chart manually to do this thing. But it is too subjective, isn't it?

I have a idea which seems promising. we can develop a custom indi to collect volume data session by session, ie. europe session, and then design an algorithm and let indi tell us which bars belong to ultra-high volume bars, ...

The attached image is the sorted M15 volume data...
Attached Image(s) (click to enlarge)
Click to Enlarge Name: gbpusd m15.gif Size: 25 KB
Click to Enlarge Name: gbpusd m15_1.gif Size: 23 KB
Attached File(s)
File Type: mq4 iPolo - Volume Analyzer.mq4   17 KB | 1,922 downloads
  • #7,114
  • Apr 29, 2010 9:26am Apr 29, 2010 9:26am
Hi, friend
.
You know much more than me. Since my native language is not English, it takes me more efforts to digest the MTM. So, my original thoughts is to compare the weakness and strength terms pair by pair. Lazy man always wants simple method to do things.

Cheers,

Quoting sharpster
Strength:
Bottom Reversal
Stopping Volume
The Test
Selling Climax
Pushing up through Supply
Shakeout

Weakness:
[FONT=Verdana,...
  • #7,115
  • Apr 29, 2010 11:17am Apr 29, 2010 11:17am
why don't you just use US dollar index and euro index if you insist...?
Quoting taomql4
Most Professional stock traders don't like to take positions against
the DOW jones index , they would rather trade with the prevailing trend/OR know what the dow is doing..

why not fx, i think i found a pretty Good representative index for FX.
A basket Chart , for those that would rather trade with the trend.

The ONLY thing missing is the BASKET VOLUME INDICATOR that can read from the First indicator's Data..

can anybody/programmers come up with a basket volume indicator ?
could be interesting...

thanks......
"Imagination is more important than knowledge" Einstein
  • #7,116
  • Apr 29, 2010 11:28am Apr 29, 2010 11:28am
[quote=bruceli;3683320]malcolmb, i always read hidden buying or selling here, but i dont have any idea what about it.

if possible, could you give an explanation ? i mean, how we can detect a hidden buying or selling..

thanks a lot...[/quote
if a trend precedes a candle on high vol closing off from the direction of the trend usually these is the first sign the trend get week and after that you look after more signs to confirm this. the respective candle has the attribute of hidden potential whatever...
"Imagination is more important than knowledge" Einstein
  • #7,117
  • Apr 29, 2010 11:48am Apr 29, 2010 11:48am
Quoting lnangia
Buying/Selling Climax is nothing but extreme levels of demand and supply displayed on one single bar/candle. Richard D Wyckoff used the word climax in context to volumes and not range (irrespective of wide or narrow).

This means that when we see sudden surge in volumes we term this as climatic volumes or potential climatic volumes. And when this extreme volume is seen on an upbar we call it buying climax as long as it is not pushing up through a resistance zone on the left hand side of the chart , in that case it is Absorption Volumes.

Similarly...
3 very nice posts. Please feel free to help more where you see fit.

Are you an advocate of WRB also?
  • #7,118
  • Apr 29, 2010 12:10pm Apr 29, 2010 12:10pm
Yes Intel , WRB and Long Shadow Analysis play a very vital role for me while analyzing charts using VSA/Wyckoff's techniques.

Cheers
Lalit
  • #7,119
  • Apr 29, 2010 12:32pm Apr 29, 2010 12:32pm
Quoting s21
why don't you just use US dollar index and euro index if you insist...?
That Basket is well hedged--
  • #7,120
  • Apr 29, 2010 1:24pm Apr 29, 2010 1:24pm
Quoting lnangia
Buying/Selling Climax is nothing but extreme levels of demand and supply displayed on one single bar/candle. Richard D Wyckoff used the word climax in context to volumes and not range (irrespective of wide or narrow).

This means that when we see sudden surge in volumes we term this as climatic volumes or potential climatic volumes. And when this extreme volume is seen on an upbar we call it buying climax as long as it is not pushing up through a resistance zone on the left hand side of the chart , in that case it is Absorption Volumes.

Similarly...
Thank you very much for your answer. Do you have some documentation explaining the different signals or how to trade using VSA. Another one than the "Master the Markets" book :-))
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