Trade Using VSA (Volume Spread Analysis) | Page 369 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Volume Spread Analysis (VSA) and background 5 replies

Trading With VSA - Volatile Volume and Spread Analysis 9 replies

What is the best VSA (Volume Spread Analysis) system/indicator? 1 reply

Volume Spread Analysis (VSA) and the EURUSD 3 replies

VSA Volume Spread Analysis: No demand and accumlation 2 replies

Attachments: Trade Using VSA (Volume Spread Analysis)
Exit Attachments

Trade Using VSA (Volume Spread Analysis)

  • #7,361
  • May 14, 2010 4:19pm May 14, 2010 4:19pm
Hi,

I would like to ask the VSA masters here if they are using VSA only or if they are using trading lines and considering VSA signals only when approching those lines?

How do we know when there is some kind of VSA signal that the trade is going to last for sometime or in contrary will be very short?

For example often I first notice some decreasing weakness in a down move with down bars on lower volume, then Inotice some selling climax later followed by stopping volume. I enter immediately on the long side after the stopping volume only to see the price reversing and going down more one or two bar later, although I could notice all those signs of strength. What am I doing wrong?

Daniel
  • #7,362
  • May 14, 2010 7:34pm May 14, 2010 7:34pm
Quoting dvarrin
Hi,

I would like to ask the VSA masters here if they are using VSA only or if they are using trading lines and considering VSA signals only when approching those lines?

How do we know when there is some kind of VSA signal that the trade is going to last for sometime or in contrary will be very short?

For example often I first notice some decreasing weakness in a down move with down bars on lower volume, then Inotice some selling climax later followed by stopping volume. I enter immediately on the long side after the stopping volume only...
I certainly wouldn't be so bold as to suggest I am a master but I use VSA combined with VSR (Volume Based Support and Resistance Module in SMART) only.

I also only follow the strongest VSA signals and don't get involved trying to identify things like accumulation and things like that.

I would suggest picking a single tf and pair to follow. On the weekend you can scroll back in your chart and just advance one bar at a time to test yourself. Pick a signal and look for those only, when you have them fairly well nailed move on to another signal etc.

I hope this helps.

PS Hi guys.
The trend always ends.
  • #7,363
  • Edited 9:01pm May 14, 2010 8:41pm | Edited 9:01pm
Quoting dvarrin
..How do we know when there is some kind of VSA signal that the trade is going to last for sometime or in contrary will be very short?
I would argue that you never do, as the future is unknown. With that said, I know Tom Williams says the longer the accumulation or distribution phase, the longer the up move or down move respectively.

Quoting dvarrin
.I would like to ask the VSA masters here if they are using VSA only or if they are using trading lines and considering VSA signals only when approching those lines?
You're in my wheel-house now. LOL. First let me say I echo Shamus in that neither would I be so bold as to suggest myself a master. And if I claim to be a wise man, that surely means that I don't know.

I Think that this is where Gavin has a lot of problems with me. This is despite the fact that I constantly say that WRB Analysis is not VSA. I would argue there is a symbiotic relationship and have put much effort into melding the two ideas. But the fact remains, they are different.

For me it all comes down to "seeing what you want to see, where you want to see it". The where you want to see it part, for me, is within the body of a significant WRB also know as the Supply/Demand Delta Zone.

I have attached 3 charts.

The first chart is the GBP/JPY chart I used to answer a question posed in the thread by F451. We can see some nice price action/ VSA set-ups happening. Yet this is only half the equation.

The second chart shows the same area, but I went back and placed some of the Supply/Demand Delta Zones on the chart. Note that the price action/volume spread analysis we saw in the previous chart actually occurs in the correct place. In other words, as price move back into this area, I'm looking for something to happen. At the very least, I know I need to pay more attention to the chart at this time.

The Third chart goes further back to the left. This shows the appearance of the WRB that was the key change in the supply/demand dynamic that created the zone the subsequent trades appeared. I consider this to be a key change in the supply/demand dynamic because it is the first effort to fall candle after a no demand which is in the correct place and concludes a signal. If you jump back to chart two, you will note that a key change in the supply/demand dynamic happens when we get the first Effort to Fall candle after the Up Thrust. There are other reasons why a candle would be considered a significant WRB, but I wont get into them at this time. I really wanted to make the point about "what you want to see, and where you want to see it". You should note that most of the traders here do have some sort of horizontal lines on their charts. Malcolmb has MM and Value Area (I think). Shamus, Volume Based Support and Resistance. The Chief, high volume areas. The means differ but the end remains the same: ferret out the higher probability trades as those trades that occur in the ideal place as definite by the method used to draw the lines.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: current1.png Size: 131 KB
Click to Enlarge Name: Current2.png Size: 133 KB
Click to Enlarge Name: current3.png Size: 134 KB
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #7,364
  • May 14, 2010 8:41pm May 14, 2010 8:41pm
Quoting dvarrin
Hi,

... I first notice some decreasing weakness in a down move with down bars on lower volume, then I notice some selling climax later followed by stopping volume. I enter immediately on the long side after the stopping volume only to see the price reversing and going down more one or two bar later, although I could notice all those signs of strength. What am I doing wrong?

Daniel
dvarrin,

remember ... wait for confirmation of strength or weakness before entering any position...

as Tom says.. Background, Background, Background...

the bootcamp vids have an excellent section on bottom reversals and confirmation of entries....

Shamus is correct.. pick one pair and study it until you know how it moves, study the higher tf's every day for trends and market direction... .

Quoting Shamus
I certainly wouldn't be so bold as to suggest I am a master but .....
ooooh contrare Shamus !!!
Attached Image
  • #7,365
  • May 15, 2010 5:26am May 15, 2010 5:26am
Hi All,
I am a big fan of the thread and thought I would post my outlook on gbpusd for the coming week based on what ive learned from you all.

In the daily chart price is in a very long downtrend reaching areas unseen in more than a year. a few bars back there is a very high volume down candle closing near its highs, I have marked this as stopping volume. The second last candle visits this area again closing on its lows, but this time with much less volume (nearly half of the stopping volume) and also less then the previous two. I didnt mark this as no supply as the spread is wide,but it is some sort of markdown on low volume. The next candle (last on this chart) is again down on highvolume and narrow spread, this is a squat. All this signs indicate some strength in the background.

Examining the hourly chart we can see a steep downward channel formed over the last three days , whch has now found its way into the (blue) area of previous high volume the long wicked stopping volume candle.

In the fifteen minute chart we see that perhaps this trend channel has lost steam, as the price was unable to reach the bottom line of the channel between touches of the top. There is also relatively high volume in the troughs of the price action. Maybe this could be some sort of bottom forming?

So the trading plan for next week is basically wait and see. If we break through friday's high I will look for long position setups using vsa. Otherwise a break through the bottom of the high volume areas will suggest to me to look for short setups.

Please dont take this as expert analysis, I am only a beginner in these matters, but I would like to hear your thoughts and whether you agree or disagree.

Thanks
Attached Image(s) (click to enlarge)
Click to Enlarge Name: Dailymay152010.png Size: 68 KB
Click to Enlarge Name: hourmay152010.png Size: 66 KB
Click to Enlarge Name: fifteenmay152010.png Size: 74 KB
  • #7,366
  • May 15, 2010 9:52am May 15, 2010 9:52am
Quoting HiddenGap
I would argue that you never do, as the future is unknown. With that said, I know Tom Williams says the longer the accumulation or distribution phase, the longer the up move or down move respectively.



You're in my wheel-house now. LOL. First let me say I echo Shamus in that neither would I be so bold as to suggest myself a master. And if I claim to be a wise man, that surely means that I don't know.

I Think that this is where Gavin has a lot of problems with me. This is despite the fact that I constantly say that WRB Analysis is not VSA....

One again your explanantions are really nice hiddengap :-))

The problem with me is that I could for example see an upthrust at many positions on the chart. If the volume is high, with weakness on the background and the bar is closing at the bottom, it looks like an upthrust.

So should I draw resistance/support lines and trend lines and look for special signal only when getting close to those area?

I also don't understand when we have to wait for confirmation or not. In some cases the upthrust appear and we have to wait for confirmation, and in other cases, the upthrust is the confirmation we are waiting for. How can we tell that a signal is the confirmation to enter the trade?
  • #7,367
  • May 15, 2010 10:34am May 15, 2010 10:34am
Quoting dvarrin
One again your explanantions are really nice hiddengap :-))

The problem with me is that I could for example see an upthrust at many positions on the chart. If the volume is high, with weakness on the background and the bar is closing at the bottom, it looks like an upthrust.

So should I draw resistance/support lines and trend lines and look for special signal only when getting close to those area?

I also don't understand when we have to wait for confirmation or not. In some cases the upthrust appear and we have to wait for confirmation,...
A true upthrust (or reverse ut) is the highest volume and price into a new high (or low for reverse) for the range.

You will see what looks like a ut (rut) pattern a lot, but be sure the volume is there or it's not a valid signal. If it isn't, it's a pseudo upthrust... which can also be good just not as clear IMO).
The trend always ends.
  • #7,368
  • Edited 1:38pm May 15, 2010 1:08pm | Edited 1:38pm
Quoting Shamus
A true upthrust (or reverse ut) is the highest volume and price into a new high (or low for reverse) for the range.

You will see what looks like a ut (rut) pattern a lot, but be sure the volume is there or it's not a valid signal. If it isn't, it's a pseudo upthrust... which can also be good just not as clear IMO).

Thank you for your answer Shamus! I'm a bit lost with VSA still and I don't know where to start :-(

I'm trying to find signals on the 5 min chart, starting in the past and looking if I was right with the signal I recognize, but I'm not 50% right, I'm simply 95% wrong and I don't understand what I'm doing wrong.

Where should I start my analysis from and what should I look for?
  • #7,369
  • Edited 6:13pm May 15, 2010 5:48pm | Edited 6:13pm
Quoting dvarrin
Thank you for your answer Shamus! I'm a bit lost with VSA still and I don't know where to start :-(

I'm trying to find signals on the 5 min chart, starting in the past and looking if I was right with the signal I recognize, but I'm not 50% right, I'm simply 95% wrong and I don't understand what I'm doing wrong.

Where should I start my analysis from and what should I look for?
High Volume Upbars ;
High Volume Downbars ;
See , if you can call Simple Retracements ... 3 things

1.Hidden Potential sellers/buyers , 2.upthrust/reverse upthrust , 3.No demand/supply---Have fun

With Enough practice , check out the dreaded accumulation and distribution Patterns on charts......
  • #7,370
  • May 15, 2010 6:03pm May 15, 2010 6:03pm
Is there a significance betwen these two Daily charts. One is from back in January when we started this UTL before a 1280 pip push up. Am I on the right track here or way off base.

Jim
Attached Image(s) (click to enlarge)
Click to Enlarge Name: gu.gif Size: 27 KB
Click to Enlarge Name: gu1.gif Size: 34 KB
  • #7,371
  • Edited 7:26pm May 15, 2010 6:48pm | Edited 7:26pm
Quoting Nene
Is there a significance betwen these two Daily charts. One is from back in January when we started this UTL before a 1280 pip push up. Am I on the right track here or way off base.

Jim
First chart is more similar to the Test of the Lows
on the second chart--

ON first chart--Recent--

Now , what are You going to do?--absolutely Nothing..

You wait for confirmation(next bar) and test..
Something is keeping that bar narrow-
SQUAT BAR(possibly buyers- higher volume)..

its a daily chart , so i hope you don't Grow grey hairs..
But if you think you know what's going on and can't
wait for test on the daily , you can
take some trades on lower timeframes.
Attached Image (click to enlarge)
Click to Enlarge Name: modifiedGU.GIF Size: 35 KB
  • #7,372
  • May 16, 2010 6:22am May 16, 2010 6:22am
Ok, Buyers, thats what I am thinking. But is it true that a dump on decreasing volume is a sign of a possible turn.

Jim

Quoting taomql4
First chart is more similar to the Test of the Lows
on the second chart--

ON first chart--Recent--

Now , what are You going to do?--absolutely Nothing..

You wait for confirmation(next bar) and test..
Something is keeping that bar narrow-
SQUAT BAR(possibly buyers- higher volume)..

its a daily chart , so i hope you don't Grow grey hairs..
But if you think you know what's going on and can't
wait for test on the daily , you can
take some trades on lower timeframes.
  • #7,373
  • May 16, 2010 6:30am May 16, 2010 6:30am
There are already signs of a turn on the higher frames. For instance on the Monthly we are just peeking thru a major UTL and even though we are thru, it will take a lot more than that to convince me of a Monthly break lower. And besides the Stochastic is showing long after a cross in the buy zone. The 4 hr and Daily both show Double Bottom formations and the Daily has that huge pin a few candles back.

Jim
Attached Image (click to enlarge)
Click to Enlarge Name: gu.gif Size: 27 KB
  • #7,374
  • May 16, 2010 7:19am May 16, 2010 7:19am
Quoting Nene
For instance on the Monthly we are just peeking thru a major UTL and even though we are thru, it will take a lot more than that to convince me of a Monthly break lower.
Just for the record, for me that isn't a valid UTL...
A TL needs 2 points to be drawn (preferably apart enough from each other - that's not the case), and then needs a valid third touch to be confirmed as valid.
And right now, we are through.

I would pay more attention to the area below as horizontal support zone, than to that UTL.
  • #7,375
  • May 16, 2010 7:28am May 16, 2010 7:28am
Quoting Nene
There are already signs of a turn on the higher frames. For instance on the Monthly we are just peeking thru a major UTL and even though we are thru, it will take a lot more than that to convince me of a Monthly break lower. And besides the Stochastic is showing long after a cross in the buy zone. The 4 hr and Daily both show Double Bottom formations and the Daily has that huge pin a few candles back.

Jim
To share my thought.--- (higher time frame)
we might get a correction.but momentum is downside.its better to stay with the current momentum.
all the big move happens when indicators are overbought and oversold.
and yes right now its on the daily support zone.so we might get a bounce from that zone for a correction.
  • #7,376
  • May 16, 2010 8:08am May 16, 2010 8:08am
Quoting dvarrin
Thank you for your answer Shamus! I'm a bit lost with VSA still and I don't know where to start :-(

I'm trying to find signals on the 5 min chart, starting in the past and looking if I was right with the signal I recognize, but I'm not 50% right, I'm simply 95% wrong and I don't understand what I'm doing wrong.

Where should I start my analysis from and what should I look for?
where you are going wrong is looking for signals on a 5 min chart

try looking for signs of strength or weakness on a 30 min / 15 min and then drill down to 5 min / 2 min for entries

for example gu we know Thursday was heavy selling day , then Friday was chop but as price remained under the lower value area of prior day all day it was sell rallies so I was looking for weakness on 15 min charts

3 fairly easy trades and once range had been defined ( seem they were plying between 1.4600 and lower values area of 1.4530 )

for the week moving forward I am thing the weekly support breaks ( however there was very high vol on the 4 hour charts on Friday and the way this bounced around in a channel on a daily doji could be some buying interest)

to be honest on a 15 min / 30 min with patience vsa set ups are simple , 5 min you get caught in all kinds of chop

Attached Image (click to enlarge)
Click to Enlarge Name: chart2203.png Size: 230 KB
Blogging daily now at www.volume.zone
  • #7,377
  • May 16, 2010 12:27pm May 16, 2010 12:27pm
Thank you very much for your help your answer malcolmb14 and taomql4. I'll try to look at an higher timeframe and look for the signals you've given. Sorry for all my questions ;-)

But your answers always help me to progress a bit more :-):-)
  • #7,378
  • May 17, 2010 12:56am May 17, 2010 12:56am
If I enter long on a test signal after a selling climax, and then I see no demand bars. What should I do? Do I have to exit the trade, because of the sign of weakness? What is stronger? the test that I saw before or the no demand bars appearing now?

Is it right to think that No-demand or no-supply bars look like passive signals and we should not follow them if there was a signal in the other direction? For example, after an upthrust if I can see a no supply bar is it ok to stay short because the upthrust is stronger that no supply?
  • #7,379
  • May 17, 2010 3:10am May 17, 2010 3:10am
Dvarrin , in the first scenario the low volume up bar after the re-test of strength may or may not be no demand. If i look at it strictly from VSA then it is confirmation of strength because price has immediately responded on the upside after the market tested for supply.

However now if i include WRB Analysis then the closest Delta Zones would have to be considered to see the interaction of price to determine the validity of the background. This is done because if there is genuine strength in the background then price should manifest into the mark up phase. If not then something else is happening.

Now in the second scenario look at the low volume down bar as a confirmation of the UpThrust . In the Boot Camp CD's , Tom and Todd have coined this phenomena as "Polar Bear In Hawai". I respectfully disagree with them because in isolation a low volume down bar means no supply but with a weak background in place it is confirmation of Weakness and most likely the beginning of Mark Down unless it is forming a base for re-accumulation.

Hope This Helps

Cheers
Lalit
  • #7,380
  • Edited 7:11am May 17, 2010 6:34am | Edited 7:11am
Is there some explanation about WRB analysis available? I dont want to pay 400$ to buy the tutorials if it brings nothing more than VSA.

I encounter some problems after an effort to rise or an effort to fall. Tom Williams thought that if after an effort the price dont confirm the direction of the effort, then the effort is not genuine and we have to look for a reversal.

I am looking at EURUSD 30M, but after an effort to rise, the price don't seem to want to go up, there are no demand or upthrust appearing in the next 4 to 5 bars. So I go short only to see an other big candlestick going upwards.

What should I look for after an effort to confirm the direction or what should I look/wait for to enter in the opposite direction?
Should the bars following an effort have a much higher volume than the effort bar to be a genuine confirmation or reversal signal?

If after an effort to rise, there is an up-bar following it and then a down-bar closing below the low of the up-bar. Tom Williams says it's a very strong signal for a reversal, well not for me as it seems to be :-(
3 traders viewing now