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Trade Using VSA (Volume Spread Analysis)

  • #7,501
  • May 29, 2010 10:42am May 29, 2010 10:42am
Here is my trade on May 26

Weakness might have been in background since 25 May 19 PM so I looked for a short position after asian session open cause I thought It would retrace to support line or to MP Mediana .

Then I sold at 90.48 with the RAMBO by emini-watch.com.maybe RAMBO signify almost same as KRB TP was 90.14 which is MP Mediana.

URL of a pic is http://imepita.jp/20100530/002940

Quoting comeinvest
I'm just a newbie, please correct me if i'm wrong.
From my point of view, the high volume up bar was the SMART MONEY action to push the price beyond the resistance at 1.2390 but the up move stop by another resistance level at 1.2440.
Hello.comeinvest I am just a newbie as well. I think you have a right point of view
  • #7,502
  • May 29, 2010 11:08am May 29, 2010 11:08am
Quoting kamise
Have you ever consider what the Up-move with high volume for ?

If not so,why don't you read this thread from the first page before annoying our master?

This is not a very nice comment. If he is having trouble with something which you consider to be very basic then maybe, you could help him with it?

Things are only easy when you know the answers. Lets not forget, if you were to ask a more advanced question, it will probably seem quite straight forward to malcolm, but I bet he still answers anyway!
  • #7,503
  • May 29, 2010 12:30pm May 29, 2010 12:30pm
Quoting dvarrin
But on my chart it 's not buying climax. The trend is going down before the first up-move.

I'm lost!!! :-(
is this stock real ? is so tell me ticker and the date of the chart I can look at it better

I entered form in my esignal and got a completely different company
Blogging daily now at www.volume.zone
  • #7,504
  • May 29, 2010 12:31pm May 29, 2010 12:31pm
Quoting dvarrin
On the chart below, how do we know that it is absorption of selling (passing accumulation) instead of aggressive accumulation?

How do we know that there is a strong selling and it is absorbed? Where can it be seen on the chart? Couldn't it be simply buying without selling?
ok look at the chart and the not at the end ...the ultra high volume up barsi n 1st cluster indicate weakness is there
this is confirmed with up move in afternoon that was sold into also
Blogging daily now at www.volume.zone
  • #7,505
  • May 29, 2010 12:33pm May 29, 2010 12:33pm
Quoting comeinvest
I'm just a newbie, please correct me if i'm wrong.
From my point of view, the high volume up bar was the SMART MONEY action to push the price beyond the resistance at 1.2390 but the up move stop by another resistance level at 1.2440.
ultra high volume up moves on wide spread are nearly always selling ....

the ultra high volume is pros selling into the strength

this is why so many newbie trader lose money when they see these plays , they think they are buying with the pros

a pros trader will never buy something at the top if they do they wil mark up price thru resistance elvel very quickly , this is to trap traders in the trade . once you see this look for low volume tests of that resistance level that has now become support
Blogging daily now at www.volume.zone
  • #7,506
  • May 29, 2010 4:07pm May 29, 2010 4:07pm
NP camise ;-) Really I don't want to annoy everybody here and I have a lot to learn from you all!

That was a chart in an old book about tape reading.

Well I understand what was meant by the Smart money selling into strength and buying into weakness.

I have to read the Tom Williams book more. What I could retain for now is that if there is a down move with high and increasing volume, it means that the smart money is selling.

As soon as the selling volume start to decrease, that is a sign that SM is no more agreeing the down move.

Then if there is high volume on down bars with low spread, there is demand; the SM begins to buy.

On the chart I posted there is a down move with low quite volume. Then the price is going flat, on low volume. just before the first circled area. Lack of supply?? Then the tall bar in the circle with high volume is trange to me:

- the volume is high, so the SM must have something to do with that move;

- this is an up bar with a wide spread and high volume closing off the high: for me it looks like an upthrust: there was buying, but the bar failed to close at the high.

- this is an up-bar, and we have to look at up-bars to detect weakness and down-bars to find signs of strength.

So this could be buying from the SM to make weak traders enter on the wrong side. But as it is written in the chart, the SM is "absorbing the selling", thus we should look for a bullish or trading range in the near future.

The move on the right is small and could be right after a breakout and the SM my have decide to put weak traders on the wrong side with an upthrust.

This is the problem with my lecture of the chart. This all looks logical to me, but as the chart comment and all masters here shows that I'm wrong, I'd like to understand what is my mistake in this chart reading. What can tell me in the background that it is not an upthrust and the SM is instead accumulating the stock?
  • #7,507
  • May 29, 2010 4:24pm May 29, 2010 4:24pm
lol kind of wrong again ....

IF you have a down nove with ultra high volume then this could be hidden buyers , specially if at area of support.

think upside down
high volume up bars that have no follow thru - sign of weakness
high volume down bars that have no follow thru - sign of strength

low spread up bars into new highs - no vol = no buying interest
low spread down bars closing off lows in up trend = test = no selling interest

once you can wrap your mind around this you are 75% there in vsa

note the 2nd chart below the long took 12 hours to fomulate

Attached Image (click to enlarge)
Click to Enlarge Name: chart2267.png Size: 282 KB


Attached Image (click to enlarge)
Click to Enlarge Name: chart2268.png Size: 262 KB




Quoting dvarrin
NP camise ;-) Really I don't want to annoy everybody here and I have a lot to learn from you all!

That was a chart in an old book about tape reading.

Well I understand what was meant by the Smart money selling into strength and buying into weakness.

I have to read the Tom Williams book more. What I could retain for now is that if there is a down move with high and increasing volume, it means that the smart money is selling.

As soon as the selling volume start to decrease, that is a sign that SM is no more agreeing the down move....
Blogging daily now at www.volume.zone
  • #7,508
  • May 29, 2010 4:46pm May 29, 2010 4:46pm
Quoting malcolmb14
lol kind of wrong again ....

IF you have a down nove with ultra high volume then this could be hidden buyers , specially if at area of support.

think upside down
high volume up bars that have no follow thru - sign of weakness
high volume down bars that have no follow thru - sign of strength

low spread up bars into new highs - no vol = no buying interest
low spread down bars closing off lows in up trend = test = no selling interest

once you can wrap your mind around this you are 75% there in vsa

note the 2nd chart below the long took...
Ok ;-) I think I understand my mistake. The up-bar I was thinking was an upthrust is on ultra high volume. Normally it would mean weakness if the volume was high, but not ultra high. That's the ultra high volume here that changes the picture: instead of selling only when on a normally high volume, here we also have buying because the volume is ultra high :-))

Am I coming close to understand something more about VSA ?!?! :-)

Well, I'll study longer your very great charts and I'll read more the Tom Williams book to rebuild my understanding ;-)
  • #7,509
  • May 30, 2010 6:13am May 30, 2010 6:13am
Quoting kamise

...RAMBO signify almost same as KRB TP was 90.14 which is MP Mediana.
Hi Kamise

Can you shed some light on the abbreviations Rambo, KRB TP and MP Mediana?

Cheers Dutchy
  • #7,510
  • May 30, 2010 8:35pm May 30, 2010 8:35pm
Interesting stuff.

Quoting V_2008
Hello everybody! There is some thoughts on accumulation and distribution from one trader:
"Techniques of Tape Reading - Accumulation and Distribution

There are actually two types of accumulation/distribution scenarios. We have labeled them passive and aggressive. ....
A while ago I posted a chart up here (post #7345 ) in an attempt to answer one of my own questions. I'm going to re-ask the question. I'm still a VSA neophyte so its difficult for me to distinguish between market moves where VSA clearly signals the setup and moves of the market without any clear VSA setup that I just want to see (incorrectly) as a VSA pattern. (teach a man to recognize a polar bear and he'll look for it in Hawaii.) I still feel I see two types of move - those signaled by weakness or strength in the background followed a small period of listless market activity characterised by lower volume and a trigger bar to enter the trade (e.g. no demand bars or testing). After those, the market moves with effort bars. The other type I'm seeing is an upthrust or stopping volume then an immediate reversal without any confirmation bar to signal a proper entry. In terms of volume vs resulting change in price they are quite similar - the spread narrows on bigger volume indicating hidden buying or selling, but then the move just takes off without the usual confirmation you'd expect to see (no demand, testing, no supply etc) as I understand VSA.

I asked Malcomb14 and HG if they acknowledged that distinction (in moves), and traded them, or if they passed over the immediate reversals as lower quality VSA setups. I think HG basically said that the distinction was bogus (i.e. I wasn't being discriminating enough and filtering out things that looked a bit like VSA setups but actually weren't). This could certainly be the case (because I can't reliably pick the VSA moves yet - I was definitely surprised by the continuation of the GU up move on the 27th - I was expecting a the short pullback to be a real down move).

Malcomb14 if you care to comment again it would be appreciated.

I wonder if the two types of moves I've just described correspond to the markup/down phase after the passive/aggressive accumulation/distribution. Maybe the second type (immediate reversal) is the result of passive accumulation or distribution and the first is a result of aggressive accumulation or distribution. If so they ought to be recognizable according to the article V_2008 posted.

f451
  • #7,511
  • May 30, 2010 9:01pm May 30, 2010 9:01pm
as this week playes out I am following euro and es

I will post some charts at end of each day , maybe this will help you

Quoting f451
Interesting stuff.



A while ago I posted a chart up here (post #7345 ) in an attempt to answer one of my own questions. I'm going to re-ask the question. I'm still a VSA neophyte so its difficult for me to distinguish between market moves where VSA clearly signals the setup and moves of the market without any clear VSA setup that I just want to see (incorrectly) as a VSA pattern....
Blogging daily now at www.volume.zone
  • #7,512
  • May 30, 2010 9:13pm May 30, 2010 9:13pm
Quoting dvarrin
Up-move with high volume is strength!! Why is it weakness here?
wait..
if i remember correctly, we look for weakness in up bars (selling) & strength in down bars (buying)..

Quoting dvarrin
...Really I don't want to annoy everybody here and I have a lot to learn from you all!....
u dont annoy anyone when u are trying to learn
i believe kamise already apologized so it's ok now.
  • #7,513
  • May 31, 2010 12:20am May 31, 2010 12:20am
Quoting malcolmb14
as this week playes out I am following euro and es

I will post some charts at end of each day , maybe this will help you
Thanks again, Malcomb14, you're very generous.
If you could explain why you *didn't* take some of those possibles on your last chart (like the UTs around 23:00-00:00 5/28 or the 2bar reversal at 1:30 or even the one at 05:00) - I think that might really help.

f451
  • #7,514
  • May 31, 2010 2:35am May 31, 2010 2:35am
Quoting f451
Thanks again, Malcomb14, you're very generous.
If you could explain why you *didn't* take some of those possibles on your last chart (like the UTs around 23:00-00:00 5/28 or the 2bar reversal at 1:30 or even the one at 05:00) - I think that might really help.

f451
Knowing why people DON'T take trades and seeing the trades which were taken but failed are HUGELY beneficial for learning.
  • #7,515
  • May 31, 2010 5:15am May 31, 2010 5:15am
Hello kamise,

since you might have overlooked my question posed to you (see: http://www.forexfactory.com/showpost...postcount=7456), let me remind you with this post.


Kind regards,

Wolfgang
  • #7,516
  • May 31, 2010 6:48am May 31, 2010 6:48am
Quoting declaime
Hello kamise,

since you might have overlooked my question posed to you (see: http://www.forexfactory.com/showpost...postcount=7456), let me remind you with this post.


Kind regards,

Wolfgang
Hello,Wolfgang

Apologies for missing your post.

Currently I dont look for any particular signals from the tick volume histo neither from The better volume itself.

What I am doing is only to watch a relationship among these 2 volumes and price aciton.

p.s
I greatly appriciate all generous contributors in this thread, you keep my trade invincible so far since March 2010.
Regards,
  • #7,517
  • May 31, 2010 9:57am May 31, 2010 9:57am
Quoting f451
Thanks again, Malcomb14, you're very generous.
If you could explain why you *didn't* take some of those possibles on your last chart (like the UTs around 23:00-00:00 5/28 or the 2bar reversal at 1:30 or even the one at 05:00) - I think that might really help.

f451
in the last chart I have good reason to exit trade on the upo candle on ultra high vol

the reason i did not take sell is due to the hulls moving ave still being green

these days I am not picking tops and bottoms , instead i am trying to get a portion of the range.

If after seeing that high volume up candle and then seeing another attempt at this area on a no demand and price breaking under the jma / hulls i would have taken the sell

essentially i am looking at vsa 1st then confirmation of trade using jma ( pink / blue lines)
Blogging daily now at www.volume.zone
  • #7,518
  • May 31, 2010 12:05pm May 31, 2010 12:05pm
Anybody knows how the relative volume bar is computed in tradeguider?

What is the formula used to determine that there is more buying than selling?

Daniel
  • #7,519
  • Edited 11:15pm May 31, 2010 9:44pm | Edited 11:15pm
Quoting malcolmb14
in the last chart I have good reason to exit trade on the upo candle on ultra high vol

the reason i did not take sell is due to the hulls moving ave still being green

these days I am not picking tops and bottoms , instead i am trying to get a portion of the range.

If after seeing that high volume up candle and then seeing another attempt at this area on a no demand and price breaking under the jma / hulls i would have taken the sell

essentially i am looking at vsa 1st then confirmation of trade using jma ( pink / blue lines)
Thanks again.

Using a fast MA (like JMA or Hull MA) and seeing when price action breaks the MA in the direction of the VSA bias sounds like a great filter against those drifty phases after signs of weakness or strength. I may try using Ehler's Adaptive Laguerre Filter for that.

After re-reading some of your and HG comments and MTM I think I've figured out what I've been doing wrong in determining the background. I've been trying to pick it without paying much attention to the climatic bars, where the SM have opportunity to sell into the mass buying, or buy into mass selling. So I went over some charts last night looking for climatic volume and wide spread bars, like hidden potential selling, as the starting point to figure out strength or weakness. With that in mind and everything became a lot clearer. I find it's easier to see climatic bars on the 1HR than the 15M chart.

What are you using the RSX for? And what role does S/R (e.g. pivots or murrey math lines) play in your decision making process?
  • #7,520
  • Jun 1, 2010 8:58am Jun 1, 2010 8:58am
Quoting f451
Thanks again.

Using a fast MA (like JMA or Hull MA) and seeing when price action breaks the MA in the direction of the VSA bias sounds like a great filter against those drifty phases after signs of weakness or strength. I may try using Ehler's Adaptive Laguerre Filter for that.

After re-reading some of your and HG comments and MTM I think I've figured out what I've been doing wrong in determining the background. I've been trying to pick it without paying much attention to the climatic bars, where the SM have opportunity to sell into the mass...
thank's
"Imagination is more important than knowledge" Einstein
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