Trade Using VSA (Volume Spread Analysis)

It can vary greatly depending on if you're using the combined feed on eSignal or one of the single providers. Just FYI, eSignal's FXCM feed and the tick data in FXCM's Metatrader are quite similar.

I need opinion about mml..

if interested please chek this out..

bandung

Thanks.

Hi Shamus, do u trade futures cfds?

Lubo.

Price did get under the 30 ema and then found the earlier support around the POC level from market profile set on the US close. Again, the increase in volume gave us a heads up and the additional combination of a fib 61% retrace and a time line was sufficient for a buy. Will we now make a new daily high??......TWT

Yes and after the buy signal, price pulled back only once to the rising 30 ema and moved up ~150 pips to hit the 4600 level an hour before the UK close.

The usual intra day profit taking then gave a ~50 pip retrace.....

Heya Lubo (Long time no see) I trade Forex. I use globex charts using VSA to trade multiple pairs one way or another.

I hope all is well.

Any updates on that ?

I don't know but I've just searched my Gmail and the last email I have from them was the confirmation of the signup.

same here, still no smart yet

Oh how I long to be smart.

We are having some issues with the mailing. We are trying smaller batches.

In the meantime I thank you for your patience.

lol

I use futures and SMART/VSA to trade multiple pairs based on the futures. For instance if the YEN looks strong VSA wise on globex I will go short usd/jpy eur/jpy gbp/jpy etc.

don't assume just because the last move was up, the next move is down. Make sure you're checking for ultra high volume, wide spread bars to show if there is strength or weakness in the background. Sometimes you get a couple of mark downs before accumulation, or a couple of mark ups before distribution (they look like steps). badly failed tests are a sign of weakness, and if you see them you need to re-evaluate thoughts of going long, and a test in an up move can be a sign of continued strength.

It's always best to be looking for a solid VSA sequence - strength or weakness in the background, then some pattern of confirmation bars. Then confirm with whatever other filters you would normally use on your trades, price breaking moving average, etc etc

Nice. And I like the uncluttered way you've all the relevant price levels sessions, previous open close etc on your MT4 chart. Care to post a template?

good points, thank you.

I found myself a little over trading, Could you tell me how many trades you make everyday upon the current market condition?

somebody wanna touch my sl.. hmm

Probably the best way to answer that is to pick a pair you trade and go back and look to see how many big moves you typically see a week. Go back through the last 3 months, ignore the Greek crisis around 5 may and just see how the pair moves. I suspect there will be at least 1 or 2 reasonable size moves (100-200+ pips) every week, everywhere you look.

I actually don't take that many trades. I aim to take 3-5 a week, and that might be across a few pairs. There are lots of trades to be had with valid setups appearing on many pairs, and many timeframes, but over-trading is also a weakness in my current trading, so I'm trying to refine my discipline by attempting to only take high quality set-ups. Taking only quality setups makes you far more profitable, and improves your confidence significantly.

The main issue I find with VSA is that even once you have correctly identified strength or weakness in the background, and found your confirmation bars (one or more of no supply or successful tests if there is strength, or one or more of no demand and upthrusts if there is weakness) you still might get stopped out after your entry, if the market drifts lower before mark-up, or has a couple of upthrusts before mark-down. This is just a risk you take. (You can reduce that risk by looking for support/resistance areas to place your stops behind).

If you're looking at a top, once you identify weakness, see a no demand bar or upthrust and go short, there will generally be at least a small move in your favour (say 50 pips) - but it might not be THE mark-down (see the chart in post 7326, or the first chart I posted in 7345 for an example of these kinds of tops). You can definitely trade these dips at the top for good profits, as long as you set your profit targets sensibly, whether you catch the big mark down or not.

My experience so far is that in currency trading the tops (distribution) are more protracted than the bottoms (accumulation), and often have several dips, followed by minor rallies, often with upthrusts, often each making lower highs, and then sometimes another dip and minor rally, before finally the big mark down occurs. The big moves are usually 150-250+ pips.

Conversely, in forex, reversals at the bottom seem to be much faster than stocks. Usually if you have identified strength, and see a valid test it's best to get in long straight away, because the mark up is probably coming. I'm not sure why - perhaps because the floating supply is more session dependent, and the SM don't want to wait for other players to get in and muck up their play.

I found this difference (in behavior between tops and bottoms) pretty confusing at first, and it definitely messed up my VSA trading in two ways - firstly in clouding my expectations around my profit targets (i.e. how big is the move going to be, and if I need to set a take profit target because I can't watch the trade, where should it be). This lead to a number of winners that became breakeven or losers (particularly when the new york session faded london). Secondly, I kept missing viable long trades because the mark up would happen with very little confirmation, and I kept looking for a protracted accumulation phase much like the distribution at tops, with several tests, dips and rallies, occasional shakeout etc. Instead it seems to often be stopping volume, test on lowish to average volume (rather than really low) than bam! Even now I find it hard to pull the trigger on longs after strength in the background because I keep looking for more than one confirmation bar.

Identifying the background - This is definitely the art in VSA. My starting point is to look for wide spread, ultra high volume bars. I find it easiest to see these on the 1HR or 4HR timeframe, then drill down to 30m or 15m once I've found one and check for confirmation bar and wait for a valid entry. (if you're looking at a smaller timeframe chart, say 15m or 30m, a wide spread high volume move might be spread over several bars). A wide spread ultra high volume down bar, especially after a down trend is hidden potential buying = strength in the background. A wide spread ultra high volume up bar, especially after an uptrend is hidden potential selling = weakness in the background. You generally see stopping volume or squats (narrow spread bar with very high volume) after these at the bottom, and upthrusts or squats at the top, but not always.

Hope that helps.

f451

Gavin sent an email today talking about a massive shake out in the markets. and es back above 1100 and beyond

what I do not get it then why is the effort to rise on low volume , in fact one being a no demand bar.

then today we see an upthrust of sorts on huge volume right above support.

I think if anything we get a shake out to 950 , before any kind of move up , and that move up will not be 1100 , maybe 1050 test then I will be looking for wave 3

I see what Gavin is talking about but so far every up move is being sold into , maybe the market is not ready to rise yet , and the strength that is there on the shake out is causing this volatility we have now.

950 to 900 then looking for up move ...