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Trade Using VSA (Volume Spread Analysis)

  • #7,901
  • Jun 23, 2010 6:39am Jun 23, 2010 6:39am
Many Thanks to Shamus, Tom and chief1oar. I have much to learn, but I hope not to annoy you too much with my questions. Best Wishes for Big Profits

Jim Forte wrote an article called "Anatomy of a Trading Range" that was published in MTA Journal Summer-Fall, 1994, and the interested reader may find it useful from a VSA perspective.

http://www.informedtrades.com/attach...ding-range-pdf
  • #7,902
  • Jun 23, 2010 7:26am Jun 23, 2010 7:26am
Quoting rbumbalough
Many Thanks to Shamus, Tom and chief1oar. I have much to learn, but I hope not to annoy you too much with my questions. Best Wishes for Big Profits

Jim Forte wrote an article called "Anatomy of a Trading Range" that was published in MTA Journal Summer-Fall, 1994, and the interested reader may find it useful from a VSA perspective.

http://www.informedtrades.com/attach...ding-range-pdf
Will check it out. Thanks for the link.
The trend always ends.
  • #7,903
  • Jun 23, 2010 11:04am Jun 23, 2010 11:04am
Quoting rbumbalough
Many Thanks to Shamus, Tom and chief1oar. I have much to learn, but I hope not to annoy you too much with my questions. Best Wishes for Big Profits

Jim Forte wrote an article called "Anatomy of a Trading Range" that was published in MTA Journal Summer-Fall, 1994, and the interested reader may find it useful from a VSA perspective.

http://www.informedtrades.com/attach...ding-range-pdf
thanx mate for the link...

cheers
  • #7,904
  • Jun 23, 2010 12:04pm Jun 23, 2010 12:04pm
Quoting rbumbalough
Many Thanks to Shamus, Tom and chief1oar. I have much to learn, but I hope not to annoy you too much with my questions. Best Wishes for Big Profits

Jim Forte wrote an article called "Anatomy of a Trading Range" that was published in MTA Journal Summer-Fall, 1994, and the interested reader may find it useful from a VSA perspective.

http://www.informedtrades.com/attach...ding-range-pdf
Just finished reading this document. Found it very helpful. Many thanks to you.
  • #7,905
  • Jun 23, 2010 11:26pm Jun 23, 2010 11:26pm
Can someone please take a look at GBP/CAD? The volume is awful and seems to be non-existant for the past few days. Any one had seen something like this before on pair or why it might happen?
  • #7,906
  • Jun 24, 2010 3:29am Jun 24, 2010 3:29am
Hi,

I just wanted to make you notice the particularities of the chart below.

The first indicator is the volume and the second one is the spread (high - low) for a bar.

As you can see on the volume indicator, there is some kind of cycle on the volume, and if you look at the price chart, you can see that there is nothing important happening on the price when the volume is really low or really high.

This should tell us that the volume doesn't correspond to the Smart Money actions, but simply follows a common cycle where there is volume during the day than during the night.

If you look at the spread, you can see that it is very similar to what volume is doing: a wide spread is usually do to high volume and low spread is due to low volume.

VSA is using volume, spread and price, but it seems that volume and spread are related together.
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  • #7,907
  • Jun 24, 2010 5:27am Jun 24, 2010 5:27am
Hi,
Does anyone know a broker with web based platform that provides the volume?

Thanks
Knowledge is possessed only if is shared
  • #7,908
  • Edited 7:30am Jun 24, 2010 7:17am | Edited 7:30am
Quoting dvarrin
Hi,

I just wanted to make you notice the particularities of the chart below.

The first indicator is the volume and the second one is the spread (high - low) for a bar.

As you can see on the volume indicator, there is some kind of cycle on the volume, and if you look at the price chart, you can see that there is nothing important happening on the price when the volume is really low or really high.

This should tell us that the volume doesn't correspond to the Smart Money actions, but simply follows a common cycle where there is volume...
It might seem that way but it all comes together with the A. I have looked at thousands of charts in every time frame and have traded pure VSA using SMART for the last year with incredible results. The results are consistent enough to not just be a fluke.

Plain and simple VSA works because of how the A relates to the V and the S

Add some background strength or weakness to the mix and well... you get the idea.

How VSA says to Interpret each of it's parts and put it together to take a trade or more importantly, stay out, is indisputable.

That said, I am working on an interesting idea that will seek to smooth out these peaks and valleys time/volume wise on certain longer term time frames. Hopefully this will better handle the normal market closing/opening increasing and decreasing volume areas.

Good luck trading.
The trend always ends.
  • #7,909
  • Jun 24, 2010 7:19am Jun 24, 2010 7:19am
Quoting corcha
Hi,
Does anyone know a broker with web based platform that provides the volume?

Thanks
I don't know of any but I haven't really looked into it either. I know google finance provides volume for their stock charts so you can check them as I believe they do offer currency quotes as well.
The trend always ends.
  • #7,910
  • Jun 24, 2010 7:46am Jun 24, 2010 7:46am
Quoting Shamus
It might seem that way but it all comes together with the A....
PS: Dvarrin, if you could, please post up a chart with your indicators so I can illustrate my point by posting up a SMART chart to compare. This is one area where SMART shines. SMART allows you to very easily see the signals on a chart and it cuts the analysis time way down.
The trend always ends.
  • #7,911
  • Jun 24, 2010 7:49am Jun 24, 2010 7:49am
Quoting Shamus
It might seem that way but it all comes together with the A....

Thank you very much for your answer Shamus! :-)

I'm only a bit scared to see that volume seems to be following a cycle.
If we look at a daily chart, it is quite impossible to trade on them, because every 6th day there is a very low volume/very low spread bar.

I'm not sur to fully understand VSA: it looks like I'm always trading on the wrong side or I miss opportunities.

Could you please explain to us how you perform a VSA analyse of a chart?

Our main tools are:
- volume
- spread
- price action
- trend lines
- trend channels
- trading ranges (accumulation / distribution / ...)

I know we have to start with the volume. How do you analyse the volume? Are you watching each bar independently from the other, or you are watching at the average volume of a price move ?

How do you determine where something is likely to happen? Are you using trend channels or horizontal trading ranges and you look for shakeouts or so?

That's easy to analyse a chart after the move has occured. Say there was a trading range and the price is making a shake out to attract weak traders, and then we see a back-up with no-supply, and then the price moves higher and higher until it breaks above the trading range and continue further.
In that case it's easy to say that the trading range was accumulation, that the breakout below the channel was a shake out and then we should have gone long on the no-supply bar.

But if we are at the shake out position, how do we analyse the price action? How can we know that the trading range was accumulation?
How can we know that it is a shake out? There could have been no-demand near the top of the trading range!!
Then when we see the no-supply bar after the shake out, how do we know that this signal is more important than the no-demand bar and the breakout below the trading range? It often happen that there is no-supply at the beginning of a down move and it could go up a bit before it resumes it's trend downwards.

Could you please explain us how you proceed step by step?

Daniel
  • #7,912
  • Jun 24, 2010 7:59am Jun 24, 2010 7:59am
Quoting Shamus
PS: Dvarrin, if you could, please post up a chart with your indicators so I can illustrate my point by posting up a SMART chart to compare. This is one area where SMART shines. SMART allows you to very easily see the signals on a chart and it cuts the analysis time way down.
Here is the 15m chart of EURUSD.

Where do we have some VSA signs of strength or weakness?

Can we determine if the price should go up or down in the future? Or do we have to wait for something first to happen?

One of my big problems is to locate selling climax and buying climax and to determine if there is accumulation, distribution or nothing in a trading range.


Daniel
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  • #7,913
  • Jun 24, 2010 8:14am Jun 24, 2010 8:14am
Quoting dvarrin
Thank you very much for your answer Shamus! :-)

I'm only a bit scared to see that volume seems to be following a cycle.
If we look at a daily chart, it is quite impossible to trade on them, because every 6th day there is a very low volume/very low spread bar.

I'm not sur to fully understand VSA: it looks like I'm always trading on the wrong side or I miss opportunities.

Could you please explain to us how you perform a VSA analyse of a chart?

Our main tools are:
- volume
- spread
- price action
- trend lines
- trend channels
-...
All great questions and I know exactly what you mean on the longer time frames. You can either ignore the low volume signals on Sundays or look for the very clear strong signals as I do and drill down to the shorter tf's to get a sense of the BG on multiple time frames (SMART BG Scanners do this easily all on one chart)

In terms of Accumulation and Distribution... I rarely look at them the way VSA says to (In forex anyway) The simplified reason is that there is no defined float for example and things can not simply be accumulated to cause a squeeze. The market is too large. Hidden Gap.... quite possibly the best trader that ever graced our thread disagrees with me somewhat here but you can read his take earlier in the thread.

I look at SR and pure VSA only.

Whatever you decide... don't do as some fools do and try to use a moving average to trade VSA. This is really silly and very dangerous. Remember prices moves lines not vice versa.
The trend always ends.
  • #7,914
  • Jun 24, 2010 8:19am Jun 24, 2010 8:19am
Quoting dvarrin
Here is the 15m chart of EURUSD.

Where do we have some VSA signs of strength or weakness?

Can we determine if the price should go up or down in the future? Or do we have to wait for something first to happen?

One of my big problems is to locate selling climax and buying climax and to determine if there is accumulation, distribution or nothing in a trading range.


Daniel
oops posted the unannotated (is that a word) version lol Sorry about that.
The trend always ends.
  • #7,915
  • Jun 24, 2010 8:23am Jun 24, 2010 8:23am
Quoting dvarrin
Here is the 15m chart of EURUSD.

Where do we have some VSA signs of strength or weakness?

Can we determine if the price should go up or down in the future? Or do we have to wait for something first to happen?

One of my big problems is to locate selling climax and buying climax and to determine if there is accumulation, distribution or nothing in a trading range.


Daniel
You need to get a sense too of EOM (Expectation of movement) Pips wise I mean. a Upthrust (Valid) is generally regarded as a very strong reversal/short signal. On a 5 minute eu chart an upthrust might only yield 20 or so pips before a contradicting signal or strength indication bg scan comes in while on a h1 it could be up to 100 pips or more.

I would say practice with getting the BG right and follow a few of the stronger patterns and it should all start to "click"

I hope this helps.
The trend always ends.
  • #7,916
  • Jun 24, 2010 8:24am Jun 24, 2010 8:24am
Would it be possible for you to post a H1 or H4 chart of any currency and show us what you're watching at step by step?

Do you have some examples to help me answer my questions?

Daniel
  • #7,917
  • Jun 24, 2010 8:26am Jun 24, 2010 8:26am
Quoting Shamus
You need to get a sense too of EOM (Expectation of movement) Pips wise I mean. a Upthrust (Valid) is generally regarded as a very strong reversal/short signal. On a 5 minute eu chart an upthrust might only yield 20 or so pips before a contradicting signal or strength indication bg scan comes in while on a h1 it could be up to 100 pips or more.

I would say practice with getting the BG right and follow a few of the stronger patterns and it should all start to "click"

I hope this helps.
What are the stronger patterns? Do you have some examples? I always notice them when they have already happened :-(
  • #7,918
  • Jun 24, 2010 8:34am Jun 24, 2010 8:34am
Quoting dvarrin
What are the stronger patterns? Do you have some examples? I always notice them when they have already happened :-(
I personally love simple ut's and rut's. What I dubbed spinning rowboats are also quite good. No demands, supply tests etc... I would start with one or two patterns/signals. Master those and then move on.

PS Some signals require confirmation and all require bg corroboration. Take a look at the articles by Todd in the first post of this thread. They are very excellent sources of information.

I hate to keep bringing it up but take a look at SMART too. it does all the work for you.

Will Be back later.... helping a customer in the chat.
The trend always ends.
  • #7,919
  • Jun 24, 2010 8:45am Jun 24, 2010 8:45am
Quoting dvarrin
Would it be possible for you to post a H1 or H4 chart of any currency and show us what you're watching at step by step?

Do you have some examples to help me answer my questions?

Daniel
Here's a uc chart from yesterday... I am done for the week and need to work on some SMART stuff for an update. You can come in the chat as well if you have more questions.

This is an h1 usdchf chart:

http://posterous.com/getfile/files.p...chfrowboat.png

Comments are here (I don't want to retype them all): http://pipbuilders.posterous.com/a-s...ified-by-smart
The trend always ends.
  • #7,920
  • Jun 24, 2010 10:25am Jun 24, 2010 10:25am
Does a wide spread bar on low volume correspond to something in VSA?
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