vsa with Malcolm

Thanks for posting those files f451, been reading them for the past hour. So do you know who this karthik guy is? I still lean towards Williams, but Karthik's perspectives do seem useful.

Just want to add another view.

On first glance it looks like a simple 'double top' style setup with the 2nd top on less volume that the first, a classic.

However, on the first top, it price went up on reducing volume as we'd expect for a bounce. But this time we're going up on INCREASING volume(except the very last bar).

One of the times where care has to be taken when trading an 'end of rising market' setup is when we can see an old top in the recent past. When this occurs, the narrow spread bar at the top could simply be absorbtion by the SM.

If we add to this, the wide spread up bar closing near the highs on very high volume, we could have a situation where SM have tried to push up through the old top but were unable to because of the weak holders at that price area.

As Mal says, we should wait for conformation for either direction.

I used to have a major problem with Gavin and Malcolmb. "They call themselves VSA traders yet they have indicators on their charts",I would say to myself. What I have come to understand is that while they have indicators on their charts, they are not indicator traders. They merely use indicators to indicate trend. Gavin does not go long simply because his bars turn green and his diamonds turn green. Mal does not go short simply because the Hulls cross or turn red. Both in fact are skillfully reading the chart to determine the relationship of supply and demand and then entering trades that are in harmony with the trend. Simply, they are TREND TRADERS.

That's right. Even though VSA "signals" weakness at the top or strength at the bottom, they both are only looking to enter the market when the trend is on their side. The trend is your friend may be a trite phrase, but that does not mean it is not true. Tom Williams, the father of VSA, may be able to call the turn and enter aggressively, but most other traders help themselves by not trying to top and bottom pick, but rather by "wanting what the market wants" as defined by its trend.

The best trends tend to come only after the market has built a cause. Put another way: (Generally) The longer the distribution phase, the stronger the resulting fall. (Generally) The longer the accumulation phase, the stronger the resulting rise.

Take a look at the chart below.

Before getting into the individual candles, let's think big picture for a moment: the market at any onetime is in one of four phase-bull (uptrend), bear(downtrend),accumulation or distribution. The market may jump from bull to bear, but as previously stated, most of the time there is a causal relationship between the length of the distribution phase and the resulting bear phase. As retail traders, our ability to make money is in direct proportion to our ability to identify and take advantage of the bull and bear phases, not the accumulation and distribution phases.

Don't get me wrong. Properly identifying accumulation and distribution is important, but our entries come once the EFFECT of the accumulation or distribution occurs. That is, when the new trend emerges.

The chart below shows three distinct phases. We start off in a bull phase. Followed by a distribution phase and then a bear phase.

Note that evidence of a change in supply/demand (weakness) comes as price is rising and the trend is up. Yet the best places to get short come as price is rising (on low volume) and the trend is down. Therefore, the No Demand we want to see will come after the change in trend.

A: Climatic up candle closing off its high with the next candle down. This is a sign of weakness. We know we are in an uptrend. Price is above the BPL and above MeanSwing. Moreover we know one candle does not a mean get short.

B: Tricky but it does not have to be. Up candle on volume less than the previous two candles-No Demand. Two clues hear make it less tricky. The trend is up (above the BPL and MeanSwing). The volume while lees then the previous two is still higher than average. This is my least favorite type of No Demand candles because it makes a lower low and not a higher high. I really like NDs that make a higher and not a lower low on volume less than the previous two candles. The herd know this type of candle as a "buying candle". That is of course not true and only further sucks the herd into the wrong side of the market. The other reason I don't really like this type of ND is that if the next candle had been up, then it would be a Hidden Test.

C: NFP release. We know from VSA 101 that the BBs love to use news releases to take their positions. The larger volume on the release helps enter a position without moving the price against themselves. Here we have Ultra High volume (Yao Ming) on an ultra wide spread closing off the high. Supply must have entered hear. If not then the close should be on the high. VSA tells us that when weakness appears, it appears on up candles. This candle is up and weakness appeared.
How cares what the news was? All we need to know is what price did on all that volume.

D: If this candle had been down than there would be absolutely no doubt that (C) had selling. On this candle the close is up, but in the lower half of its range on increasing volume and a smaller range than the previous candle. This is an Up Thrust. The appearance of this Up Thrust is further evidence of weakness on (C) even though the close is up.

But we can't short this market yet. We are still in an uptrend.

Note the candle 2 candles later. This candle closes up on volume less than either (C or D) with the next candle down. Volume on the up candles is dwindling. "It takes an increase of buying, on up-days (or bars), to force a market up".-Tom Williams, MTM, p40. The path of least resistance is changing.

E,F&G: All the previous weakness has caused the market to move sideways. We see further signs of weakness in the form of Up Thrusts, Up thrusts over 2 bars, and 2 bar reversals.

The market has now entered a distribution phase. Our key here need be that we see weakness in the background and price is beginning to trade on either side of the BPL. We know that we only want to take longs when we are above it and shorts when we are below. We also know with the weakness in the background we should only be targeting shorts. We also know that the path of least resistance is also defined by what side of MeanSwing we are on. Prices remain above it so we can't yet get short.

H: Aggressive "intuition" entry. We have a narrow range up candle on volume less than the previous two candles. Note that the volume is yellow so not only is it less than the previous two, but the lowest volume in the last 20 candles. This candle is partially within the range of the long shadow of our Up Thrust at (D).

It is below the BPL which tells us the trend is down. We have gone from a bull phase to a distribution phase and now have entered a bear phase. It closes just slightly above the MeanSwing so it is not ideal but if you have an itchy trigger finger there is plenty of evidence to take a short here.

I: The better entry. Here price is below the MeanSwing and below the BPL. The candle itself is making a higher high and not a lower low as it closes up on volume less than the previous two candles with a narrow range (NR4).

Something interesting happens here. The proper entry method is to look to enter on a breach of the low of the ND candle. It is not a confirmed ND until the next candle closes down. But we may already be in the market before the next interval closes if it trades lower than the possible ND's low. In this case the next interval makes a lower low, which brings us into the market, but the close is higher than the previous candle. This means the ND candle is not confirmed yet we are brought into the market. The market immediately turns down and goes lower. This sequence can confuse some traders so I wanted to point it out. Technically No Demand is an up candle on volume less than the previous two candles. Confirmation comes when the next candle is down. We enter prior to confirmation because of the technical definition.

To sum it up: We all trade our own personalities. Trend trading may not be in your make-up. It does have its advantages for the retail trader. It is not antithetical to VSA. Find a comfortable way to define the trend and then trade in harmony with the Smart Money.

Without doubt one of the better submissions for a retail trader that I have come across.

very impressive! above info has been helpful, thanks!
can i know what is VSA 101 and the BPL's full name? does BPL work like a HULL MA, for MT4?

you mentioned in point B: "if the next candle had been up, then it would be a Hidden Test." u mean a hidden test to go up or down?

in point H "It closes just slightly above the MeanSwing"... what does "meanswing" mean?

For the H bar, r u saying it would act as a better no demand if the body of candle "H" is totally within the body of "D" instead of being positioned at the wick of "D"?

[quote=HiddenGap;3848981]


The best trends tend to come only after the market has built a cause. Put another way: (Generally) The longer the distribution phase, the stronger the resulting fall. (Generally) The longer the accumulation phase, the stronger the resulting rise.

Thanks HG for clearly explaining with clarity and lucidity .your post are really a gift.

For EUR/USd last week at the 2300 area it was clear that accumulation was happening. When it reached 2500 area it was playing in that area for a pretty long time and i took it to mean that distrubution was going on and put in my shorts . as you now explained
" but our entries come once the EFFECT of the accumulation or distribution occurs. That is, when the new trend emerges."
i had also noticed one thing in the 2500 area... all the down bars were being lapped up with nice volume..it was really accumulation II going on.

in the 2600 area also downbars were taken up with nice volume.....but then the bars started drifting down with low volumes at down bars..

hi what do u mean "downbars were taken up with nice volume"? do u mean the chart has got downbars with longer bottom wicks.. and tat probably tells us there are buyers in that downbar??

how do u know the majority of "nice volume" which u mentioned is made up of buying and not selling?

End of rising market would be if new fresh ground or form some month nothing there was, that is what i remember from Tom Williams.

But the main point everyone should get is right - supply swamping demand.

If that was in new fresh ground we would be sure that this is supply, but, as we have on the left resistance, we cant be sure that this is end of rising market.

Best,
Tom

If price was distributed good, You will see downbars on lower volume and that is logical, because, for price to go down, You dont need such effort. All You need as proffesional is to witdraw from market.
That why markets tend to go lower on lower volume than Up on higher volume typicaly.

Best,
Tom

[quote=manojsai;3849039]

the volume was average......in my better volume indicator. when it was drifting volume was below average.

i am still a novice in volume friend. that is why i am posting to know if i am wrong and to get advice.

Take a look at the chart below. The No Demand on this chart is very nice and is within the long shadow of a beautiful Up Thrust. The long shadow show price rejection. Thus when price move back into this "rejected" area, it does so on decreasing volume or decreasing Professional interest. So (H) would be more powerful if it was completely within the long shadow. Yet the fact that some part of (H) trades into the rejected area on low volume is key.

P.S. This chart was originally going to be used to compare and contrast the chart in the previous post. Selling on that No Demand is not a good idea (as good of a No demand as it is) because the trend has not changed. Price does go down and if you are a very quick scalper type of trader you could take it, but a trend trader needs to wait for the trend to change.

VSA 101 just means basic VSA. In America entry level college classes often have numbers in the 100s signifying foundational level material. Seniors often take classes in the 500-600s. The material is more advanced but one has to take and understand the basic material first.

So when I say VSA 101, I am really speaking of a concept that is very basic and at the heart of VSA. You have to understand that weakness appears on up bars (when it appears) before you can begin a discussion of Up Thrusts and No demands.

The Dynamic Balance Point Line serves the same purpose as the Hulls. It has the added feature of being a mutliple timeframe tool as well.

A Test means the BBs are searching for sellers (supply) in the market. "The danger to the professional operator who is BULLISH, is supply coming into his market(selling) because on any rally, selling on the opposite side of the market will act as resistance to the rally and may even swamp his buying.." Tom Williams, MTM, P34.

Testing is ALWAYS about prices going up. If it is successful test, volume will be low and prices will respond to the upside immediately. If it is a failed test, then the next candle will be down or the volume will be high. The high volume indicates supply present as does the lower close. If the volume is low and the next candle is up, but price does not move higher, then we have no results from a test. This too is a sign of weakness as successful tests should bring higher prices immediately.

Also i wanted to add to HiddenGaps post about tests:
If You see test on high volume and price goes up than dont be surprised why it came back.. Because You had high vol test there and price came back because supply was not removed properly yet in that time.


If that has been said already somewhere, sorry.

Best,
Tom

In this situation, you will have already seen a substantial rise in the market. The likely end of a rising market is hallmarked by a narrow spread, on an up-day (or bar), accompanied by very high volume.
Ideally, the market should close on the high – this ‘capping’ action adds extra significance to the weakness and the price should fall immediately in this situation.If the prices are into new high ground, this will usually mark a top. The professional money has taken the opportunity to transfer stock bought at lower levels to potential weak holders. How do we know this?
Well, if the professional money had been bullish (there is no way they are going to give you a good deal),the spread of the day would have been wide and up. The spread is narrow because they are selling into a surge of buy orders, which prevents the price from rising too much. The market-makers are giving the buying public a good price because they have detected overall weakness and are taking profits.

Tradeguider is picking up those bars as potential supply hitting the market ..

No matter what they are for sure sellers seem to be on the futures

Mal can you post an EU chart from TG? Thanks in advance.

have to rest and go sideaways after any high volume up days, because the selling has to be disappear before any further up-moves can take place..

for GU, last thursday and friday, as if this sentence summarize what happens.

on the other hand, at daily chart, you ll see, we have lower tops, and it indicates a probable weakness... and we almost came such a top , which is critical level.

meantime, please notice that, in this week i have seen some hourly bars are closed on its previos highs in last minutes, addtionally, previous friday, it has been marked up with very very low volume...

and if this is our new top, it took more time than previous ones, in other words, any down move could be more than previous ones..

and now, i am reading the book again

and, i am "bias"less...

cheers..

I am just saying Tom Williams words - that all
Nothing new i will not say.

Best,
Tom

potential stopping vol daily dx

may test 84 whole number yet but strength is there

also eu potential buying climax

Karthik's is just his own (detailed) summary of Tom Williams - use it to assist you in spotting the specific bars and learning to read VSA. There is no substitute for Mr Williams tho.

Thanks HiddenGap for the detailed explanation above! also thanks tfflyer for your contribution.

Hi Malcolmb or anyone else who can answer this:
for a good "end of a rising market" bar, should it need to be within the range of a previous up bar or within the top wick of a previous upthrust bar or it is okay if it's just anywhere above the low of the previous upbar as long as it is a short candle with close in the middle?

for a bar like "end of a rising market"
will the close be in the middle to lower range be better? and is it necessasy to have wicks on both side of the bar?

you mentioned "If the prices are into new high ground, this will usually mark a top."... how long does a level has to be untouched before it can be considered a valid fresh high ground? (i think it is very very rare if a level has never ever been touched before)

for the opposite, do u call that bag holding-- is that like a test bar/no supply but with very high volume instead of low?..

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http://i42.tinypic.com/20rtzp.gif
image is taken from "petefader" at post #231 at this link: http://forums.babypips.com/free-fore...tml#post177813

for the above chart, i see high volume at the "bottom pivots" which mean some buying there.. the TS said :
"Buyers should be looking for a retrace to gather up more longs before another test of the high. I may look to get long on that retrace, if volume agrees. Also, I'll be looking for lower volume on a test of 1.3678 area and a continuation up OR, high volume to create a double top there, and a short entry."

Q1) does he mean that the last red area may be an accumulation area, and he can only go long when he confirms that by waiting to see if a test with low volume appears at 1.3678?
Q2) for "high volume to create a double top there, and a short entry", does that high volume bar need to be low spread? up/down bar? or it doesnt matter as long as it has got a long upper wick to create that double top?

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f451, i noticed a "uhigh" and "uwide" in your VSA Cheat Sheet.txt, what does it mean? (ultra?)
For the "NARROW SPREADS AND HIGH VOLUME (SQUAT BARS)" has the close been confirmed high or still unknown?
The last column header states "change".. do you mean change in the reaction of the price level?
Thanks f451 for your reply below!
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Thanks Scrat for the reply below, i asked becoz i previously saw for stockcharts they have such precise volume indicators and i tot this tool might be very useful when using with the VSA strategy for the forex.. The forex volume are not as precise.. im wondering why would traders not buy stocks and use this VSA strategy instead, why still stick to forex?... im not sure if anyone will have a good reason for that..? i know VSA use relative volume, but wouldnt it be better if precise volume is actually available.. just a tot...

ticks are not recorded. it would be possible if you find an indicator that actually can record all ticks, and then you know how many were up and how many were down. but you would need to leave platform open forever...