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vsa with Malcolm

  • #1,761
  • Jul 29, 2010 10:52pm Jul 29, 2010 10:52pm
Good morning senior traders,
I realise i take only 1 trade or 2 sitting in front of my com for 3 hrs, monitoring 5 pairs, on average.

There is something seriously wrong about this right? hmmm...any advice is deeply appreciated.

still a long way to go,
Bethel
  • #1,762
  • Jul 29, 2010 11:41pm Jul 29, 2010 11:41pm
Quoting Bethel
Good morning senior traders,
I realise i take only 1 trade or 2 sitting in front of my com for 3 hrs, monitoring 5 pairs, on average.

There is something seriously wrong about this right? hmmm...any advice is deeply appreciated.

still a long way to go,
Bethel
the thing that is wrong is you only spend 3 hours. ... it should be 18 hours ..lol

trying following one pair ... get to know all s/r areas , how it moves and when. For example last 3 days aj has had the crap sold out of it in asia for some reason . today was no different. This pattern will not continue , but when you notice something like this going on it is often smart money positioning.
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  • #1,763
  • Jul 30, 2010 12:26am Jul 30, 2010 12:26am
haha, dear malc, im really going to make it 18 hrs! haha i can't do that, gotta go school... , nevertheless, ok, follow one pair 24/7 for now, thanks for the quick reply!

btw, im planning to long AJ, isn't it still in a uptrend? hulls green and all
abiding my time to long. Will you be free to explain why it will cont to sell? thank you

cheers,
Bethel

Quoting malcolmb14
the thing that is wrong is you only spend 3 hours. ... it should be 18 hours ..lol

trying following one pair ... get to know all s/r areas , how it moves and when. For example last 3 days aj has had the crap sold out of it in asia for some reason . today was no different. This pattern will not continue , but when you notice something like this going on it is often smart money positioning.
  • #1,764
  • Jul 30, 2010 12:39am Jul 30, 2010 12:39am
Quoting malcolmb14
the thing that is wrong is you only spend 3 hours. ... it should be 18 hours ..lol

trying following one pair ... get to know all s/r areas , how it moves and when. For example last 3 days aj has had the crap sold out of it in asia for some reason . today was no different. This pattern will not continue , but when you notice something like this going on it is often smart money positioning.
Hello Malcolmb14,

I don't post much and I'm on the ground floor learning VSA but could you please show a chart of this AJ example. My current trading method is more short term but trying to move a bit more longer term style.

Thank you for your time.
  • #1,765
  • Jul 30, 2010 4:03pm Jul 30, 2010 4:03pm
Hey Guys

Chart is a GBPJPY,5M

This is much more apparent on my other data feed, but its on the other computer....

Anyways we have three down bars with extreamly High Vol, (on the 15 its a hugh vol spike) with narrowing spreads and long wicks to the downside.

A few bars later we have a low vol test, although there is not currently going with the trend. We do have a low vol pull back later for re entry.

Id just like to thank everyone who has posted on thsi thread, new and old all the post have been a big help.
Look forward to posting some more charts next week.

P.s. Mal is your RSX indie for esignal programmed by that coder of yours or can i get it somewhere.

Regards T
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  • #1,766
  • Jul 30, 2010 5:23pm Jul 30, 2010 5:23pm
Quoting Tea_trader
Hey Guys

Chart is a GBPJPY,5M

This is much more apparent on my other data feed, but its on the other computer....

Anyways we have three down bars with extreamly High Vol, (on the 15 its a hugh vol spike) with narrowing spreads and long wicks to the downside.

A few bars later we have a low vol test, although there is not currently going with the trend. We do have a low vol pull back later for re entry.

Id just like to thank everyone who has posted on thsi thread, new and old all the post have been a big help.
Look forward to posting some...
Tea_trader, congratulations if you have enter on that test, but this is a very risky trade if you don't take into consideration anything else but the high volume down bars, followed by a low volume test in a longer term downtrend. By looking only at these factors 90% of trades would be lost, because momentum takes the market further down.
You didn't mention, but you might have come to the same cognition as myself, that when the market in a downtrend starts to make higher highs and lows (as shown in your chart) it is pushed down for the final time to shake everyone out. And test in that situation moves odds much higher from previous 20%.
  • #1,767
  • Jul 31, 2010 1:27am Jul 31, 2010 1:27am
Hello Tdj,
i got a few questions..
why do u say it's a "very risky" trade?
what stuff were u referring to when u said "if you don't take into consideration anything else"?
"By looking only at these factors 90% of trades would be lost" --- what is the basis of the "90% losing" stat?

personally, i didnt see his trade as "very risky". also, i see tests much more often than shakeouts.
  • #1,768
  • Jul 31, 2010 3:39am Jul 31, 2010 3:39am
Quoting Tdj
Tea_trader, congratulations if you have enter on that test, but this is a very risky trade if you don't take into consideration anything else but the high volume down bars, followed by a low volume test in a longer term downtrend. By looking only at these factors 90% of trades would be lost, because momentum takes the market further down.
You didn't mention, but you might have come to the same cognition as myself, that when the market in a downtrend starts to make higher highs and lows (as shown in your chart) it is pushed down for the final time...
Even against the trend, I would take this trade every time.

We have a down move started but very quickly we get a wide spread narrow range up bar closing in the top 25 % on ultra high volume - STOPPING VOLUME.

The next 2 bars are down bars (we would rather see an up bar next but its not vital) with reasonably wide spread closing in the middle on high volume. This is SM buying the rest of the supply as there was too much to get on 1 bar - STRENGTH.

Next we get 3 up bars on increasing volume - STRENGTH.

Then we get a good quality test(the only thing that stops it being perfect is that we would like it to close close to the high) on low volume - STRENGTH.

Standard entry on break of the high of the test.

Even against the trend, this is a good setup. Of course there are traders whon won't trade against the trend, and that is a perfectly legitimate trading rule.
  • #1,769
  • Jul 31, 2010 4:10am Jul 31, 2010 4:10am
Quoting supremeChaos
Hello Tdj,
i got a few questions..
why do u say it's a "very risky" trade?
what stuff were u referring to when u said "if you don't take into consideration anything else"?
"By looking only at these factors 90% of trades would be lost" --- what is the basis of the "90% losing" stat?

personally, i didnt see his trade as "very risky". also, i see tests much more often than shakeouts.
Hello supremeChaos,

if we look at the background we see that we are in a downtrend and going long on that test would be a perfect picking of a bottom. And we all know how difficult this is and by doing that we'll get stoped out 9 of 10 times; that's just general estimation.
In a downtrend you get high volume down bars (you can't break the support on low volume) followed by low volume down bars all the time (just temporary pause of a market). So, you can't go long on every test you see. Which means that you have to wait for some other factors to come in to confirm the bottom. You might be approaching some strong support or you start to see some strength in the background, which I've pointed out in a previous post, when market makes higher highs and lows, or you might see a strength in a rapidness of a final down move when accumulation takes place, or in an ultra, ultra high volume... But it's still difficult to be sure about the bounce off a bottom.
Personally I'm always more comforatable to take lower risk trades after the market shows some more strength, after it rounds, builds a base, than trying to pick a bottom.
I apologize if I hadn't been clear in a previous post. Feel free to ask if you have any further question.

I have also attached a chart of GBP/JPY with the same pattern as Tea_trader was referring to that happened just four hours before. But this time the market went down.
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  • #1,770
  • Jul 31, 2010 10:38am Jul 31, 2010 10:38am
Quoting Tdj
Hello supremeChaos,

if we look at the background we see that we are in a downtrend and going long on that test would be a perfect picking of a bottom. And we all know how difficult this is and by doing that we'll get stoped out 9 of 10 times; that's just general estimation.
In a downtrend you get high volume down bars (you can't break the support on low volume) followed by low volume down bars all the time (just temporary pause of a market). So, you can't go long on every test you see. Which means that you have to wait for some other factors...
Hi Tdj,

I understand that you advocate caution when trading against the trend. This is sound advice to any trader. And that sometimes, a trade may appear to be sound but, not work.

However, the trade in question is sound. The trade which you have put up for comparison is nothing like Tea Traders. There are a lot of imortant differences which I dont have time to go into right now (I'm at work). I will post when I get home explaining what I see.
  • #1,771
  • Jul 31, 2010 10:42am Jul 31, 2010 10:42am
No offence, but the earlier pattern isn't remotely like the one in Tea Trader's chart. Look at the volume in the bar you have marked as "test" for a start. Then compare it with his test - lowest volume in a dozen or more bars - just what you would want to see in fact.

The stopping volume in Tea Trader's example is also climactic rather than just above average. The signs of potential strength are much more convincing, as Intel has already pointed out.
  • #1,772
  • Jul 31, 2010 11:28am Jul 31, 2010 11:28am
we had what looks like a low volume test just under key level 1100 ,

then Friday after a drop into 1083 , es closed right under the 1100 are again BUT with a high volume doji.

Monday I will be looking for additional strength for move into 1115 then if this can break 1150 by end of week.

gu as though gave a bullish break out , but eu is stalling under 3100 , however is holding 3000

If this es chart plays out gu and eu may head higher , of interest also is the daily doji on aj , which has been following es exactly. If es daily plays out aj has r at 79 , breaks this look for tests etc for move to 80 to 81


all bets are off if es breaks 1085 , we may see another low vol test on daily but cannot break it

Attached Image (click to enlarge)
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  • #1,773
  • Aug 1, 2010 4:09am Aug 1, 2010 4:09am
Quoting Intel
Hi Tdj,

I understand that you advocate caution when trading against the trend. This is sound advice to any trader. And that sometimes, a trade may appear to be sound but, not work.

However, the trade in question is sound. The trade which you have put up for comparison is nothing like Tea Traders. There are a lot of imortant differences which I dont have time to go into right now (I'm at work). I will post when I get home explaining what I see.
Sorry for not posting last night , I was very tired after work. Here are the differences I see between the charts of Tea Trader and Tdj. Please note, I'm comparing the charts NOT the traders.

Tea T. - We have a down move started but very quickly we get a wide spread narrow range up bar closing in the top 25 % on ultra high volume(roughly 70% more than the previous bar) - STOPPING VOLUME, STRENGTH.

Tdj - We have a down move on steadily increasing volume - WEAKNESS.

Tea T. - The next 2 bars are down bars (we would rather see an up bar next but its not vital) with reasonably wide spread closing in the middle on high volume. This is SM buying the rest of the supply as there was too much to get on 1 bar - STRENGTH. Next we get 3 up bars on increasing volume - STRENGTH.

Tdj - We get a down bar closing in the middle on slightly higher volume than the previous (this is a key point) - POSSIBLE STRENGTH.

Tea T. - Next we get 3 up bars on increasing volume - STRENGTH.

Tdj - We get a small move up on decreasing volume then a short range on increased volume - WEAKNESS.

Tea T. - 3 down bars on decreasing volume in to a good quality test(the only thing that stops it being perfect is that we would like it to close close to the high) on low volume - STRENGTH.

Tdj - 3 down bars on increasing volume into a test on un reduced volume. With the weakness in the background, this is a failed test - WEAKNESS.

Tdj - next we have 2 upbars on decreased volume - WEAKNESS The 2nd test is not a test but a NS. However, with the weakness in the background, it is also a polar bear in Hawaii and should be ignored. This is followed by 2 more up bars on decreasing volume.


In almost all of Tdjs chart we see weakness but, in all of Tea Traders chart we see strength. The differences are subtle but VERY important.

Hope this helps.
  • #1,774
  • Aug 1, 2010 4:45am Aug 1, 2010 4:45am
I might have been misunderstood, but my point was that you can't enter long in a downtrend by looking only at high volume down bars, followed by a test as Tea_trader mentioned in his post. Exactly the same thing (high volume down bars, followed by a test) I found to happen a couple of hours earlier as shown in a chart I posted. I mentioned that you have to look at other factors to raise your odds and I totally agree with the factors you have very clearly posted, Intel. I have learned a lot from your post. Your arguments are definitely enough to satisfy someone, who likes to take these kind of trades. I think you are very subtle at identifying specific details in a chart, which can mean a difference between winning and loosing as we saw in this example.

Malcolmb14, I would just like to draw your attention at the volume in ES #f contract, which is moved by one period to the right. I prefer using SPY contract instead.
  • #1,775
  • Aug 1, 2010 12:15pm Aug 1, 2010 12:15pm
Quoting Tdj
I might have been misunderstood, but my point was that you can't enter long in a downtrend by looking only at high volume down bars, followed by a test as Tea_trader mentioned in his post. Exactly the same thing (high volume down bars, followed by a test) I found to happen a couple of hours earlier as shown in a chart I posted. I mentioned that you have to look at other factors to raise your odds and I totally agree with the factors you have very clearly posted, Intel. I have learned a lot from your post. Your arguments are definitely enough to...
[/b]

can you please elaborate on this ? what do you mean by moved one period to the right ?
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  • #1,776
  • Aug 1, 2010 12:19pm Aug 1, 2010 12:19pm
Attached File(s)
File Type: mq4 MA_of_RSX.mq4   4 KB | 464 downloads


Attached File(s)
File Type: mq4 RSX.mq4   2 KB | 467 downloads


Attached File(s)
File Type: mq4 marketprofile.mq4   5 KB | 573 downloads


Quoting tea_trader
hey guys

chart is a gbpjpy,5m

this is much more apparent on my other data feed, but its on the other computer....

Anyways we have three down bars with extreamly high vol, (on the 15 its a hugh vol spike) with narrowing spreads and long wicks to the downside.

A few bars later we have a low vol test, although there is not currently going with the trend. We do have a low vol pull back later for re entry.

Id just like to thank everyone who has posted on thsi thread, new and old all the post have been a big help.
Look forward to posting some...
Blogging daily now at www.volume.zone
  • #1,777
  • Aug 1, 2010 12:27pm Aug 1, 2010 12:27pm
Quoting Tdj
Tea_trader, congratulations if you have enter on that test, but this is a very risky trade if you don't take into consideration anything else but the high volume down bars, followed by a low volume test in a longer term downtrend. By looking only at these factors 90% of trades would be lost, because momentum takes the market further down.
You didn't mention, but you might have come to the same cognition as myself, that when the market in a downtrend starts to make higher highs and lows (as shown in your chart) it is pushed down for the final time...
when you look at a higher time frame and background this was a perfect very low risk to high reward long.

Nice work Tea...

tdj thanks for the great debate ... and making others think and look at this. This is what this thread is about everyone helping each other think and become better at this trading game.

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  • #1,778
  • Aug 1, 2010 12:38pm Aug 1, 2010 12:38pm
My two cents on this one.

Before we look at the chart, I will skip ahead to the concept. There are two types of entries. The VSA non-aided entry and the VSA aided entry. Aided vs. Non aided refers to something beyond just price action. More exactly it refers to the use of an additional tool/technique beyond simple VSA. Mal uses Hulls. I use the DBPL. These are tools used to help define trend and if used correctly dictate when and where one can enter a trade. Simply put, Mal and I are in the trend traders camp. Mal can speak for himself, but I believe the trend is truly the only advantage the retail trader has. I was drawn to currencies originally because of the currencies propensity to trend.

On to the chart.

Intel already covered this. Here's my take:

A. Wide range down candle on climatic volume with the next candle up. Whilst the close is near the low, the fact that the next candle is up tells us that some buying was happening on this candle.

B. Volume increases from the previous candle. It is ultra high as the candle closes in the upper portion of its range after making a lower low. Note that the open is lower than the close of the previous candle and the close of this candle is higher than both its own open and the previous close. This is a KeyReversalBar (KRB). In VSA terms, this is a Shake Out.

C. Stopping Volume. Here we have a narrow range down bar on increasing volume that closes in the middle of its range. In fact, the range is less than the previous 3 candles making this a NR4 candle. With volume greater than the previous candle on a decreasing range from the previous candle, we know this is also a down squat.

D. There is No Selling Pressure here. We are making a lower low and the range of the candle is increasing, but the volume is less than the previous two candles. Something telling here: every lower low since the shake out candle has come on decreasing volume (less than the shake out). That is not a sign of weakness.

E. Test. VSA non aided entry signal. Weakness in the background and now we have a narrow range low volume down candle closing in the middle of its range. That is also a Dunnigan candle.
Technically since the No Selling Pressure candle we have stopped making lower lows and started making higher highs. That means the trend is up. So from a pure price action standpoint, E is not a counter trend trade or reversal trade but rather a tend trade.

F. 2 bar/candle reversal. The first candle closes near its low and the next candle has an increasing range and closes in the upper portion of its range and higher than the high of the first candle. Notice that the second candle is closing ABOVE the DBPL. That is by definition a sign of an uptrend. Now we can enter as this VSA sign of strength is aided by the trend tool.

Is (E) more risky than(F)? Again, this is personal because (E) is actually a trend trade as well. Trade offs are made in trading and the use of a trend tool falls into that category.

More on this in the next post.............
Attached Image (click to enlarge)
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Without VSA, you're playing checkers while the Smart Money plays chess.
  • #1,779
  • Aug 1, 2010 12:46pm Aug 1, 2010 12:46pm
Once again another awesome post !!! well explained ... thanks HG

ps trend rocks !!!

Quoting HiddenGap
My two cents on this one.


Before we look at the chart, I will skip ahead to the concept. There are two types of entries. The VSA non-aided entry and the VSA aided entry. Aided vs. Non aided refers to something beyond just price action. More exactly it refers to the use of an additional...
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  • #1,780
  • Aug 1, 2010 1:10pm Aug 1, 2010 1:10pm
Absolutely beautiful chart of so many VSA principles.

The best entry on this chart is not the entry that Gavin, or Mal, or myself would take. It is one Tom or Intel would....

Take a look at the chart below.

A. We see an increasing range candle on climatic volume. The close is in the upper portion of its range and the next candle is up. This is an Effort to Rise. For whatever reason this price area has brought in demand (this will be key later). Note the top to the left, this appears to be absorption volume/pushing through supply. Both signs of strength. If it was, however, we would expect an immediate test to make sure the sellers are gone. Selling is resistance to any up move. That's why the BBs test before moving prices up.


B. Increasing range on an up candle but the volume is less than the previous two candles. There is No Buying Pressure on this bar. The BBs are not actively participating on this candle's move. If the BBs are not interested in higher prices, they must expect prices are going lower.

C. No Demand. A narrow range inside candle with volume less than the previous two candles and with the next candle down.

D. Pay attention: We see a dark (open>close) WRB that is closing lower than the low of the Effort to Rise candle. This is NO RESULT for an EFFORT TO RISE. The market has taken out the low of the high volume candle this is very important.

E. BINGO. This is the candle. This is the absolute best place to get short from a VSA non aided standpoint. After price has closed lower than the high volume up candle it move back into the range of that high volume up candle and now does it on volume less than the previous two candles. The range is narrow and the close is in the middle. This is No Demand.

Whatever it was that brought in demand the first time in this price area, is no longer there. If it were, we would see an increase in volume on an up candle like this. Simply, the effort we saw once is now gone.

Now here's the rub. If you use diamonds, or hulls or DBPL, you can not enter here. Price is on the wrong side of DBPL in this example. But from a pure VSA standpoint this IS what you look for to get short. This pattern repeats time and time again. Here again, price action is saying a trend change has happened as we are making lower lows and lower highs at this point. Tom, the father of VSA, and Intel might well enter here.

F. Price is below the DBPL and we see a narrow range (NR7) up candle on volume less than the previous two candles. In fact, the volume is less than the previous 20 candles. The BBs are certainly not interested in higher prices at this time. From Gavin's point of view, this is the best place to short the market.

E. Advanced entry. This is the type of entry that you add to your arsenal after low volume up bars/candles. This is a nice Up Squat. Notice that the range is narrow. It has the narrowest range in the last 6 candles, which means it is a NR7. It makes a higher high than the previous candle and not a lower low. This means it is a Dunnigan candle, or a "Buying bar". However, we know buying bar is a misnomer. Because the close is in the lower 1/3 rd of the range on increasing volume and volume greater than average. That can not be buying with such a close on that amount of volume. Supply must be swamping demand. The narrow range tells all.

Here too, the close is below the DBPL and therefore a valid entry for those using a trend tool like the DBPL.
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