Learn to Trade using VSA (Volume Spread Analysis)

Well charts were developed in the late 70's which allowed traders,market specialists and firms to see the development of orderflows and market paticipation in realtime.Fast forward to 2011 and charts are categorized in my terms as a map for the market.As a trader you need to be able to see where your going or whats going on with thte insiders and the market from a birds eye view

First, the bar is a representation of the market action, and volume is the corresponding strength of ear individual bars across various time frames and sessions.The spread is the range of the bar from the Open/High or Open/Low. A wide spread or low spread indicates a certain setiment for a currency or stock and the volume indicates the interest in which way the position ought to move.

How does market manipulation benefit smart money? Well in many ways the most specific way is by creating fear in the eyes of investors and traders.Smart money utilize news to manipulate all markets mainly to benefit there positions.One strategy to use before trading a specific position look at the news objectively amd understand why the news comes out in the first place.Look at the price of the equity,commodity or currency and realize that smart money always needs fear to occur to better there market positions.

Think of a bad earnings report amd a stock tanks,look at the history of te price to the left of the chart.How far has it advanced,what current and past price levels have been achieved? What's the daily and weekly chart show? Also look at the spreads of the bars on a daily and weekly chart.Compare that to the volume.Are your spread narrowing into higher prices and on lower volume this means the smart money is looking to cap the market.Are the spreads wide on high volume hitting fresh new lows.Means panic selling and smart money is beginning to absorb some of the selling.Above all realize this smart money shows there moves everytimw in the chart,that's open for the public to see.What's not understood is the why certain moves occur.That's what seperates smart money from retail traders.

As retail traders there one principle you hve to realize smart money trade with an much greater money base then the rest of us.Tradin isn't about making a quick buck but understanding how to continually derive profits and retain capital over am extended period of time.When you see a currency spike downward on heavy volume,understand and try to think like a smart money participant would,which is objectively.They accumulate on down bars at various price levels,which means there are times they buy into heavy selling.But you say well isn't that risky but you have to understand why they do this.The market has past price levels that smart money have already anticipated ahead of any market decline and they have already mapped out which levels on a chart will entice buyers to show there hands when they are selling into the market.Trading with the herd is what the majority of retail trader do which is why they only buy when the market goes up

However please consider this that buying in a rising market is a poor strategy bc in essence you've now taken the position of the herd.So you sy but Im scared to buy on down bar bc you don't know when a stock will stop falling true but you can use the charts to show you estimates of where a support position is located.You can do this by checking 5m-60m-daily charts.You are to carefully monitor the spreads and volume on each chart.Also try to focus on mastering one particular currency or stock at a time.Your analysis of a stock takes place on multiple time frames and the more stocks or currency you cover the new difficult to manage and investigate the charts throughly.

Above all realize all the indicators you need is price and volume.Price action is a leading indicator because of the fact you can monitor and read the spread of the bars in real time.Wide spreads up or down prove to be a bullish or bearish and sentiment is high in either direction.Narrowing spreads in eithe direction prove to prove sentiment is beginning to weaken.The volume is the velocity to measures the strength of a move in real time.

Top Top Stuff.. Please keep it up..I understand it.. The Malcom thred i dont.. some times i think he posts opinions to confuse..what is said just doesnt make sense.. Just my opn of course..

Here's an easy way to analyzing equities.For example Im looking at the Macys May 2011 call option with $25strike price.First look at the corresponding sector ETF for retail stocks.Check out the weekly and daily and 60m charts.What your looking for is strength in the background.When comparing current market price action look at the price action in the past couple of months.

Before I make this trade I'm first going to look at the Retail Sector ETF,so I can get overall sentiment for the retail sector.Make sure before you trade any stock or other product that you always check the overall sector.The ETF is XRT and your looking at the weekly and daily charts.The weekly chart shows that Jan.there was a wide spread down bar on heavy volume followed by weakness however, the bars were narrow on lowere volume which is a sign of strength.This is why in Feb you have the next bar being up bar on wide spread and high volume.That occurred because of the buying in the background from smart money.The last bar on the chart broke out past the $49 resistance line on average volume which is a bullish sign.Whenever a stock or currency breaks out of the resistance you want it to be on average volume and not extremely high volume.If it breaks on super high volume that shows that supply was hidden in that price action and to be wary of lower prices on the horizon.However, that didnt occur in this case.Next well look at the weekly chart of Macys ticker:M

okay now looking at the Macy weekly chart we all see confirming signs of strength.Jan bar closed on wide spread and high volume which is weakness.Over the next weeks you have continued weakness,however notice the spreads are narrow which means the sentiment is pending to change and smart money isn't supporting lower prices.Now,check out that reverse upthrust which has the long tail, that bar probably occurred because of some news.On that particular bar you have insight of to how smart money operated because contained in that bar they absorbed the selling and the bar closed near the high of the bar.This occurred on higher volume,comparing this to the previous down bars you notice this bar clearly stands out.Next we have an up on average volume which is just the sign were looking for because this shows that the sentiment is bullish based on the wide spread and the average volume says that there isnt excess supply in the background. Another thing I want to point out is that if you look at the chart you can see that this setup has occured back in Oct-Nov. You are going to use the history or background information to help you manage the trade going forward.October you had a down bar on wide spread with ultra high volume with the following bar closing higher which also was a bullish sign.Now fast forward to February's chart if the following weekly bar and you can manage this trade based on the bars and volume that appear for the following week.Now, I'm going to be playing this trade by purchasing Macy May 2011 call options,and i'll now explain this strategy

When looking at the Macy May 2011 $25C, first off the volume is extremely high compared to the corresponding options this shows bullish sentiment and using our charts we already see that a bullish move is occurring based on the Retail sector chart and on the Macy weekly charts.So, for me this is a trade i'm confident to take.Remember also that you will have weakness in the up move because of a variety of reasons but don't let the smart money shake you out of a good trade.Sometimes selling will occur bc of dumb money or retail traders selling.Smart realize this occur and also accumulate more stock during the selling.Remember that the chart tells you everything that you need to see.If you get any news in the upcoming week realize that smart money is using that news to there advantage and your to look at it objectly.Understanding that if news occurs especially if bad then smart money is looking to accumulate more stock again before they begin the markup process.Thats what the news represents.

The best way to understand the news which comes out is to look at the price action on the chart.Thinking like smart money basically your looking to get your merchandise on sale and to acquire as much of it as you can.The only way you can do this an hide your intentions is to use news to better your position.Most heard traders sell on bad news and sometimes it takes a couple of days for the selling to subside before smart money steps in to acquire the stock or currency.However,sometimes this will occur rather quickly but just understand that any bad news should be understood objectively.You can do this by looking at the price action history of the stock,has it been moving higher on wide spreads and high volume or has it been moving higher on narrow spread and average volume? Has the stock or currency recently moved above a resistance line or fell below a support line or vice versa.This is how the smart money thinks,always analyzing the history or background of whatever market there trading.

Once you start to understand how smart money manipulated the market then you can begin to profit from there intentions and trade in harmony with smart money and not against it.You will become the 5%,which is the percentage of successful players who trade successfully in the markets.Even if you have 401K you can easily employ this strategy.You can use VSA to transform the return you get.Learn to take control of you money and follow what the smart players are doing.It's all there you can improve your trading using the charts.

Hopefully this has helped give you guys some insight on the markets, if you have questions just shoot me a message.Before you trade first understand the principles behind the market then your trading will become more sound and insightful.

Thank you very much you can view my videos at www.YouTube.com/nyse82

An accumulation is the process smart money utilizes to acquire of the majority of the float or available shares or currency.This process occur unbenounced to the retail market as though to cover there movements.The majority of the time they accumulate after a selloff on wide spread down bar or bars.However they can accumulate during in areas of support or oversold areas.When they accumulate there are signs you look out for most notably narrow spreads and low volume,for currencies this occurs during the time frames of minimal trading during the Asian sessions.

The volume during this process is low for a reason.Also look to consolidation areas especially area nears the support area or oversold areas.During the accumulation phase the stock or currency may drift lower but almost always the spreads are narrow because support for the stock or currency is supported in the movements.After the accumulation phases is the markup phase...

The markup phase is important also. Because it's tw phase where smart money meets the demand of the buyers by artificially marking the price up to entice buyers to jump in.This ocurs after a major accumulation phase when smart money has removed alot o the remaining supply.The markup also occurs in currencies.

Selling EURJPY ---
Looks like a Nice 30/60 minute TF Retracement coming up...

Boy !! Lots of Reading material, NYSE . But I like it ...