Anonymous

Thanks ezduzzit. You asked about Joel Pozen. Your question uses the word mentor so my answer as it pertains to this is, I do not know. I have not taken his course and thus can not comment on his ability to teach what he knows, or in the overall course. I have taken the free live demo a couple of times. It is clear to me that Joel posses an uncanny ability to "call" market direction based on reading the bars. After attending numerous webinars by Tradeguider, it is refreshing to see someone NOT dependant on "indicators" to read price and volume. That is, Gavin, who does most of the non-software customer webinars, actually relies on trending systems and VSA indicators of the software to make trading decisions. Whereas Joel is looking at Volume, Price, Spread and Support and Resistance levels only. Joel does place a "dot" on all bars that have volume less than the previous two bars, but he is doing more CHART READING than signal waiting if you will. Nevertheless, I agree that the cost seems a bit high. I do recommend taking the demo if you have not. He is willing to share many insights during these free sessions and you can decide if it is a program worth pursuing. If one buys the book and the bootcamp and puts in the time to learn the concepts, that is enough to create a solid understanding of many key VSA ideas. Simply, the most cost effective way to learn is: 1. The Book ($100.00) 2. The bootcamp ($500.00) 3. Screen time 4. Webinars (free)- every now and then Gavin does provide useful pieces of information. 5. Screen time 6. Repeat ** unfortunately, if you buy the book and bootcamp and the foundations course and attend the upcoming live seminars, you will spend much more than a person that only buys the End Of Day version of the software. However, your money is not considered equal, and thus you will not be allowed into the customer only seminars held by Todd where advanced learning takes place. Go figure. ** Also that Weimar by Todd can be found on the CBOT website.

BrownsFan; Have you looked into Ensign Software yet?

Sensei; * I did not say the use of multiple strategies is wrong, only the use of various contract sizes with the various signals is something I do not understand. * I have been talking about multiple strategies as they pertain to the same trade length. In other words, a daytrade signal vs. another daytrade signal. If one trades 10 lots on a daytrade, it is reasonable to trade fewer contracts on a different signal type if that signal type is a swing trade. Obviously the issue of margin comes into play here. Another issue is psychology. Which brings me to my main point. * If signal type A is more reliable than signal type B and you trade fewer contracts on signal type B, you are telling yourself on some level to trust signal type B less than signal type A. This is if fine WHEN THINGS ARE GOING WELL. Now suppose we have two different situations: 1. Signal B has been incorrect 3-5 times out of 3-5. Can you pull the trigger on the next Signal B ? The very fact that it is traded with fewer lots implies that you trust it less. If that was not the case, than either you would trade it with the same amount as signal A or more. So from a trading mind set point of view, it is more added baggage to deal with from my point of view. The lesser quality trade has been a loser, but it is known to be a lesser trade by the very fact that fewer contracts are traded. Now one is asked to pull the trigger like all things are equal. 2. With two weeks left in the month a trader is experiencing his worst draw-down in 6 months. A signal B type trade appears. Now he must trust in that signal and take it. But since he has placed a lower lot level on the trade, based on his confidence in it, how can he now trust it? This can possibly create more demons to fight in a field replete with them. Now suppose the trader has lowered all signal types to 1 lot due to the draw-down. Still here, the trader knows that all signal are NOT created equal. If they were, then he would already by using similar lot sizes for all. So the very fact that he is now using equal lot sizes reinforces the lack of recent profitability. Yet he still has to deal with taking a less quality trade, at the time when what he needs most is a profitable trade. While the outcome can not be known in advance, why take a lesser quality trade if you do not have too. What makes is less quality? Don't know. But if it were of equal quality then the lot size trade when things are going well should be the same as all other trade signal types. * On some level, different position sizes put the signal types on a "trust scale". This may work out good when everything clicks. But at the first sign of trouble (long period of drawdowns, or continuous losses on the lower sized signal) it effects HOW a trader trades. How can it not? * Again, I am not saying I know more than anyone on this subject. I am simply saying that I believe there is a sub-conscious value weighted system put in place when size varies with signal quality. Trading is simple, but not easy. Having to overcome that weighted value system when things are not going well only adds to the difficulty inherent in trading. * Playing the "money I could of made" game is surely a road to ruin. Not every profitable move will be captured. It is erroneous to say that profit is missed because only the high quality trades are used. Yet, there is a way to improve your profitability by trading more markets and more timeframes. If one doesn't mind high quality and less quality trade set-ups, that is fine. The contracts used, however, should not reflect the variance in quality. A trader needs to trust every signal equally and that should be born out in equal lot sizes used. * As this is my last post on the subject: 1. Multiple signals are fine, but one should keep the size traded equal for the psychological advantage incurred. 2. If various types of trades are made, daytrade, swing, scalp, clearly size will vary. This variance, however, is based on trade type, not signal type. 3. Profitable traders trade the same when things are going bad as when they are going well. Note I am not talking about not reducing size during drawdowns. I am talking about willingness to take a trade. If your position sizes reflect how confident you are in a trade, can you continue to trade it when things are bad? A 5 lot quality trade when things are good, may be turned into a 1 lot trade during such a period. A 3 lot also turns into a 1 lot. However, the quality of the 5 lotter is still higher than the 3 lot signal type. And on some level the trader knows this. 4. If you want more money, trade more contracts (on the best signal only). Or trade more markets. Or more timeframes. This makes more sense in terms of the trader's mind (to me at least) than trading various quality of trades AND trading them at varying sizes. 5. You will always leave money on the table. There will be other opportunities to make money. * Thank you Mark for your posts.

Sensei You are wise in much and I for one thank you for your participation, both in forums in general and here in particular. I must humbly disagree here. If signal type A has such an advantage over signal type B, why trade signal type B? If signal type A decreases in reliability when volatility decreases, why trade signal type A in a decreasing volatility environment? I think the more prudent approach is to trade A all the time, with the ability to ADD to the position in those times when volatility is both high, and the position is in profit. Simply, the original position is constant, but the actual size can be increased as the MARKET allows via movement in one's "desired" direction. Now, suppose signal type B is better than signal type A when Volatility decreases. Here one could trade B rather than A, but the initial position size of B should be the same as the initial position size of A under A's optimal condition-increased volatility. As I see it, if one is not willing to put the same amount of contracts on B, he is saying that he believes less in B than A. But if one believes less in B, why take the signal in the first place? Again, if the desire is to make more trades, trading more markets, via sister trades or not, or trading more timeframes seems the better course of action. When test out a new signal type C, yes one could start out with fewer contracts. But once the test period ends, either the value of C merits a full position or no position at all. I believe in UNDER trading is size and frequency. Too many traders need action and thus look for multiple ways to get in. Yet, if there is a wide disparity among signal types the edge is lessened due to overtrading. Again if one starts out with x amount of contracts and then adds on as the market proves the trader to be in tune with it, then the best signal type under the best conditions ends up being the one with the most contracts in total. But this is at the end, not the beginning. And the beginning is of course when nothing is truly known about the eventual outcome........ It is not the mutiple signal types I question, rather the variation of size associated with each. Either they are all 5 contract worthy, or some are not while some are. And if some are not, why trade them?

Nice. I have never understood why some people have more than one signal type AND trade different amounts on each. For example, 10 contracts on signal A. 5 contracts on B and only 1 on signal type C. If signal type C does not warrant a full position, then why take it in the first place? If signal type A does not show up enough, then trade MORE markets. Here I would of course favor the SISTER trade idea, where you actually trade one market but are taking the clue from another correlated market. Or alternatively trade more timeframes. Even better: do both and using A only.

First, the astute among you may have noticed that a valid pattern might of appeared on the 3 minute Euro. That is the Down aspect. Now, B.F., how would you be entering the trade(s): at the market or limit ? Wouldn't your quick style hamper your ability to both get in and out of all the markets? Just curious, not criticizing.

One thing that I am very struck with is the overlap one finds in " things that are true" across various methods. Take for example the chart below. Notice that we have a valid High Close Doji pattern. This pattern appears within the body of the WRB and the following Ultra Wide Spread bar with Ultra High volume. Take a look at the test bar. VSA tells us that a test bar is when Professional Money "mark" prices down to see if there are is any supply (sellers). VSA, however, does not look at the open of the bar. But look at what we see if we do. First, we see that this bar is a doji. In candlestick terms this bar represents indecision. More over, the close on the top means price was rejected as it moved down. This is not unlike what VSA tells us. When we look at the entire bar, what must be the way the bar played out? The bar opened up, went down and the price came up to close right where it opened. Clearly, we can see that Professional Money "marked-down" the price only to take it back up again. In this case, we have a "perfect" example of the true intentions of the Smart Money. If the open had been lower on the bar, we would of course still have a test, but the picture would be different. For example, if the open was at the low of the bar, we would still have a test, but we would not get a sense of the "mark-down". Note that the other labeled test candle opens in the middle and closes on its high. We do see the action (mark down-price rejection) here as well. To be clear, tests come in various forms and the key is the volume and the close. But some tests are more reliable than others. Volume plays a role here but so does the open. Tests that are also dojis tend to be the optimal type of tests. To those that use candles, this makes sense. Hammers with long shadows also make ideal test bars. Two methods reaching like conclusions. It should be pointed out that a test bar needs confirmation. Ideally that confirmation comes on the next bar with a close higher than the close of the close of the test bar. If that confirmation bar closes higher than the high of the test bar and it (the test bar) is a doji, well, now we have something..............

Price Action traders in particular can benefit from using the " UP/DOWN and Out" method. That is, while the trader may have a particular market they trade and a particular timeframe that is favored, he can benefit from looking at higher and lower time frames (the UP/Down) AND other correlated markets (the Out). This is especially true the more exacting the PRICE ACTION requirements needed to enter a trade. In the case of the UP/Down the trade would be taken on the timeframe that meets the rule set. In the case of the Out, the trade is taken in the FAVORED market on the same timeframe. Take a look at the attached chart. Here a trade is taken on the 15 min because there is a valid High Close Doji pattern that forms at 0915. Yet, if on looks at both the 5 and 10 minute timeframes neither shows a valid bullish dark hammer pattern or bullish white hammer pattern respectively. A trader looking at only the 5 would therefore not enter a trade (assuming that was the only pattern he looked for). Nor would a trader looking at the 10 min. Now, it is possible that a highly correlated market, like the Swiss Franc, does have a valid pattern on the 5 min at this time (it does not). If that was indeed the case, a sister trade on the 5 min Euro could be opened. Before you ask, let's take the Dow as an example. If you trade the YM and look for signals in the $indx (or whatever the symbol for cash Dow is) as well, you take the trade in the YM. If for no other reason than most cannot afford to trade the cash index. Simply, one is basing a trade on the cash index but making the trade in the more affordable futures contract. Nothing here about which leads the other, just using similar markets to broaden the signal universe. This is a better alternative than simply increasing the amount of signals used, and thus possibly diluting the overall Price Action signal strength used. In other words, rather than going from 10 signal types to 20 in order to increase opportunities, you remain with the 10 but look for them in more than just one place.

BrownsFan's question could not be more timely. I too echo the sentiment. It would be nice to see if and how others are using WRBs in their trading. As you know, my use of WRBs is wider than his (no pun intended). WRBs give us insight into: * Changes/shifts in supply and demand. * Volume or activity. * Volatility * Support/Resistance Zones * Gaps * WRBs are independent of Japanese candlestick patterns; Japanese candlestick patterns, however, are NOT independent of WRBs. While WRBs create very good profit taking opportunities, as seen by BrownsFan, this sole use only scratches the surface of the depth of usable information/techniques in my opinion. The attached chart shows what happens when everything comes together I use them. Here we see how the primary methods of VSA and WRB & Long Shadow Analysis create the context thru which a candlestick pattern (secondary method-entry signal) can be viewed. Remember, Long Shadow candles usually were WRBs within the interval, so they are a sub-set of WRBs. That is why a trader that exits on the apperance of a WRB during the interval may find that the candle is NOT a WRB at the end of the period. This is another method that can be employed, rather than waiting until the end of the interval as BF does. Hopefully, anyone using this method will post examples and insights. The method I prefer is to trail a stop using the appearance of a WRB (or Long Shadow). Seen as the red lines on the chart. It is my contention that VSA and WRB & Long Shadow Analysis have more in common than is first seen. By taking out the open, VSA, takes out much of the information that can be seen. Yet, if VSA did look at the open the conclusions would mirror those of WRB & Long Shadow Analysis. But even without the open, many of the conclusions are the same. We see a Ultra Wide Spread bar that closes in the lower portion and up from the previous day on Ultra High Volume. This is a hammer line with a Long Shadow (upper). Supply entered the market on this bar. Why else would the close be on the lower portion with all that volume? Moreover, the next bar is down. If the Smart Money was buying on the previous bar, this bar should not be down. The next bar is down, engulfs the body of the hammer line and is a WRB. The Supply/Demand dynamic is changing. The next bar is key. It is a narrow bar that closes in its upper portion with volume less than the previous two bars and the next bar is down. This is No Demand. Ideally, we would want this bar to close higher than the previous bar. But in this case, the close is equal. Note that the close is at the close of the WRB and the high trades into the body of the WRB. This is why the Upthrust is a better signal of market context than the valid test that comes before it. The Upthrust happens within the body of the WRB whereas the test forms below it. True it forms within the range of the entire WRB candle, but the test bar was not within the body. Now the confirmation bar, the candle after the test is. This is where the secondary method kicks in. The test does not form a valid candle stick pattern. Hence, even if you mistake the test as a sign of market strength, you would not want to enter. What does happen is a valid reversal pattern within the WRB that has an Upthrust in it. That is, the UpThrust is a Long Shadow Doji with the next bar closing lower than the low of the Doji. This bar engulfs the open/close of the Doji and is a dark WRB. Also note that the bodies and the shadows of the candles in the highlighted area are smaller than the depth of the shadow of the Doji. Except for the white WRB, which is ignored and the reason we look at the three intervals prior to it. You should note that we are seeing decreasing Volatility in the price action then we see a WRB. Also note that the larger dark WRB after the Doji closes lower than the close of the white WRB. This dark WRB is also larger than the white WRB. In short, increased volatility to the downside. Enter short on the close of the dark WRB (low close doji) or open on next candle. There is a lot less here than may one may first think. But there is a lot more to WRBs than just exits. If you are using them, even for just exits, both B.F. and myself would like to see how.

While there is a bit more to it, a good place to start is with WRB analysis. Plus you could add in an understanding of volume..........

This post builds on post # 114. After the up move in price what happens next? There is on thing we want to keep in mind; we had a couple of Gaps on the way up. Gaps are usually filled. They can at times, however, act as support and resistance areas...... Let's look at the what happens when a test fails. The first thing you will notice is a WRB. Not important to VSA but oh so telling to the rest of us. The best places to see tests, upthrusts, and no supply/no demand bars are within the body of a WRB or shadow of a Long Shadow candle. We have our WRB in place. This creates a natural support/resistance zone. Next we see a narrow bar that closes near its high, closes equal to the previous bar, and has Ultra High volume. THIS IS A HIGH VOLUME TEST. Smart money is looking for sellers and is finding some. While it is true that sometimes the market goes up on high test, it usually does not go up far and then comes back down to re-test the area. As always the next 1 or 2 bars need to be considered. To actually confirm the test we need to see one of the next 2 bars close Higher than the close of the test. Otherwise, we have a failed test. Notice what happens here. The next bar is down and then the bar after that is an up bar but closes equal to the close of the test bar. Now, look at the next bar. We have an up bar that closes in the middle to slightly up on relatively high volume. It is not as high as the test, but it is still high. Up close (from previous bar), on high volume closing near the middle: This is supply entering the market. At this point, we have a FAILED test on high volume and more supply showing up. The very next bar closes on the high with volume less than the previous two bars and closes higher than the previous bar. This is no buying pressure. As it would happen, the high of this bar is equal to the close of the WRB. TG WONT TELL YOU THIS. Then we get the next bar down. From a VSA point of view, now is the time to go short. * the test of supply has failed. * New supply entered. * No buying pressure. couple that with the fact that there are gaps below and all this is happening at the low of the S/R zone of a WRB. Now let's take a look at a test that does not fail. I would first point out that from a time of day perspective, this is not an ideal time to be entering a trade. It all starts with a WRB. We have an Ultra Wide Spread bar on Ultra High Volume that closes on the low. But the next bar is up. If this bar is up then there must of been some buying in the previous Ultra Wide Spread bar. WRB analysis tells us that changes and shifts in supply/demand occur in WRBs. More reasons to think something is indeed going on. 3 candles later, we see a narrow range candle that closes on its high, makes a lower low and has volume less than the previous two bars. THIS IS A TEST. Technically a possible test, as we do not have a confirmation bar yet. Confirmation comes 2 bars later when we see an up bar that closes higher than the close of the test bar. First possible entry point, with no regard to time of day. If you missed that point there is another. We get a bar that closes on its low, has a narrow range, has volume less than the previous two bars, with the next bar up. THIS IS NO SELLING PRESSURE/NO SUPPLY. What is nice about this bar is the volume. While the test volume was lower than the previous two bars, it was not as low as the volume on this bar. More evidence of the lack of sellers underneath. Also note that we are within the range of the WRB as on this bar. So we have a second chance entry which may in fact be the most ideal entry of all for some (leaving time of day out of the equation). Back to the test candle. Some may note a hammer line that appears to traverse into a bullish white hammer pattern. It does not. But if you had mistaken it as such, here too, time of day should have kept you out.

Thanks for the kind words. I believe you are talking about the chart labeled " what did they know and when did they know it". I hope that is correct. First, you are correct. It is a bit hard to see. Generally speaking the bar is broken up into thirds by TG. So by that matrix the bar closes in the middle. In reality it is a close that is not in the middle but still only slightly in the upper portion of the range. I do think the close is close enough to the middle to be considered a middle close. And we know that middle closes on wide spread bars are important. But we really need to look at the bar prior and the bar proceeding to get an understanding of what is going on. Note that this bar closes equal to the previous bar. With all that volume the bar managed to go nowhere. But with all that volume, we know the Smart Money was doing something. What cannot be seen on this chart is the fact that prices were trending more to the downside than the upside prior to this bar. So, if Smart Money did come in on the bar, the first inclination is to see it as Demand. Even if we consider the close as being in the upper portion we have to assume that there was BUYING going on in the bar. If there had been selling the bar should at least be slightly to the down side of the bar. But wait. No position is going to be taken at this point anyway. Now on the very next bar volume dries up, the range narrows and the close is in the upper portion of the bar. This is a test. If the Smart Money is testing for supply, they MUST have been buying on the previous bar. Simply, we would not get a test on low volume, if they had been selling. Note I did not mention the fact that this is a white candle (close>open), because VSA does not look at the open. But as I do, I also can see that price closed up from the open so I have another clue as to buying on the bar rather than selling. There are some candle traders that would call this bar a Doji because of the width of the body in relation to the overall candle length. Doji are indecision bar. If we then look to Long Shadow analysis, we know that a shift in supply/demand is likely. So something is happening on the bar. Based on what has come before and what comes after the entire picture comes into view. From a repeatable pattern point of view, tests very often come after bars with Ultra High Volume where demand comes in. So you don't have to get too caught up in the middle/slight upper close issue of the bar. More over, why would Smart Money test for supply if they had just dumped some? They would not. Hence they are looking to take prices up and must of been buying prior to the test. Had the test failed.................. see next post.

BEFORE & AFTER: I have attached two charts. The first is the before and the second is the after. Let's look at the before. For me the key concept comes thru at least a basic understanding of WRBs. Of course, VSA doesn't look at the open, but I think much is missed if you don't. More over, I think that if VSA did, they would come to the same conclusion. And in fact, they DO come to the same conclusion partially when dealing with wide spread bars (more on this later). The first bar with the double arrow is a wide spread bar that closes in the middle on ultra high volume. Supply enters the market on this bar. Not a place to go short. The reason: the reason is explained in the next highlighted bars. The next bar we have is a Long Shadow and in VSA terms, it is Ultra Wide Spread bar on high volume, that closes lower than the previous bar, and closes in the upper portion of the range. DEMAND entered the market on this bar. Now, here is where I depart from VSA. We now have a Long Shadow that creates a support/resistance zone. We also see that this Long Shadow tells us that demand overcame supply on the lower portion of the bar. Not to mention, this bar is a Doji (close=open). VSA does not care that it is a doji, yet the conclusion that something is changing in the supply/demand dynamic is the same-Buyers came in on this bar. Still not the bar to get into the market on. The next key bar is a WRB. WRBs also tell us of shifts or changes in supply and demand. Then we get a No Demand bar. Again not a bar to enter on. What we need to see is something happen within the RANGE of the WRB AND OR THE RANGE OF THE SHADOW OF THE LONG SHADOW BAR. Ideally, the market will move back down and give us a No Supply or Test within these ranges. Then we should be looking to go long. And that concept is what Todd does not say much about. Clearly, he would not talk about within the context of the WRB because he does not look at the open, but he can talk about the overall range of the Ultra Wide Spread bar. In other words, even though he would not know it is a Long Shadow, he would recognize the bar as Ultra Wide Spread and thus should be used as a matrix to measure what comes. The next chart is the AFTER. We do indeed get the No Supply sign in the range of the WRB and the Long Shadow candle. Once we have the confirmation bar up, the next bar, we get long at the close of that bar/open of the next bar. Note that there are two gaps and gaps are usually filled so we need to keep that in mind.

Hello VSAers; By now most if not all have seen the Cramer video. But if you go to youtube.com and type Market Manipulation in the search box, a few videos down from the Cramer one is a video by Tom Williams himself.

And the sun doesn't actually rise: the earth rotates. lol True, during a day you can have one new bull enter the market and the seller can be already long, but liquidating. BUT THAT TRANSACTION HAS ONE BUYER AND ONE SELLER. The market will bring them together at a point where their disagreement on value is at an agreed upon price. Therefore every price will be valid and has two sides. Hence No overbought or oversold condition can exist. Since all prices are valid, as each party in a two side transaction are willing to do business at that level, markets can not overract. Anybody that says the market is overreacting (to the upside) is saying "price has move further than I thought it would". Or, "I am short and getting my a** handed to me". Like you said , a new contract is not necessarily created on every transaction. But every transaction has two sides and so a new buyer still has to be let in by a seller. Now if the seller is not a "bear" as you posit, then you only further prove that Bullish/Bearish consensus does not exist as it is would not correctly reflect market reality. That is: two bulls here, but only 1trade made so the market is still equal from the standpoint of 1 buyer and 1 seller.

Overbought/Oversold or Bullish/Bearish consensus example: We ask 10 people if they are bullish. They all say yes and they are long. Well, there is a bear on the other side of the trade (the seller). Therefore the amount of bulls and bears is equal. Now we ask 10 more people if they are bullish and they say yes. But these 10 are NOT in the market. Their opinions don't matter. If they are not willing to "place a bet" based on their beliefs then they need to be discounted. Hence to say the market is overly bullish or overbought is incorrect. To be sure, at this time there is a general euphoria for the market, as seen in the large number of "bulls". But the market is still evenly dispersed. If any of the second 10 want to go long, a as of yet un-asked bear must take the other side of the transaction. So any measure that comes up with either an overbought or bullish consensus, including those NOT in the market, simply has not asked enough bearish people. But what do you really care about the opinions of those who are not in the market? Now as soon as the other 10 enter the market (a bear lets them in), Price reflects that. That is, if the bulls are more enthusiastic about buying than the bears are about selling then price will rise. There will still be an equal amount of bulls and bears, however. This also means that while the 10 new bulls may know something the bears do not, price must reflect that information. Price reflects it, even if all don't know it.

SUPPLY AND DEMAND. Technical are derivates of price and can not therefore drive price. They are calculated on past prices so how can they lead future price? Emotions and news drive trader's actions. That is buying and selling. But buying is Demand and Selling is Supply. Every price where there is a transaction involves two parties: a buyer and a seller. No matter what the price, there is always somebody on the other side. Hence, how there is no such thing as overbought or oversold. This is especially evedent in the indecies, where no contract is made until a buyer and seller come together. Yes, Professional Money uses the retail trader's greed to get them to buy tops, but that has nothing to do with the felonious condition of overbought. The Smart money uses the retail trader's fear and pain to get them to sell at bottoms, again nothing to do with the felonious notion of oversold. Price is not an important factor in most analysis styles, which is why most traders do not make consistent profits.

I always say start with the book first and then get the bootcamp. Of course it they come packaged together that would be the best. What you really need to know is how YOU learn best. If you learn better reading about a concept, then Cleary start with the book. If you learn better in a more lecture type setting then you would want to start with the bootcamp. * Remember, the book needs to be continuously read. One read will not be enough. *

If there has been a theme to my posts recently, it is summed up in the word: CONTEXT. I am learning to use candlestick patterns as a secondary method. By that I mean, entry set-up signals. VSA and WRB & Long Shadow analysis are the primary methods and are used to understand the contextual backdrop thru which a candlestick pattern trade can be taken. Take a look at the chart below. We see a WRB on Ultra High Volume. VSA tells us that markets do not like Wide Spread up bars on Ultra High Volume. Because there could be hidden selling in the bar. Now check out the very next bar. This bar has almost as much volume as the WRB, in fact it has 3 ticks less. BUT the range is much more narrow and the bar closes in the middle of its range. This is a transfer of ownership bar. The Smart Money is dumping supply into the market. As retail traders rush in to get long, the Smart Money is all too happy to sell to them. Like I said, we need to always be aware of who is on the other side of the trade. While this bar is up, on high volume it is not "up volume". Most volume indicators and volume analysis would assume it is positive. But we know better than that. A few bars later, we see a narrow bar that close up from the previous bar and closes in the upper portion of its range, but on volume less than the previous two bars. This is No Demand. Professionals are not interested in higher prices at this time. At this point we have context. Supply has entered the market. Note that price overall begins to move sideways. There are some who would go short after the No Demand with the background selling that can be seen. This is a personal choice. For me, all that the context says is, "now is not the time to be going long". I need to see some candle pattern, preferably within the range of the WRB, to get me short. (if you look at a chart from today, you will see that price plummeted after the jobs report). But my point is this, the context, or story, at this time says more about NOT going long than simply get short. A Tradeguider "sign of weakness" might appear on the transfer of ownership bar. It would therefore look like the top was called and thus possibly sold. This is the error that most indicator only traders who look at TG make.

"Every time I think I'm out............they pull me back in". LOL First of all Price is king. It is reality. Price and Volume are the only two indicators. But, we all know how I feel :p The actual person to talk to is NihabaAshi. His mastery as a price action trader is humbling and something to strive for by those who call themselves students of the markets or price action only traders. Now what you do not understand is the concept of correlation. Market A can be positively correlated with Market B. The more that number tends to 1, the higher the correlation. Market A can be negatively correlated with Market B. The more that number tends to -1 the higher the correlation. With positive correlation, as Market A goes up, Market B goes up also. With negative correlation, as Market A goes up, Market B moves equally, but in the opposite direction. That is, down. Therefore, a price action trade using specific price set- ups may look for those set -ups on a broad range of markets. If the set-up appears in Market A the correlation with market B should mean that B goes up also. Hence a trade in B can be signaled by the price action of A. But it remains all about the price action. More specifically, NihabaAShi uses candle patterns. Some of which are discussed on the elitetrader.com forum thread "trading hammers (revisited)". Now if market A meets the requirements of (his) valid hammer pattern, but market B only has a hammer line (a hammer line traverses to hammer pattern if and only if ALL the requirements are met), a trade in Market B can still be made both because of PRICE ACTION (which was in Market A) and Correlation (which is a statistical phenomena). Simply, Price, volume, volatility , and news events are used to make trading decisions. The fact that some markets trade together is used to broaden the chance for opportunities, especially when the pattern requirements are so exacting. p.s. He does not only use hammer patterns. He was one of the first to discover WRBs and WRBs is his primary method. Japanese candlestick are his secondary method.............. p.s.s. I use WRB & Long Shadow analysis and VSA as my primary methods. I am learning Japanese canldesticks as the secondary method. I currently trade the EURO. But I can make "sister" trades in the EURO based on the Price Acion of the SWISS FRANC because it is highly correlated (negatively) with the EURO. That is, when the SWISS FRANC goes up, the EURO goes down.

Hello BF and others; I was going to post this in the VSA thread, but while looking at it I got an idea that may appeal to some. To be sure, this is a "perfect" example, and admittedly, that is probably why I noticed it. This version combines the variations used by BrownsFan, myself and NihabaAshi. I do think it is more appropriate for time based charts, but BF will be able to say more about that. What you would do is take the trade on one timeframe. After the appearance of the first WRB on that timeframe, move your stop to just below the low of the WRB's body. This is a long trade so we are talking about a white WRB and thus the stop is moved to just below the OPEN of the WRB. Just below would be 1 or 2 ticks. At that point, you move up to a higher timeframe. Here I have a 30 min chart. So we have moved up from the 5 to the 30. One would not have to move 3 timeframes up, but I was looking at this chart. Moreover, the amount one moves up would be based on the individual preferences and the price action which caused the trade in the first place. In other words, with certain types of news releases one might want to move up from 5 to 30, where the usual move might just be up to 15. At any rate, that is for the trader to decide. If someone likes this idea, hopefully they will post what they end up doing. Now once you have moved up to the higher timeframe, You look to exit on the close of the first WRB that appears. Note how in this example, like so many of yours, the WRB gets you out very near the top of the move. What I like about this is it does allow one to get more of what the market is willing to give you, while still having some of that "get out at the first sign of change" mentality. Just a thought. Hopefully, someone likes it and can provide more insight and examples. BTW, notice the bar after the WRB. It has Ultra High Volume, almost as much as the WRB (3 ticks less in fact). Its range is much less however, and it closes in the middle of its range: THIS IS A TRANSFER OF OWNERSHIP BAR. The Smart Money is dumping supply onto the market. Note how price starts to move sideways. Also note the No Demand bar.

* Currencies have the highest propensity to trend of all the markets. Unfortunately, that does not mean they are easier to trade. Nor does it mean that they always trend. It simply means they tend to trend more often than all the others, and when they do trend they tend to trend longer. * Technicals work well in currencies, when used correctly. Which is true of all markets. But if used to define trends rather than pick tops and bottoms, technicals do work well. I don't like indicators myself ....... * Tick volume only in a lot of cases with spot currencies. You would do better to trade currency futures for constant volume candles. * 24 hour spot market, but the best hours do put a crimp in your day. The European open is important as is the New York session. * Some brokers will widen the spread prior to and during news releases. I hate this and it is one reason I am moving to the indexes. I would suggest making sure that the broker does not do this, if they even exist. Not to mention you might not get your stop honored. * A lot of brokers frown on scalpers, at least that is the story. If you are a in and out 20 xs a day looking for 3-5 pips, you might have to beware. * You can't beat the leverage offered in this market (spot FX) tho.

BF, I think we have been down this road before : confused: I will just state a few thoughts. * I believe in surrendering to the market it. I want to let it take me where it is going. I want to want what it wants. Profit targets are about what I want, not what the market wants. * Exiting a position at a profit target is speculating on the future when it is NOT necessary to do so. * The more a trader can take himself out of the equation and faithfully mirror the market, the less stress involved and the better the results. * Most of the "Market Wizards" made their money trading long term positions or swing trading. Because, they could be right and sit tight. * If you make 5 xs as much on your winners than you lose on your losers, You don't have to be right 80% of the time. Most traders get caught up in being right and the take profits too early on the few times they are. * Currencies have a high propensity to trend. As a retail trader, trend is one portion of the edge. Hence when this part of the edge is present, one needs to take full advantage of it. * A trailing stop does not assume the market will trend forever, but taking a profit target does assume it wont. Again this is trying to predict the market and the future. Why bother? * I liken myself to a salmon egg. The market will take me where it wants to go and I trust that if I allow it to do so the result will be where I NEED to be. Others are like the adult salmon, they fight the river and in the end find their demise. * It is not about trying to hit Homeruns, but rather positioning oneself to take all of what the market is willing to give. * Only when one learns that he can not conquer the market can he make a good living in the market. There is no need to try and outsmart the market. * Be comfortable being IN the market. The market will provide, but not on the trader's terms. Rather on the market's. * Markets tend to keep on doing what they are already doing. Newton’s law of motion. If the market is moving up the most likely direction it will move is up. Just keep moving the stop in the direction of the trade. At some point the market will stop you out. Overall, the amount made by staying in a market that trends beyond expectations will more than make up for those times when one gets stopped out at a lower profit level than a profit target would have gotten. * WRBs signal possible shifts/changes in the supply/demand dynamic. If you simply move your stop to a position that signals that change/shift has indeed happened, you are both using market derived information and allowing your profits to run. In short, the market told you when to get in, shouldn't you let it tell you when to get out? Like I said, we have been down this road before, so let's not do it again. Simply, I believe that trailing stops keep one in tune with the market. They are not based on the unkown and the unknowable (the future). Be comfortable in the market and let your go of the ego (not directed at you, BF). Take care of the losses and let the winners take care of themselves.

Just wanted to post a pic for the newbies. Here we have 2 other WRB methods for stops/exits.: 1. The first method is one used by Mark. Although, he will at times move to a higher timeframe after the first Pt (profit target). The key here is that the position is scaled out a portion at a time on a WRB. In this method the exit is WHEN THE CANDLE BECOMES A WRB, NOT THE CLOSE OF THE INTERVAL. If you did not move up or down a timeframe, there would be three WRB profit taking opportunities. 2. My preferred method combines both of my primary methods- WRB & Long Shadow analysis and Volume Spread Analysis. I like to place a trailing stop 1 or 2 ticks below/above the low/high of the BODY of the WRB after it is formed. Trail 4 is via VSA. I would move the stop to just below the low of this bar. It is a narrow range bar that closes on its low, closes below the previous bar and has volume less than the previous 2 bars. Here I would actually wait until the close of the next bar. In other words, wait for confirmation that the bar is indeed NO SELLING PRESSURE. So I am also looking for No Supply or No Selling Pressure bars and Tests(low volume) to move my stop.

What did they know, and when did they know it? OR the importance of Volume. Here is a chart of some of today's price action in the Euro. What is telling here is the actions of Professional Money PRIOR to the news release. We can see when they begin to position themselves and on what side through the use of VSA. Almost an hour beforehand, we see an Ultra Wide Spread Bar with Ultra High Volume, that closes down from the previous bar and closes in the middle of its range. This bar represents a transfer of ownership. That is, the Professionals are buying from the retail traders. Why would they be buying prior to a usually volatile news release ? Seems like a risky thing to do. Could they already have an idea of what it will say? Now VSA tells us that if this is the case, we would expect that if they are BUYING now, they will be SELLING into the release itself for profit taking. Especially If the news spurs the retail traders into entering the market on the long side. However, if the retail trader is believes the news to be bearish, they (Smart Money) would be BUYING more. That is, if the retail traders are getting short, who are they selling to? So we should see both Professional selling and buying. We don't expect then to get net short in other words. Check out the large dark hammer as the news is released. There was some profit taking on that bar. But the bar has ultra High volume, closes on its low with the next bar up. Some buying must of taken place as well. More exactly, they took profits and then began buying as the retail traders (weak hands) rushed in on the short side. We always want to consider "who is on the other side" with VSA. Usually, its the Smart Money and that is not good. I should say, without VSA it's usually the Smart Money and that is not good. Note that price did begin to fall for a few bars. But then we get a dark hammer line. The Long Shadow of the hammer line happens, not so coincidently, to trade into the region of the First candle mentioned where the transfer of ownership begun. The Smart Money is becoming aggressive on the demand side. They are locking in the weak holders (retail shorts) as they know price is going HIGER NOT LOWER. The down move and the dark hammer itself may have even pushed some weak longs out. If you look at a chart beyond the time shown here, you will see the strong up move that ensues. 1. The Smart Money began getting long (long) prior to the News. 2. Some used the event to take a bit of profit. 3. Most got even more long (demand). 4. Once the weak holders where short, price found support in a such a way as to knock out weak longs and lock in weak shorts. 5. what can not be seen in this picture, is a large inverted white hammer that represents the last effort for the weak shorts to get out at break even if the bought on the news release itself. When we use VSA we get a 3 dimensional picture: volume, range and price. Ignoring one of them (like volume or keeping volume constant) is like cutting off one leg of a tripod...............