YertleTurtle

Hi Gary, Thanks for reviving this dead thread. Can you tell me what your views are on interpreting volume on a PnF chart? Also - what box size would you recommend for day or short swing trading? I've really enjoyed your Wyckoff material.

Not all people learn the same way. I personally enjoy digesting books. To be honest - the principles that Wyckoff taught and VSA teaches are simple. Its the application of these simple principles that take time. Its finding your own style that works with these principles that takes time. As for whether you should study Wyckoff - VSA is basically a distilled version of Wyckoff. Studying Wyckoff can only reinforce what you read in VSA sources. I personally have read and continue to read anything I can get my hands on with regards to tape reading, VSA, the Wyckoff method or any other term for understanding price and volume. Personally I believe that my understanding of accumulation and distribution is due to studying Wyckoff. Master the Markets have simplified entry signals but I needed both.

1) What is the best source of VSA info. (i.e. tradeguider, Volumespreadanalysis.com etc.)? I would start with Master the Markets by Tom Williams. I personally feel that everyone buying tradeguider or other VSA indicators are doing themselves a disservice. Learn to read price and volume through study and practice. There are some good threads on various sites about VSA. (forexfactory, babypips.com - but I trade forex) 2) What books are best from the one's available (MTM, Trading in the Shadow etc.)? Master the Markets is all you need. Unfortunately there is a sales pitch for tradeguider built into the material. Trading in the Shadow doesn't seem to add anything new and is another sales pitch for tradeguider. 3) Is the TG software a good tool? It seems to be available for a fee of about $99/mo. which comes with an "educational trading course". I have never used it so I can't say how good or bad it is but I can say you don't need it. I've read plenty of good and bad reviews. You can do better than the signals generated by tradeguider by learning what to look for yourself. VSA is pretty simple in its concepts. It is based on logic. If you learn and apply the logic you will outperform a person that needs tradeguider to tell him what is going on. 4) I work a 9-5EST job and cannot trade intra-day. Is VSA (w/ or w/o the software effective using end-of-day data? Yes. It works on all timeframes.

I trade forex successfully. I therefore know it can be done. Like anything it has its advantages and disadvantages. I'm sure if I tried trading options I would lose my shirt. This doesn't change the fact that there is nothing wrong with learning to trade options. We all have a bias toward the things we personally have chosen. I'm sure there are even successful forex traders who have sworn off futures.

This isn't true. Forex markets tend to be faster than stocks or futures but they are still governed by supply and demand. A finance teacher probably doesn't know much about trading. Also - your ability to do your job at a call center and move up the ladder has zero predictive value on your ability as a trader. Hard work and discipline do. The reality is that trading anything but forex with 2000 euro would be the same as setting money of fire. You just need deeper pockets. On that budget forex is your only choice. Pick a pair to concentrate on. I would recommend either EUR/USD GBP/USD or AUD/USD to start. Only watch that pair and only trade that pair. Like most things its the little details that make all the difference and you will only pick up the little things by studying one market at a time.

If you want to trade real money I would recommend spot forex. You can trade mini lots which are worth only a few cents a pip. Also the forex market tends to move the most during the european session so it seems like a logical fit.

@JD, Currency futures are regulated and have equal precision to the e-mini S&P. This doesn't mean this data is perfectly accurate. The big players come up with ways to trade off of the exchange. @Mitsubishi, I guess you have a different trading style but you are saying that 1 tick up or down would mess up your trading? I'm not sure what maths you use in trading but most indicators are averaging data. Whether you are calculating daily pivots, moving averages or stochastics I find it hard to believe that a couple of ticks would change any trading outcomes drastically. Also - different charting providers handle data differently coming from the exchanges. You may get different data or bad data or adjusted data just based on what platform you use. If I ask you what is 1 divided by 7 what would reply 0.142857 repeating? Wouldn't .14 be enough precision?

My opening comment was meant to be a joke. I should have been more clear. I have no idea how to go about testing this. I didn't intend for this to be construed as a statement of fact. If it is true I would classify it as a loose correlation. I meant from a VSA standpoint - I think averaged over time you would end up with the same number of trade signals regardless of how you tuned the clock. I can't speak about other modalities but I would guess the same would hold true. Sure - Trading Sessions | When Can You Trade Forex? | Learn Forex Trading Forex Market Hours Forex Global Market Trading Hours Forex Trading Hours - Worldwide Forex Trading Times They all say the same thing - Forex market opens on Sunday 5 pm EST (10:00 pm GMT), closes on Friday 5 pm EST (10:00 pm GMT). The reason why professionals look at 4 hour charts is because it slices the day by session. Asia, Europe and North America each get one 4 our morning bar and 1 4 hour evening bar. Why do you want to invalidate the futures contract volume? What do you trade? I think while we are challenging everything we know about trading you might consider challenging the notion of precision. Do you really need to know the exact volume figure to trade with volume? Do you need to know the exact price? Is anything this precise in trading? If needed absolute precision in trading people would only trade watching time and sales (some do). For most of us we don't want all the noise. This is why most of us would prefer to look at a 15 minute chart than a 1 minute chart.

JD, I admire your adherence to statistical proof but its tough to debate something using logic if your counter argument is always - where is your statistical proof? I could ask you the same thing - where is your statistical proof that closes don't matter? If you or I did have proof we could then enter debates as the validity of the proof. As for VSA I am not trying to label it the holy grail. It just represents a proven trading style which heavily relies on the close of bars. There are VSA traders trading everything from 2 minute charts to dailies. There are plenty of ways to skin a cat and be a winning trader but I can't think of one that doesn't take the close of a bar into consideration. A single bar means nothing in isolation. A single close cannot either. We need a series of data points to make meaning out of anything in trading. Inferences can start being made as soon as there are two bars or two closes. The close is like a little sample of price and time. Its a snapshot at regular intervals. I doubt these snapshots can tell a radically different story if the shot is at 1:10 instead of 1:00. I haven't bothered to prove this but I see no reason to test this belief. Like you said what I am doing works for me. As for when you should set your 4 hour time bars in the 24 hour forex market - there is a logical choice. On Sundays the spot forex market opens at 5 pm eastern time. This is the logical place to start 4 hour bars as you will have no partial bars on your chart. Its also most likely what the pros do. Lastly, as to why VSA traders are trading spot forex when there is only tick volume available. Its because tick volume is highly correlated to contract volume. This can be verified by putting a chart of the spot FX market up next to the futures contract. There is even a possibility that the spot forex tick data is more accurate than the CME data for the purposes of VSA. The spot market has much greater liquidity than the futures market and this shows up in the tick volume. Spot forex allows much smaller trade sizes which is beneficial to any new trader.

I haven't done any testing of activity toward bar closes. I have just made observations by watching the currency markets. Often you will have a strong up bar that becomes a down bar in the last 5 to 10 minutes of an hourly bar. If you do test this I would be interested in finding out the results. I'm not sure what you mean by "which hourly bar and why that one?" I only trade currencies so I can only speak about what happens in those markets but its well known that professional traders watch 240 minute charts. This doesn't mean they only place trades every 4 hours but smart money is interested in this timeframe. I am a VSA trader, have been consistently profitable and the signals that I take are based off the closes of particular bars. If bar closes were arbitrary then you would think that VSA traders wouldn't be doing particularly well but most skilled VSA traders have win rates around 65-70%. Obviously volume and spread are other important factors in VSA trading but the close shows who is winning the battle - the bulls or the bears. I understand that its fun to debate things but I don't see how arguing about the value of closes will further anyone's trading. People have successfully traded off of VSA, price action, candlesticks, pitchforks etc. all which consider the close to be important.

I personally think you are wrong about the close of a bar not being important. Sure the average losing trader uses a multitude of different time frames but it is the professional money that moves the market. Professionals understand that amateurs are clustered around different time frames. This is why you will see price action pick up towards the end of an hourly bar (one of many examples). If you believe that the market is fractal in nature then the close of any bar has significance. On the other hand the open IS meaningless on all time frames.

Trading without a stop loss is disregarding the number one rule in trading. Protect your capital! It makes me think of all the investors out there that buy a stock and watch it plummet but never think to sell. They made their buy and hold decision and they will hold regardless. Its a terrible idea to trade without stops. You no longer have an exit strategy and emotions will be making your decisions. When someone asks what your risk reward ratio is you can proudly tell them anywhere from 0 to 100 to 1.

90% of futures new futures traders go broke within a few months. With your account size it would be very easy to blow up your account. You would also need to get up at 5 am to trade when the markets open. I would recommend you start with spot forex. The market is open 24 hours 5.5 days a week and has good volume during your evenings. Also you can trade micro lots at around 10 cents a pip. Your goal in the beginning shouldn't be to make money - it should be to learn and not blow up your account. Capital preservation via proper risk management is essential to all traders. Learn to trade with hard stops, to assess risk/reward, and to be disciplined. If you can do that you increase your chances of success ten fold. Down the road if you want to trade futures you will have an easy transition to currency futures.

My win percentage is around 60%. Its not a system that can be backtested so I don't have enough data for a meaningful drawdown percentage. I have very conservative money management rules. As for your volume question - although there is no true volume in forex there is tick volume which is a pretty good substitute. There are lots of people successfully analyzing volume in the forex markets and there are lots of people saying you can't. As a side I think you are watching too many vehicles. IMO each market has its own personality and you need to get to know its personality before you can successfully trade it. Watching all the majors doesn't allow you to become intimate with any of them. I would recommend limiting yourself to three markets max. You will end up with fewer trades but more winners by studying less markets. A lot of professionals will just trade one thing.

I think he was suggesting that if you couldn't explain the material that makes up your system in an hour - not turn someone into a profitable trader. Here is my trading system - I use Wyckoff volume analysis and Andrew's pitchforks to find high probability trades in forex. Obviously I couldn't teach you my system to the point of mastery in an hour but I could explain the overall idea.

I have done some research into Gann and I understand his appeal based on his results but not based on his techniques. I have no interest in plotting rising signs versus the Dow. I don't think Astrology is generally seen as a science either (you may be thinking of Astronomy). But the biggest hole in studying Gann is no one seems to know what he actually did. There are people using Gann fans with fib numbers, and different people teaching squaring price and time or drawing the square of nine in completely different ways. Without consistent methods or statistics on the results using these methods I believe them to be worthless. If Gann had written a manual on how he actually traded it would be priceless - most of the Gann gurus out there are just trying to earn a buck off of people searching for the holy grail of trading. Studying Gann is a deep rabbit hole which few seem to come out of with meaningful techniques.

Everybody has a different path to take to become a successful trader. For me a big part of "getting it" was to turn off indicators. Almost all indicators are lagging and (for me at least) caused me to be less engaged in what was actually happening in the market. I was waiting for %K crossing %D or MA crosses or whatever. Now I pay attention to market structure, support and resistance areas and price action. If I was just starting out in forex I would watch 3 pairs (choose 3 of Euro, Yen, Aussie, Canada or Swiss) and watch them on one time frame. As a beginner the keys to learning and not blowing up an account is understand risk/reward ratios. If you only took trades where your risk/reward ratio was 4 to 1 or better you would only need to hit more than 20% to make money. I cannot stress this enough. This means when entering a trade you need a clearly defined protective stop and price target. If you can do just this one thing you can make a little bit of money while learning.

In my opinion you need to change your mantra from "I could have gotten more" to "I got mine". After you got yours it shouldn't matter if the market goes up 10 or 10000 points. You enter a trade with a protective stop and a profit target. When you hit either you are out. Don't be greedy and stick to your plan which is working. If you are moving targets once you enter a trade that is a different problem - namely fear - fear of the trade turning against you etc.

If you are trading the ES you should look at ES volume.

Tradestation will plot all types of PnF charts. They do allow for proper 1-box reversal charts (i.e an X and an O can exist in the same column). There is nothing to aid in box counts etc. You can also get their software for free if you trade 10 times a month. The sometimes have promotions for free lifetime data as well. I've been using a 3 box and 1 box chart on their software and like it. You can also use their data feed to feed ninjatrader if you so choose.

The 1-box reversal graphs are available with tradestation. NinjaTrader also supports PnF charting but they don't correctly plot 1-box reversals as they won't let an X and an O occupy the same column. Tradestation does this correctly.

Wyckoff used both 1 and 3 box reversal. In order to predict price move count the number of boxes across accumulation phase at a support/resistance level. Even if there is a gap during this phase this should also be counted. Take the count and multiply it by the box size. Take this result and multiply it by the reversal size (obviously if there is a 1 box reversal you don't need to do this). This is the approximate price move. Add or subtract this from the S/R level. Example: Note that this is a 3 box reversal chart and that all even columns would be better depicted as "O's". The number 50 here actually represent a price of 150. Wyckoff used both 1 and 3 box reversal charts and would calculate the price moves on both for confirmation. This estimation is meant as a rule of thumb and price will often move less or more.

Wyckoff developed and used his method to trade and there are plenty of successful traders that use his methods exclusively (or a derivative of his method) today.

StockJock, In NinjaTrader File-> New Chart then select the instrument you are interested in and hit New. Under Period -> Type -> Point and Figure. This should then open up Box Size and Reversal options. I'm sure that PnF is native to NT 7 so make sure you downloaded 7. NT isn't intuitive and sometimes it just doesn't do what you want it to. There are also issues with data setup - some of their indicators only run on realtime data but this isn't true for PnF. Also - even if you haven't purchased the software their support is pretty good. I switched from ThinkorSwim when I got interested in Wyckoff (thanks to your University) because they didn't have PnF but their software looks better and is much more intuitive. Let me know if I can be of any help. Also - I'd recommend getting a free data trial from Zen-Fire as you can get historical data and download data for whatever instruments you are interested in as most of the data feeds don't support historical data.

5 minute HLC chart on the left with daily market profile. 3 tick box size for both charts on right with top being 3 box reversal and bottom being a 1 bar reversal. Enjoy: