mister ed

Hi Rajiv, Sorry to do this after the event, and its not really VSA, but I hope the comments are of some value. I am a believer in using complementary forms of analysis, so if I was to be looking for a shorting opportunity at or around a Fib retracement I would like to see it backed up by some other resistance. I have attached your chart with short-term support and resistance drawn in by myself - the levels are rough but hopefully get the idea across. Support 1 and 2 show where there were small bounces in the downtrend, then a (small) gap lower. Then resistance forms just under the prior support. The large white candle off the low shows demand coming in, and you would expect to get a trade higher in coming days. What you do get is an immediate reaction, on the following bar no less, all the way up to short-term resistance, above the 50% retracement but below the 61.8. In conclusion, and from a short-term perspective, this is the reaction, and with the confluence of the Fib retracement levels and the support that has now become resistance, this is the shorting area and bar, if that is the trade sought. I know this is not a VSA analysis (and PivotProfiler has already posted his), and also that it is hindsight analysis, but I hope it is useful

Thanks for the comments PivotProfiler (post#329 - I gotta try harder to keep up ...) and for the correction to the WRB definition. I think my definition makes me comfortable (which is nice but not necessarily useful) because it has roots in stats, but the idea of looking at the most recent bars is more in keeping with getting in tune with what the market is doing right now. Much more useful. And thanks for the reference to the WRB thread - yes have read it and actually done a bit of a summary so I can reread it when I am offline.

Thats a great example PivotProfiler. The addition of WRB analysis really enhances the VSA analysis - the value of confluence. One thing that struck me from the 15 minute chart is the noticeable change in the character of the price movement leading up to the entry. The price activity from 2.30 to about 7 was very choppy, non-directional, range-bound then clearly changed from 7 on. I don't know if this was related to an economic or news release, but it is a very clear change. I have read Brett Steenbarger's comments on stationarity, your example seems to be a very clear illustration of a change in whatever was influencing the market. Such a change in market behaviour could be used as an alert to watch out for opportunities. One question for you, elsewhere you have defined a WRB as the widest open to close for the past 3 bars/intervals (the 3 being negotiable as long as consistency is applied). My bias is always to be a bit more statistical so I define a WRB as greater than say 1 standard deviation (edit: or 2 std devs or whatever) above the moving average of the abs(open-close). Any thoughts on this?

This is good thread answering FX questions, let me add a comment in reply to Q9: What else should I know? Know what economic news/numbers are due for release, what time they are due for release, and what is the consensus expectation for the release. In order to make sense of these releases you need to have a basic understanding of the economic theory as it relates to exchange rate valuation. The FX market works on some very basic rules of thumb, especially for short-term moves, so knowing this stuff is not at all difficult. For example, if there is a release of inflation data due in the UK and the numbers for the CPI come in higher than expectations then expect a rally in the GBP/USD. For technical traders, and specifically system traders, who rely on price action alone to make trading decisions this approach may be repugnant, but knowing why the currency has suddenly jumped 50 points or more can be helpful. At the very least it can be helpful by allowing the technical trader to improve his fill. There are some good websites with reliable economic calenders, I am not sure about the etiquette of posting links to them from this site, so will refrain, but they are not difficult to find. Along similar lines, know what the FX market is focusing on and talking about. One day it will be the carry trade, shorting a low yield currency and buying a high yield. The next day the focus may have switched to talking about the US deficits, the next day Japanese politics...and so on. The focus of the FX market shifts, knowing what is being talked about helps with deciding which currency pairs to trade over the coming days. Again, finding this info is not difficult, and even only a basic understanding of it can be very helpful to the trader. Volume figures for the FX market. Yep, not available, there is no central exchange. BUT, a good approximation can be found in using the volume figures of the deals transacted over EBS. EBS is an electronic broking service used by banks and institutions, so the bad news is these figures are not available to retail FX traders (as far as I know, but I would LOVE to be corrected on this, accurate volume figures for FX would be great to have!) Hope this helps.

Hello to everyone, and thanks for a great forum! I have been reading on the site since about April/May, in the spirit of listening more than talking, but now is the time to say hello and make some contributions. My background: from 1987 - 1998 traded FX, unfortunately only with moderate success, but learnt a lot. 1999 - 2002 equities. In 2003, and to the present, I went into a "real" business - leases, employees, the works:mad:. Am now back into the financial markets, but only part-time while I try to disengage from the "real" business, hope to be full-time soon. I trade Australian equities through a DMA CFD platform; great leverage, but need to use it sensibly. This is a great forum! Lots of information, and not much name-calling! There are some other great forums out there but the name-calling and general level of aggro can be offputting, not to mention time-wasting. I have learnt a lot from this forum, from very generous contributors. I wont mention names because I am sure to forget a few and that wouldn't be right. My trading approach/beliefs: Short-term; small profits, even smaller stops! I like: price/volume, candlesticks, Wyckoff/VSA, support/resistance, short-term trendlines (3-7 bars), price patterns, Market Profile (the ideas rather than the actual MP chart itself). I will use a few indicators to help with analysis, not as entry/exit tools, such as ATR. These are the approaches I use. There are plenty of approaches I dont like and dont use, but the funny thing is some of them I believe have real value, just not for me! For example, a trend line (beyond really short-term ones I already mentioned); I see them working but am still to integrate them into my approach comfortably. Elliot Wave, I hate it, but I see some traders using EW concepts (the simple ones) very well. Again, I can see the value, but not for me. Ok, thats enough of an introduction, thanks again to all the contributors to this site.

Thanks PivotProfiler and all contributors to this thread, great learning tool. Pivot, a few pages back you put up some code for assessing supply and demand. I have some code I use to help assess "effort" and "result", in the Wyckoff sense. Its very simple code, and could probably do with some refining, but might provide a helpful starting point for some. ----------- W 1. Up bar C>Ref(C,-1) {I told you it was very simple...} W 2. Down bar C<=Ref(C,-1) W 3. Higher volume V>=Ref(V,-1) W 4. Lower volume V<Ref(V,-1) W 5. Wider spread (H-L)>Ref((H-L),-1) W 6. Narrow spread (H-L)<=Ref((H-L),-1) W 7. Close upper half (C>=((H-L)*.5)+L) W 8. Close lower half (C<((H-L)*.5)+L) W 9 Vol > MA V>Mov(V,60,S) W 10 Vol < MA V<Mov(V,60,S) W 11 Wide spread (H-L)>Mov((H-L),60,S) W 12 Narrow spread (H-L)<Mov((H-L),60,S) W 13 Vol down 2 days {plots a minus 1 if volume has fallen for two consecutive days} If( V<Ref(V,-1) AND V<Ref(V,-2) AND Ref(V,-1)<Ref(V,-2), -1,0) W Effort Fml( "W 3. Higher volume") + Fml( "W 9 Vol > MA"); W Result If( Fml( "W 1. Up bar") =1,1,0) + If( Fml( "W 2. Down bar") =1,-1,0) + If( Fml( "W 5. Wider spread") =1,1,0) + If( Fml( "W 6. Narrow spread") =1,-1,0) + If( Fml( "W 7. Close upper half") =1,1,0) + If( Fml( "W 8. Close lower half") =1,-1,0) W Result(2) If( Fml( "W 1. Up bar") =1,1,0) + If( Fml( "W 2. Down bar") =1,-1,0) + If( Fml( "W 5. Wider spread") =1,1,0) + If( Fml( "W 11 Wide spread") =1,1,0) + If( Fml( "W 6. Narrow spread") =1,-1,0) + If( Fml( "W 12 Narrow spread") =1,-1,0) + If( Fml( "W 7. Close upper half") =1,1,0) + If( Fml( "W 8. Close lower half") =1,-1,0) W effort result combined {Multiplies an “up†“result†by the “effortâ€Â: that is, if the result is up, as measured by the “W Result†equation the result is positive, it is multiplied by the effort, as measured by the “W effort†equation.} (If( Fml( "W Result") >0,Fml( "W Result"),0)) * Fml( "W Effort") W effort result combined(2) {Multiplies a “down†“result†by the “effortâ€Â: that is, if the result is down, as measured by the “W Result†equation being negative, it is multiplied by the effort, as measured by the “W effort†equation.} (If( Fml( "W Result") <0,Fml( "W Result"),0)) * Fml( "W Effort") W effort result added {adds the “up†effort result and the “down†effort result} Fml( "W effort result combined") + Fml( "W effort result combined(2)") --------- Some of these "indicators" I plot on a chart as a tool to help assess effort and result. They are not "indicators", though, just tools. I will try to upload a chart with the tools on it, just to show an example.