[VSA] Volume Spread Analysis Part II

[DbPhoenix 42]

Short answer, yes.

[mister ed 10]

That's not what I consider to be accumulation/distribution. It's not important enough. But if it works for you, that's great.

 

Ok, I think I understand you, we have different defintiions. I might define it as accumulation at that scale.

 

 

Jargon is supposed to serve as a shortcut, but also as an aid to communication. Without it, medicine, for example, would be in a world of trouble. And if one is working alone, he can use whatever terms he likes (calling shooting stars "spindles") as long as they help him with his trading.

 

But when you mix together Market Profile and VSA and TradeGuider and Wyckoff and Evans and Williams (both pre and post-TG) and Market Delta and SMI, for a start, you've got an awful lot of jargon, much of it conflicting, and communication and clarity get the short straw.

 

Therefore, I try to avoid jargon whenever and wherever possible, which is one of the reasons why I, for example, use "buying pressure" and "selling pressure" rather than demand and supply. They more accurately characterize what's going on and elaborate definitions are not required.

 

Again, think I got you. I would refer to 'buying pressure' and 'selling pressure' using Mkt Delta - like definitions, so we can create some more confusion out of this too!

 

So, as far as the shorter cycles go, I'd refer you as I did to Sledge to Eiger's post 299. Excellent job. The only thing I bring to the party is the addition of support and resistance, so that I know when what appear to be reversal signals probably really are reversal signals and not just bored traders looking for something to do.

 

Will have a closer look at this too ... especially the 'bored traders' part - it may be some traders running the price up and down to generate some profits! But will look more closely.

 

Thanks Db

[Sledge 13]

Db-

Ok, now that we have that defined and we are on the same page. Now that you know that I'm talking about a Long Term Bull trend to come, but you have seen weakness come into the market and are expecting a re-trace. You are seeing blatant signs of weakness on a Chart. How do you personally go about defining your entry on this Short trade?

Sledge

[DbPhoenix 42]

Db-

Ok, now that we have that defined and we are on the same page. Now that you know that I'm talking about a Long Term Bull trend to come, but you have seen weakness come into the market and are expecting a re-trace. You are seeing blatant signs of weakness on a Chart. How do you personally go about defining your entry on this Short trade?

Sledge

 

Apparently we're not on the same page after all. If you're talking about a LT bull trend and you've got a retracement, I wouldn't be looking at a short trade. I'd be looking to add to my long position.

[Sledge 13]

Apparently we're not on the same page after all. If you're talking about a LT bull trend and you've got a retracement, I wouldn't be looking at a short trade. I'd be looking to add to my long position.

 

So what you are saying is that even though a retrace is imminent. You would let it go? A perfect set up to make money, a quick turn to make your account grow by potentially thousands of dollars- You'd sit on the sidelines and let that downturn just unfold to be looking for your next move to go long?

 

Sadly, some of us just don't have the capital you must have to endure a potential 500 pip retrace and not only survive- but ADD to the long as you plan to do. I guess you play at Yankee Stadium while I'm still on the neighborhood sandlot.

 

Sledge

[DbPhoenix 42]

So what you are saying is that even though a retrace is imminent. You would let it go? A perfect set up to make money, a quick turn to make your account grow by potentially thousands of dollars- You'd sit on the sidelines and let that downturn just unfold to be looking for your next move to go long?

 

Sadly, some of us just don't have the capital you must have to endure a potential 500 pip retrace and not only survive- but ADD to the long as you plan to do. I guess you play at Yankee Stadium while I'm still on the neighborhood sandlot.

 

Sledge

 

Since you're talking about a retracement rather than a reversal, yes, I always trade with the trend. Doesn't have anything to do with megabucks. Trading with the trend is a principle that holds true whether trading a monthly chart or a tick chart. Fortunately, since I now daytrade, I no longer have to worry about the longer-term trend.

[heretodaygone... 10]

Shall we play a game?

 

Here's a daily chart of citi ©, with what appears to be a successful test of the January lows, or not depending on timeframe and trading plan. A couple of questions :

 

- Is this a lower volume test of supply?

 

- Is this a long signal for you?

 

- if this is a long signal for you, are you calling this a bottom or just looking for a swing? (correction, are you anticipating a bottom? )

 

- If price rises, does that automatically mean that demand is present or could it possibly be short covering?

 

- How do you distingush between short covering and new initiative demand?

 

-Will wait for a higher low to decide?

 

- Looking for and upthrust and or a no demand bar to short?

[DbPhoenix 42]

Shall we play a game?

 

Here's a daily chart of citi ©, with what appears to be a successful test of the January lows, or not depending on timeframe and trading plan. A couple of questions :

 

- Is this a lower volume test of supply?

 

- Is this a long signal for you?

 

- if this is a long signal for you, are you calling this a bottom or just looking for a swing? (correction, are you anticipating a bottom? )

 

- If price rises, does that automatically mean that demand is present or could it possibly be short covering?

 

- How do you distingush between short covering and new initiative demand?

 

-Will wait for a higher low to decide?

 

- Looking for and upthrust and or a no demand bar to short?

 

More than a couple

 

1. It's only marginally lower, but it's possible. If it's under accumulation, there will likely be many of these.

 

2. No.

 

3. See 2.

 

4. Depends on whether or not the advance is sustained. If it isn't, it's more likely short-covering.

 

5. See 4.

 

6. To decide what?

 

7. If I were interested in trading this, I'd wait to see where the first rally takes it and whether or not that might offer potential R. The easy money has likely been made here.

[Eiger 10]

- the jump across the minor creek, look at the volume. Was it Evans/Pruden who defined the creek as 'where the volume comes in' - it may not have been - but this is a great example.

 

It was Bob Evans who associated the jump with volume, and where to expect a test.

 

Tom Williams explains this particularly well in his book, the Undeclared Secrets. He talks about many, many trapped traders who went long along the top of the trading range (or, the creek). Professionals who want to move prices higher know that there are thousands of traders trapped up there, looking to sell and get out even on their poor trades. The professionals don't want to be buying the contracts or stock the trapped longs want to unload -- they already have their line bought lower. Having to buy at higher prices isn't good business. So, what do they do? They will rapidly move price through the trading range and jump the creek (or, gap it higher). When trapped longs see this, they are more likely to just hold onto their position and ride the mark-up. It saves the professionals money. It's a useful explaination of breaking through the opposition of supply.

 

For the What It's Worth Department: Personally, I think Tom Williams's book is incredibly valuable. It is one of -- if not the -- most valuable trading books I own. I study it often. Mr. Williams created VSA based on Wyckoff and his experiences as a modern, professional trader. So, when studying and learning Wyckoff, his book is particualrly helpful (IMHO). I think it helps make Wyckoff come alive.

 

Eiger

[mister ed 10]

For the What It's Worth Department: Personally, I think Tom Williams's book is incredibly valuable. It is one of -- if not the -- most valuable trading books I own. I study it often. Mr. Williams created VSA based on Wyckoff and his experiences as a modern, professional trader. So, when studying and learning Wyckoff, his book is particualrly helpful (IMHO). I think it helps make Wyckoff come alive.

 

Eiger

 

Eiger, have you read 'Master the Markets', which I always understood was a sort of revised edition of 'Undeclared Secrets'? If so, and if you don't mind, would you make a few comments on the merits of one compared to the other?

[mister ed 10]

More than a couple

 

1. It's only marginally lower, but it's possible. If it's under accumulation, there will likely be many of these.

 

2. No.

 

3. See 2.

 

4. Depends on whether or not the advance is sustained. If it isn't, it's more likely short-covering.

 

5. See 4.

 

6. To decide what?

 

7. If I were interested in trading this, I'd wait to see where the first rally takes it and whether or not that might offer potential R. The easy money has likely been made here.

 

Thanks for the comments here Db - it takes me quite a while to answer questions like this, flicking back and forth to the chart, actually figuring it all out, so I appreciate the effort you put in for us all to learn, thanks.

[Seb Manby 11]

Hi BearBull;

 

Thank you for your questions.

Understand you are back with the TG camp for presentations at the 3 weekend Symposiums in April, 2008. Few colleagues have asked me about this, perhaps you are in a better position to clarify:

 

1. Is this going to be a repetition of the countless seminars and webinars in the past by Gavin & Co., pointing out buying/selling climax, upthrust, no demand, playing field and ofcourse that the markets are manipulated , that 90% of the volume is professional activity and that the media never reports the truth about the markets, nor do the guys at the stock exchange, ( has been repeated a zillion times.) not to mention the 60min general introductions by Gavin

 

First of all, I cannot speak for Gavin, I have no idea what he will say, second, my first part will consist of the basics as there will be people there that do not have the software or books, and know nothing, but the second part will be about trading only.

 

2. or is it that after illustrating the various principles, you folks are going to get into the real nitty-gritty of trading, ie. how to trade with these signals, what are the confirmation bars, what should be the stops, how to manage the trade, where is the exist, what will negate the setup., Strategies/tactics, some solid teaching

 

I hope to make some live trading videos explaining setups and how I trade using live charts and going into great depth as to what I am thinking and what I can see leading up to the trade, this I hope will open your eyes like never before, I will open the doors on this,and on this question I will focus on your 2nd question to give you value for money, I would love to do this here and for free, but Gavin has tied me up with a gag, but I'm so pleased that you asked me this because I finally have some feedback as to what people want from this seminar.

 

For you have ask, this VSA stuff has been going around for over 7yrs and yet there is so much confusion, why? Is it that most have failed to grasp or could it be something to do with the METHOD OF TEACHING.

 

From my understanding of feedback, my method of teaching is quite clear, people do seem to be able to grasp what I am saying, and my charts are clear enough for folks to follow.

[Sledge 13]

2. or is it that after illustrating the various principles, you folks are going to get into the real nitty-gritty of trading, ie. how to trade with these signals, what are the confirmation bars, what should be the stops, how to manage the trade, where is the exist, what will negate the setup., Strategies/tactics, some solid teaching

 

I hope to make some live trading videos explaining setups and how I trade using live charts and going into great depth as to what I am thinking and what I can see leading up to the trade, this I hope will open your eyes like never before, I will open the doors on this,and on this question I will focus on your 2nd question to give you value for money, I would love to do this here and for free, but Gavin has tied me up with a gag, but I'm so pleased that you asked me this because I finally have some feedback as to what people want from this seminar

 

Seb-

This is great news! Is this a customer only event?

Sledge

[Bearbull 10]

Hi BearBull;

 

Thank you for your questions.

 

Greatly appreciate your response, It is going to clarify the situation for a lot of folks here and I will certainly pass on the info. to some of my colleagues who have shown interest in the symposiums.

Think vast majority who attend would have some background into price/vol, VSA etc, as there have been countless seminars, webinars (archived as well on TG website) and for a while the book MTM by Tom Williams was available on the internet for a download. Hence you will find that there will be major interest now in how to trade with VSA principles. Fine the basics can be covered in the first session, but then it imperative to get into the nitty-gritty of real trading for you can see that here we are now into VSAII thread, the previous being over 150pages and still no clarity unlike what you get from reading and studying Wyckoff.

So pleased to learn that you will be doing just that, infact I would like 75% of your presentation slanted towards that. You could also advise your co-presenters the same,

Psychology lectures are fine, if kept short and to the point but as pointed out before, incentive to apply discipline to trading can only be generated after one has gained confidence in understanding what the market is telling based on VSA principles otherwise prolonged lecturing on discipline etc is pointless, for the question will come: Discipline and being consistent in Doing what...............??????

[Eiger 10]

Eiger, have you read 'Master the Markets', which I always understood was a sort of revised edition of 'Undeclared Secrets'? If so, and if you don't mind, would you make a few comments on the merits of one compared to the other?

 

I don't really know, Ed. I have only read the Undeclared Secrets. I have heard that master the Markets is different, but not sure how. You can ask Sebastian Manby. He might know.

 

Eiger

[mister ed 10]

Thanks Eiger - just after a general impression, not too important

[Primavera 10]

Eiger, have you read 'Master the Markets', which I always understood was a sort of revised edition of 'Undeclared Secrets'? If so, and if you don't mind, would you make a few comments on the merits of one compared to the other?

Ed

 

I have both books. MTM is a revised version of "Undeclared Secrets", so if you have one then you don't really need the other. The original book had a number of errors and, in particular, some references to diagrams or particular numbered points on these diagrams were incorrect, which could cause confusion in this subject which in itself can be confusing enough !

 

MTM is better organised and seems clearer. Most of the book is not Tradeguider biased except that the diagrams are generally using the software platform. However there is a section at the end that specifically deals with the Tradeguider software, which you can ignore if not relevant.

 

There is also quite a reasonable section in MTM on glossary of terms with examples of e.g. no demand. This is quite useful for reference.

 

All in all I would go for MTM given the choice, but if you want to get the feel of his master's voice then I think you get it from Undeclared Secrets. I feel that MTM had a ghostwriter who made it clearer but lost some of the original feel.

 

Primavera

[habi 10]

Do you want me to show you what you should have been sensitive to last September, or do you want to know how to tell when it's time to exit a long or short trade? If the latter, review the posts that Eiger made to Zeon (299).

 

Yes DB, I'm very interested in what I had to be sensitive last September. I take the SPY as an example. From mid July to mid August we have seen very high volume, for me a sign, that strenght came in. Then the rally startet, which you see as the exhaustion move. I tried to find myself the weakness. Bar 1 looks like a test, followed by a rally on decreasing volume. Then a large up bar (2) with the highest volume in this last rally. Then after a small correction the final rally on decreasing volume ending with bar 3 on the top.

 

Was this all enough to identify it as the ending rally?

What more made you that sensitive?

What's your explanation for the very huge volume in July/August?

 

Thanks for answer and don't look to much to the grammar

[Turning Point 10]

Hi,

I am interested in buying TG software. At the moment I use e-signal charts.

I get the volume and the bar charts on e-signal. Are there any additional advantages in buying TG software. Also what is the latest version of the software. I am told that when the market is moving fast then the TG software charts gets frozen. Is this true?

[DbPhoenix 42]

Yes DB, I'm very interested in what I had to be sensitive last September. I take the SPY as an example. From mid July to mid August we have seen very high volume, for me a sign, that strenght came in. Then the rally startet, which you see as the exhaustion move. I tried to find myself the weakness. Bar 1 looks like a test, followed by a rally on decreasing volume. Then a large up bar (2) with the highest volume in this last rally. Then after a small correction the final rally on decreasing volume ending with bar 3 on the top.

 

Was this all enough to identify it as the ending rally?

What more made you that sensitive?

What's your explanation for the very huge volume in July/August?

 

Thanks for answer and don't look to much to the grammar

 

Well, since you asked . . .

 

This is a big chart, but you have to see what you're doing.

 

There's nothing remarkable about the volume until August. But the "rally" in July has that tell-tale oval PV relationship. Not a good sign. When price falls shortly thereafter, you have what looks like preliminary support coming in at the first three arrows, culminating in what appears to be a selling climax in mid-August.

 

All this is fine so far, but look at what happens to volume. High volume is not always necessary. In fact, it can be a warning sign. But when you make that higher high, you've got that oval again, and the only remarkable volume here is on a bar that brings price well below the high (which you'd see even without bars).

 

After that, volume picks up, but it accompanies a generally downside bias. When a rally attempt is made, it can't hold above the supply line for more than a day, and there's that oval again. On the highest volume here, price is effectively neutral.

 

Then there are the Transports, which don't even begin to confirm all these rally attempts.

 

It's not just a matter of this bar or that bar. It's also a matter of "waves". Each rally "wave" -- i.e., the whole thing, not just the individual component bars -- shows weakness where one would expect to see strength. None of this may be a signal to you to head for the exits, but it's a signal that you should at least find out where they are.

 

 

[lrabovetskiy 10]

I am studying the market turns and trying to see if I can detect them using VSA.

 

Could you please enlighten me concerning the turn I marked by vertical line?

Volume on decline virtually disappeared and I can see support on the weekly chart but is this enough to go long especially considering holidays?

 

Would you trade this turn and if yes where would you go long?

 

Thank you very much,

 

Leonid

[habi 10]

It's not just a matter of this bar or that bar. It's also a matter of "waves". Each rally "wave" -- i.e., the whole thing, not just the individual component bars -- shows weakness where one would expect to see strength. None of this may be a signal to you to head for the exits, but it's a signal that you should at least find out where they are.

QUOTE]

 

DB, thanks for your answer. Yes, I try to see it as a whole picture, I don't just focus on single bars. But some bars have more weight tan others, especially those with higher volume imho. What I try to see is not only weakness or strenght but also how much weakness or strenght comes in to define, what I could expect for the following move. The second part is very hard if not impssible.

[DbPhoenix 42]

 

DB, thanks for your answer. Yes, I try to see it as a whole picture, I don't just focus on single bars. But some bars have more weight tan others, especially those with higher volume imho. What I try to see is not only weakness or strenght but also how much weakness or strenght comes in to define, what I could expect for the following move. The second part is very hard if not impssible.

 

It can be difficult, yes, but less so if you have a well-defined and well-tested setup and the patience to wait for it. Also if you're selective in whom you listen to with regard to what you're supposed to see. The latter is more difficult than the trading.

 

Incidentally, about the what-to-look-for part, the same dynamic I described above unfolded in 2000. Unfortunately, most people wouldn't listen.

 

[zdo 20]

Db,

 

Curiosity question -where and when did you get / come up with the oval concept.

 

thx

 

zdo

[DbPhoenix 42]

Db,

 

Curiosity question -where and when did you get / come up with the oval concept.

 

thx

 

zdo

 

The first maven I read was William O'Neil, who, in spite of whatever faults he may have (who doesn't), is still the first person I'd recommend to any EOD trader who has any interest at all in melding FA with TA.

 

Later, of course, I discovered that this idea stretches all the way back to Dow. But that's the nature of truth: it keeps popping up of its own accord.