[VSA] Volume Spread Analysis Part II

[zeon 10]

Just wanted to post up a chart of a little trade I took today. Welcome back, right? I'm not trading more than a handful of times a month right now as I've got plenty of other things that have been keeping me busy. But, none the less, taking great trades. I decided to take a peek at the markets this afternoon during lunch and saw a nice setup pop up.

 

So anyways...just thought I'd post it up. I won't post all the time, but will check in every week or so. Great to see this thread is still kickin'!

 

 

Hmm, the chart you posted makes my symmetrical triangle look more like a descending one. *sigh* it's so easy to see different things in the market...

[CandleWhisperer 10]

Sebastian,

Here is another example of strength showing on 3min, TG most likely would flash up the green indicator as well, many would go long, however once the price action is viewed on a 1min time frame, what comes to light are the true intentions of the market, prices have not found support as yet and hence not ready to turn up i.e B- buying pressure has evaporated.

Comments please

 

Why would anybody go long at A?

 

Yes demand entered the market but it is not a reason to go long. Note that this bar forms a dark hammer with a long shadow. What you would now look for to go long is a no supply or test within the range of this long shadow.

 

If you trade hammer patterns, you would not that to go long you have to wait for the close of the next candle, which needs to engulf body of the hammer (Mark's rules). In other words, the no trade signal at A.

 

Also note the Ultra high volume bar with the close in the middle. This bar shows supply swamping demand. Hence, the background is pretty weak at A. You can see the trend for yourself.

[Primavera 10]

That's why I always check my news calendar and adjust my stops if I'm in a position......

 

Not all news that affects the market appears on a calendar. How can you discount some event if it is entirely or largely unpredicted >

 

But as for technical and non-technical days, I don't know... dbphoenix said he doesn't believe there is noise in the markets, even on a 1-min timeframe. So if there is something "non-technical" occuring, I always get the sense that it's the trader who's reading the chart wrong. The markets are always right. It's whatever belief you had based on what you see or thought you had seen, that is incorrect.

 

Some events such as the fed's recent intervention, Northern Rock aren't just noise - they are full scale renditions of Tschkovsky's 12th with real cannon and a thunderstorm toboot.

 

Furthermore if you are just looking at the chart of the instrument you are trading then you will not account for these market events. Indeed as I said above it might not be possible for you to account for them - all you can do is react when they arise.

 

 

........ Didn't feel like chasing price, so I stood aside. Then I went long when the hinge formation I posted earlier on broke. False break apparently so I got stopped out.

 

Quite right not to chase price or setups where uncertainty exists, or if you want to try to gain from these situations then reduce risk by reducing position size.

 

 

QUOTE]

[TinGull 10]

Hmm, the chart you posted makes my symmetrical triangle look more like a descending one. *sigh* it's so easy to see different things in the market...

 

thats the beauty of the markets

[zeon 10]

thats the beauty of the markets

 

and the difficulty...

[Seb Manby 11]

My buddie Joel Pozen sent me this video of himself trading live in his class, thought I'd share it with you. Joel studied Richard Ney and Tom Williams and is able to apply his knowledge to the real time market.

 

Regards S.

Movie_0001.wmv

[rodney 10]

Thanks Seb

Just want to confirm what might have been going on in your analysis when you closed out the trade at that specific bar.

I might have continued the trade longer.

 

I saw a high volume down bar closing at the lows, followed by the exit bar -- a low volume bar with a narrower spread. And, I note this bar spent much of its time near or above the midpoint.

 

Is it the narrow range and midpoint activity on that bar that triggered the exit?

[Seb Manby 11]

Hi Rodney;

 

yes is the answer to your question, it appeared that strength might be returning to the market.

 

Regards S

[Bearbull 10]

Why would anybody go long at A?

 

Yes demand entered the market but it is not a reason to go long. Note that this bar forms a dark hammer with a long shadow. What you would now look for to go long is a no supply or test within the range of this long shadow.

 

If you trade hammer patterns, you would not that to go long you have to wait for the close of the next candle, which needs to engulf body of the hammer (Mark's rules). In other words, the no trade signal at A.

 

Also note the Ultra high volume bar with the close in the middle. This bar shows supply swamping demand. Hence, the background is pretty weak at A. You can see the trend for yourself.

 

1. The question was directed to Sebastian in regards to his video on Post 430 and as to what was his thought process/reasoning on taking a short on an upbar at that particular price location was. (my post 442)

2. Post 443 was intended to expand on that via a dialogue with sebastian once he responded with his take on his trade , this has not materialised. Instead the focus has been on post 443. In a typical strong downtrend or uptrend, one encounters wide range bars on high vol and hammers , inverted hammers also on high vol, in VSA jargon these translate into sign of strength or sign of weakness and if you listen to the archived videos in TG, has been the main point of confusion, how to know when it is selling or buying climax. There are countless setups where with one of this hammers on high vol, there has been the low vol tests as a signal to go long, only to watch the prices plough through the support of the low of the hammer, the setup has to be in the right context, not anywhere on the chart, .

3. Know enough about Wyckoff to state that VSA or any other price/vol tutuoring is merely an offshoot of the central concepts/principles of Wyckoff.

4. You obviously are well enlightened but I know quite a few traders who have difficulty with what I have just outlined

5. Once again the post 443 was meant for a discussion with Sebastian in ref. to his post of 430. I do not take trades via any hammer or hanging man.

6. Attached reveals with great clarity that not all hammers or inverted hammers are made equal and one does require anybody's rules of something engulfing something else to take the trade. Reading the price action i.e in this case clear price rejection at a significant price level, and in the context of the prior price action led to a 10pt move in ER. and that is my style of trading, period.

[Bearbull 10]

Hi Rodney;

 

yes is the answer to your question, it appeared that strength might be returning to the market.

 

Regards S

Once again would appreciate your response in ref: to your video on post 430

what was your reason, thought process of taking a short , as there was no audio, hence the question. Ref: post 432

[Bearbull 10]

Sorry Sebastian, my question to your video was on Post 442

[rodney 10]

Hi Rodney;

 

yes is the answer to your question, it appeared that strength might be returning to the market.

 

Regards S

 

Thanks Seb.

amazing what can go through one's mind in such a short time bar. Just wanted to be sure I was basically on the same page as you intended.

 

I like your silent videos.

 

But I also liked a video in which you spoke about what you might "anticipate" - not predict - what the next bar will be.

 

That anticipation - with price action background as the foundation - helped me to focus on what I would anticipate. A helpful eye opener for me.

 

Thanks again,

Rodney

[CandleWhisperer 10]

Bearbull;

 

Thanks for the info. It is just that many of your posts seem to pooh-pooh VSA and TG in particular. I too am no fan of the latter. It is likely true that there would be a green indicator at A on the chart. Yet, even the folks at TG would say that they are not buy and sell signals, merely signs of strength.

 

A trained eye would not that the volume was less than the bar I mentioned that closed near its middle representing supply swamping demand. The trained eye would also of noted that the close was not on the high and neither was the next bar up. This means it was not a Shake out. In other words, the high bar was not a place to go long in itself.

 

Everything you said about the 1 minute is true. Clearly you have a grasp on some key principles of PV trading. Thank you for your insights and please keep them coming.

[Seb Manby 11]

Once again would appreciate your response in ref: to your video on post 430

what was your reason, thought process of taking a short , as there was no audio, hence the question. Ref: post 432

 

Hi Bearbull;

 

Good question, I shorted on 'no demand' as we were in a down trend, i took advantage of an opportunity to short, and closed out when I thought the balance of supply and demand were changing, yes I should have stayed in, but i cannot place stops where I want them with ninja trader, so I just go out when I saw a potential shaking out.

 

Regards S

[Seb Manby 11]

Interesting trade, taking a short on an upbar on high vol, presume your reasoning was that the prices had just broken down from a congestion area, and then the prices were reversed , those who shorted had to run for cover, normally after this a No demand bar appears on smaller time frames, which as per the VSA is the ideal place to short. here is 1min chart perhaps you have some comments.

 

 

If you are looking at a 1 min chart you might not see a 'no demand' bar appearing, the high volume shows the deep pocket traders are active, I would imagine that just selling short into an up bar on a volume spike, you should not go far wrong, but you have to have nerves of steel for that. I traded on what I saw developing at that moment, which was weakness. I know that the Eurex have market makers because there is a list of banks on their website under market makers, that Dax is manipulated to the extreme as they try to figure out the next move in the US contracts, but being able to read volume in the correct way gives you a level playing field in which you can piggy back their objectives.

 

Hope this answers your question.

 

Regards S

[Seb Manby 11]

Thanks Seb.

amazing what can go through one's mind in such a short time bar. Just wanted to be sure I was basically on the same page as you intended.

 

I like your silent videos.

 

But I also liked a video in which you spoke about what you might "anticipate" - not predict - what the next bar will be.

 

That anticipation - with price action background as the foundation - helped me to focus on what I would anticipate. A helpful eye opener for me.

 

Thanks again,

Rodney

 

great, sounds like your making progress, keep it up.

 

Regards S

[habi 10]

Hmm, the chart you posted makes my symmetrical triangle look more like a descending one. *sigh* it's so easy to see different things in the market...

 

First of all I see, that we have different volume data in our charts on the two bars I would like to refer. After the strong down move, we see a wide spread down bar closing in the middle, followed by another wide spread up bar, closing in its high with ultra high volume. Strenght came in on very high volume. Again, some strenght came in whe prices went below the low after the open. Falling prices accompained with a rising TICK. Then rising volume on the a down bar closing off of it's low, followed by a hammer candle.

 

In my opinion, the main activitiy was early in the morning and it worth to look back in this area.

[Bearbull 10]

Hi Bearbull;

 

Good question, I shorted on 'no demand' as we were in a down trend, i took advantage of an opportunity to short, and closed out when I thought the balance of supply and demand were changing, yes I should have stayed in, but i cannot place stops where I want them with ninja trader, so I just go out when I saw a potential shaking out.

 

Regards S

 

Thanks, glad to know you will be presenting similar videos at the weekend seminars in April, hope you will include in detail both, those that were productive and those which were not(based entirely on VSA), because with all the modern technology, it is relatively simple to record live price action, audio on it in hindsight and broadcast selectively......... previously(not by you) chart examples on indicators were similarly exhibited during webinars and prior to that countless books have been published with ideal examples of RSI, CCI, MaCD divergence etc.............They all conveniently forget to mention or include those instances in which their setups, indicators, patterns etc totally failed thus reflecting the ultimate truth about the market i.e its probabilistic nature....

Unfortunately with TG seminars, there is the usualy mandatory Gavin gabble, then onto extolling the virtues of VSA, only to observe 15min/30min later the price bars on a chart gradually disappear in the background as various indicators are added on, Diamond Stops, H Stops, VSA indicators with red, green rectangles and triangles, trend indicators with more triangles, fib levels, pivot levels, trendlines, trend channels and ofcourse those famous TREND CLUSTERS blue splashes all over the chart, not forgetting the ref. to the volume thermometer, the volume bars with psychedelic bands

Then the rollercoaster ride as the charts are flicked back and forth from 240min through to 3min via 120/60/30/15 . How much difference is made to the 240min or 120min chart once a trade is taken on a 3min chart.....

[Bearbull 10]

Bearbull;

 

Thanks for the info. It is just that many of your posts seem to pooh-pooh VSA and TG in particular. I too am no fan of the latter.

Everything you said about the 1 minute is true. Clearly you have a grasp on some key principles of PV trading. Thank you for your insights and please keep them coming.

 

"pooh-pooh VSA" Whatever gave you that idea. Infact have the highest respect for Tom Williams who made a great effort over 10yrs back to reveal all the market manipulation in his "Undeclared Secrets........." and attempted to incorporate those concepts in computer program, however he is not a businessman and the VSA program remained in doldrums for a long time until Gavin came on the scene, glossed it up as Tradeguider, jacked up the price some 4time the original and commenced the US operation. The software is packed full with glitches and has not been upgraded in the past 4-5yrs although all along promises have been made.

My intent has been to highlight the fact that there is enough material on Price/Vol, VSA in these forums and in the numerous highly informative threads by Dbphoenix elsewhere (also from relatively inexpensive books , Justin Mamis, Marcel Link, Lukeman, Vadym Graifer) for anybody to learn and with hard graft, come up with setups/Strategy/tactics, test them out thoroughtly in realtime and then apply with consistency and discipline, there is absolutely no need to throw away their hard earned cash on expensive software or private tutoring.

Many of these live private tutoring classes are by those who have mastered the art of creating illusion , make general remarks on expectations where price would go, same time continue babbling on previous support/resistance, the mouse continuously moving all over the chart, prices meantime move on, if it is in the desired direction claim the status of the all knowing messiah, if not point out why, the audience so much want to believe, they do not notice the illusion;) very similar to those Psychic (clairvoyant, contacting the dead etc) shows you see on the TV;)

[rodney 10]

great, sounds like your making progress, keep it up.

 

Regards S

 

Thanks. On my real time simulator I am making great progress, and importantly consistent progress.

I now have a small account ready to trade live - as well. Just have not pulled the trigger there.

 

Juggling the concept of immediate "back ground" with "what is now developing", and then add to that what might be anticipated is kind of like surfing.

I know what is in my immediate background - the size and shape of the wave swell which is pushing me forward. I know what is now developing - as I can feel beneath my feet and the board things like the current strength ,current speed and angle.

And, of course, I must anticipate what is straight ahead.

 

So there's my crude metaphor.

However, the part of VSA that I find most elusive to master is the relationship between the background [and background volume] in comparison to the newly developing action in the current bar, and current volume.

 

Sometimes it seems that a small change in the current bar action being made on relatively lower volume than the huge volume found in the background, can bring a sudden end to a significant turn that recently formed in the background and that so recently occurred on huge volume.

 

This can be such a subtle shift to detect.

 

Does this observation make any sense?

Edited March 17, 2008 by rodney

[rodney 10]

In fact have the highest respect for Tom Williams who made a great effort over 10yrs back to reveal all the market manipulation in his "Undeclared Secrets........."

 

BearBull

I have the BootCamp CD and Master the Markets.. Did you find that the "Undeclared Secrets" added new value to the more recently published CD and Book?

 

My intent has been to highlight the fact that there is enough material on Price/Vol, VSA in these forums and in the numerous highly informative threads by Dbphoenix elsewhere (also from relatively inexpensive books , Justin Mamis, Marcel Link, Lukeman, Vadym Graifer) for anybody to learn and with hard graft, come up with setups/Strategy/tactics, test them out thoroughly in realtime and then apply with consistency and discipline, there is absolutely no need to throw away their hard earned cash on expensive software or private tutoring.

Many of these live private tutoring classes are by those who have mastered the art of creating illusion , make general remarks on expectations where price would go, same time continue babbling on previous support/resistance, the mouse continuously moving all over the chart, prices meantime move on, if it is in the desired direction claim the status of the all knowing messiah, if not point out why, the audience so much want to believe, they do not notice the illusion;) very similar to those Psychic (clairvoyant, contacting the dead etc) shows you see on the TV;)

 

Well said.

As a beginner, I too am leery of the many gurus who are so eager to exploit a beginner's need to learn. Hmmm... does this form of salesman exploitation sound a bit like the manner in which deep pocket investors exploit the sheep in the live market - with patterns such as shakeouts, holding the bag, etc ?

 

At any rate, I am deeply grateful for the owners of this website, and especially the VSA thread. It is the only place i visit.

 

One of the things I especially appreciate about this VSA thread, is that the same concepts as taught in the original books and Cd's are discussed in this thread with so much more clarity.

So many contributors here are not only doing an outstanding job at explaining VSA, and patiently giving so much of their time to us.

But, these master contributors also seem to enjoy helping beginners like me.

 

I follow along [stumble along ?]. Studying their examples over and over, I feel that I am tracing their hard-won footsteps through a steep and winding learning-curve.

 

Like learning to ski from a master skier.

 

Rodney

Edited March 17, 2008 by rodney

[Bearbull 10]

rodney,

I am not sure if there is any more value in "Undeclared Secrets...." per se, the basic concepts and principles remain unchanged , you would be better of reading more Wyckoff.

Also there is enough archived material at: http://www.ltg-trading.com/archives.htm

to learn from, study their charts, there is no need whatsoever to subscribe to their services.

[Eiger 10]

I have the BootCamp CD and Master the Markets.. Did you find that the "Undeclared Secrets" added new value to the more recently published CD and Book?

 

 

My experience of reading and re-reading the Undeclared Secrets is that it was a real eye-opener. I had studied and used Wyckoff prior to reading Tom Williams's book, so I was already pretty familiar with the concepts. I think, however, that the Undeclared Secrets brings Wyckoff to life. It explains the concepts and prinicples of supply & demand and no supply, no demand in a very unique and comprehendable way. It is a true manual on tape and chart reading.

 

The Boot Camp CD is also highly valuable, but I see this more as an extension of Undeclared Secrets. The recent Master Classes - more high quality material - also augment the book.

 

Personally, I didn't really understand chart reading until I studied Undeclared Secrets. I think so highly of it that I just finished re-reading it again. I have re-read it several times, and have a notebook full of my own notes on the book. As usual, I learn more on each re-read. All of the material put out by Tom Williams and TG is valuable, but I wouldn't miss the book.

 

That being said, I don't know how different Undeclared Secrets is from Master the Markets. I have heard there are differences, but never read MTM.

 

Eiger

[habi 10]

That being said, I don't know how different Undeclared Secrets is from Master the Markets. I have heard there are differences, but never read MTM.

 

Eiger

 

Hi Eiger

 

Have a look to the link below, if you are interested in MTM:

 

http://www.traderslaboratory.com/forums/34/vsa-recommended-resources-3424-3.html#post29891

[bertg 10]

My buddie Joel Pozen sent me this video of himself trading live in his class, thought I'd share it with you. Joel studied Richard Ney and Tom Williams and is able to apply his knowledge to the real time market.

 

Regards S.

 

I got really excited when I saw the above quoted post, since from everything I've seen, JP doesn't trade. He has a great reputation of being a great teacher, seems like, but I had never seen a video of him entering a live account trade, putting his money on the line...

 

And after the video above, I am still to see him do that.

 

Regards,

Bert