[VSA] Volume Spread Analysis Part II

[Bearbull 10]

Ok, I have to ask (time to stir the pot) - as a lurker of this thread and reading some great things (esp DB) I have one question to ask...

 

Is anyone here actually using this in real-time and making money?

 

I see a lot of 'after the fact' analysis, which is fine for learning, but I'm really curious if anyone outside of DB can do this when it counts - real-time and real money...

 

Just curious, not meant to piss anyone off.

 

Good question, having posed that myself, in the final analysis it is irrelevant for even if 50 folks typed in yes, how can it be verified.

However it is highly relevant if a vendor is attempting to extract money from you by teaching market secrets that only he or she is able to read in realtime.

As for these discussions on Wyckoff /VSA all that is required is to gather the info., analyse , gather what is pertinent to your trading and check the validity of the setups in realtime on your own charts, if not discard them, move on, no harm done except some ego clashes which happens in any job.

[Bearbull 10]

Hi Db

I have quoted above from 2 different posts you have made - and could have picked a couple more.

 

Picking up on on one of Eiger's recent posts, our brains [ emotions ] are "hard wired" and vulnerable to odd behavior at "decision time" - and especially vulnerable when facing a constant assault of new information.

 

Rodney

 

Rodney,

those are great questions for Db with equally logical response which is worth taking note of as it is based on pure Wyckoff training, not the one via SMI Wyckoff.

 

As for the humanity being "hard-wired" and all that , what bearing has that got with what the market is trying to tell you. That is why Mark Douglas has highlighted these issues regarding personal bais, attitudes in "Trading in the Zone", IMO the only book one would ever need on trading psychology, how the trading environment is unqiue, based solely on uncertainty and probabilities, unlike any other profession on earth. and that it is imperative to train and learn to read the information that the market is giving out moment to moment on a continuous tick basis(there are no open, high, low , closes in this flow) via buying and selling pressure.

[Eiger 10]

As for the humanity being "hard-wired" and all that , what bearing has that got with what the market is trying to tell you ...

 

Nothing. But, it can help you become aware of your response to market action and then make changes where needed. One of the reasons we have such a difficult time holding on to winners (which seems so simple) is because of the way we think. Our minds get in the way of what we need to do as traders. Most all of us need to work on the mental side of trading (and then there is the emotional side ... ). The Mark Douglas book is a good place to start and has a lot to offer.

 

Eiger

[Eiger 10]

Back to the markets.

 

The last two days have been constructive in the S&Ps. As we were discussing a few days ago in the Naz, it looks like a Spring is occuring at a critical point in the market. Of course, we can just fall down lower from here But, for fun, here is a possible scenario we can watch out for.

 

If this has been a Spring, then the next step to anticipate is a test. This either comes in the next day or so, or after a Jump Across the (minor) Creek, and then a test. Following that, if successfull, a Jump Across the (major) Creek. If that occurs, then we can anticipate the all-critical Back Up to the Edge of the Creek or last Point of Support, and so on.

 

Again, this is simply one of many possible scenarios that the market may take. Right now, the news is pretty bad, so the timing seems right. The key to following this is to take it one principle at a time and let the next principle confirm. So, the potential Spring needs to be confirmed by a Test. A JAC needs confirmation by a test (BUEC), etc. It will be fun to see how it all unfolds.

 

Good trading!

 

Eiger

[Bearbull 10]

Nothing. But, it can help you become aware of your response to market action and then make changes where needed. One of the reasons we have such a difficult time holding on to winners (which seems so simple) is because of the way we think. Our minds get in the way of what we need to do as traders. Most all of us need to work on the mental side of trading (and then there is the emotional side ... ). The Mark Douglas book is a good place to start and has a lot to offer.

 

Eiger

 

Market Wizards: Top traders have acheived that mindset, having resolved conflicting beliefs, that is why there are so few of them, we hardly hear about them.

 

Mark Douglas book should be enough, one can overdo this psychology/emotional thing, there is no such state as emotional-free mind, what is required is VALID knowledge which will dispel ignorance and generate confidence which in turn with experience will take of the emotional issues.

 

As for watching tick or 1min chart, it is not necessary to stare at the computer whole day, that will fry up the brain within an hour, put up 15min , 5min charts, mark the support/resistance zones and monitor what happens when price approaches/touches these zones. and then guage the reaction via vol etc. There is no need to inject meaning into every tick price and tick vol. That is the pure Wyckoff Way , remember VSA is derived from that fundamental source, the Laws of Supply/Demand, Effor/Result, Cause/Effect remain unchanged regardless of any cutesy names via VSA such as Palm tree in Alaska or Polar Bear in Florida.

[Bearbull 10]

Back to the markets.

 

The last two days have been constructive in the S&Ps. As we were discussing a few days ago in the Naz, it looks like a Spring is occuring at a critical point in the market. Of course, we can just fall down lower from here But, for fun, here is a possible scenario we can watch out for.

 

If this has been a Spring, then the next step to anticipate is a test. This either comes in the next day or so, or after a Jump Across the (minor) Creek, and then a test. Following that, if successfull, a Jump Across the (major) Creek. If that occurs, then we can anticipate the all-critical Back Up to the Edge of the Creek or last Point of Support, and so on.

 

Again, this is simply one of many possible scenarios that the market may take. Right now, the news is pretty bad, so the timing seems right. The key to following this is to take it one principle at a time and let the next principle confirm. So, the potential Spring needs to be confirmed by a Test. A JAC needs confirmation by a test (BUEC), etc. It will be fun to see how it all unfolds.

 

Good trading!

 

Eiger

 

Looks like Gary Fuller & Co at ltg are also of similar opinion

http://www.ltg-trading.com/20080318.pdf

[Bearbull 10]

Here is the relevant chart, the commentary is in their archives

[BlowFish 10]

On the other hand, however many points one "wants to make" have nothing to do with the number of points that are available, which is a chief reason why so many traders cut their profits short.

 

--snip--

 

 

This thread is moving to quickly but I'd like to come back to this discussion about time, flow and focus. Its very important.

 

First lets acknowledge that we can only take what the market gives. However that does not preclude deciding what we 'want' from it and looking in the right place for those opportunities i.e. suitable instrument and "timeframe" (time frame <> bar size here). This is one of the most fundamental choices a trader must make, its not an easy choice but its something we have complete control over (provided we can control ourselves). I think traders are less likely to cut short if they pick appropriate size 'swings' to focus on.

 

For example lets say trader X has decided to trade the ES (so he can trade 100 cars at a clip ) He doesn't want to be a slave to the screen nor does he want to leave positions on un-attended. Lets also say he doesn't really want to risk more than a couple of points to make about 4-6 (or perhaps more if offered). This he determines on a variety of criteria, including R:R, account size and a bunch of personal stuff. It is a guideline only, he will determine precise R:R for each trade based on price action.

 

Example trader X now has a set of parameters that will determine his 'focus' time wise. Actually in a strangely circular way he has picked parameters that he thinks will expose him to the market for lengths of time his weak bladder can cope with .

 

After pouring over 100's of charts of the last 6 months ES using a variety of bar types and sizes he determines that on the whole a 60 minute chart provides clear S/R levels suitably spaced for the opportunities he is looking for. He also decides to use a 20k volume chart so he can see the overnight session nice and clearly. Of course at the beginning of the day he marks up his hourly with lines taken from overnight, daily, weekly and even monthly charts and will pay special attention to these areas and even use them as a directional filter, however as they don't provide enough trading opportunities for his particular R:R and exposure parameters he will take trades from S/R from an hourly chart.

 

Next step for trader X is to determine the tools to use for monitoring the 'flow' around these levels. He is concerned if they are a) too fine he might get caught by a 'minor reaction' to a level/zone that subsequently breaks or b) too coarse he will give up trade location for the luxury of confirmation.

[DbPhoenix 42]

As the topic of discussion in the last couple of posts has shifted a bit, I feel it's appropriate to ask a relevant question here.

 

Db, I've taken your suggestion for using tick charts and looked at price the last couple of days with Sierra Charts. You said I'd be "perpetually perplexed" if I kept focusing on bars instead of price flow. I've tried doing this now but at at 5 second or 1 minute chart I've found it incredible hard to notice anything that jumps out from the rest.

 

I've payed close attention to see where price reacts and I've written down when high volume suddenly comes in and price seems to hit something and suddenly reverses, like a hot stove where you put your hand on. But a lot of these times, I was wrong and the 'reversal' only happened for a couple of minutes. I've found it very difficult to analyze which volume peaks are important and which ones not, despite focusing only on those that are in the vicinity of important S/R levels.

 

If I compare to my 5-minute bar interval, I usually have a couple of volume peaks that are clearly distinguishable from the rest. But on a 1-min bar interval, there are loads and if I were to trade off those, I'd be getting a lot of false signals...

 

This thread is about VSA, not about How I Trade, and your post is even more off-topic than my response to Rodney. Remember that we got here due to a point that I made to Eiger regarding the strength that he missed due to the bar interval he chose. So the arc did begin in VSA-land, even though it took an off-ramp somewhere along the way.

 

So please address all this in my Blog. For now, I will point out again that it all depends on support and resistance. These are the same regardless of the bar interval chosen. There may be "loads" of signals of one sort or another, but if they don't occur at support and resistance, i.e., those levels which "big money" themselves have created, then just ignore them.

[erierambler 10]

Ok, I have to ask (time to stir the pot) - as a lurker of this thread and reading some great things (esp DB) I have one question to ask...

 

Is anyone here actually using this in real-time and making money?

 

I see a lot of 'after the fact' analysis, which is fine for learning, but I'm really curious if anyone outside of DB can do this when it counts - real-time and real money...

 

Just curious, not meant to piss anyone off.

 

Obviously if you have to ask , you haven't done any work on this . It's not for everybody. I'm surprised there is not more interested. Good trading.

erie

[DbPhoenix 42]

Obviously if you have to ask , you haven't done any work on this . It's not for everybody. I'm surprised there is not more interested. Good trading.

erie

 

Though I haven't read the first thread (sorry), it appears that the locus of interest is the software rather than VSA itself. Even so, VSA appears to be much more interested in bars than in flow, which is perhaps what distinguishes it most from Wyckoff's emphasis. So I'm not surprised that there's not more interest. It is, after all, off-topic.

[Sledge 13]

 

Is anyone here actually using this in real-time and making money?

 

I see a lot of 'after the fact' analysis, which is fine for learning, but I'm really curious if anyone outside of DB can do this when it counts - real-time and real money...

 

brownsfan019:

 

I just can't imagine anyone that possesses such a grasp on this subject (as MANY folks in this thread do) that would be able to make such detailed and informative posts on the subject matter- but sit at home and not actually use the theories and system they have perfected. Call it a hunch.

 

I personally, as with any other human being by nature will get in, let ride and post results after-if I post any at all. I'm not some "Market Master" and feel it arrogant to jump in and say "I'm in- going to NAIL 150 pips- Whoo, put it in the bank." I read at an early point in my trading somewhere that the beauty of trading is that it is not absolute, you can roll with the punches. If you are short and see a pullback transpiring, but it did not hit your intended target? You are able to close out, wait for the pullback to be finished and attempt a short again- if you want too, the market may tell you otherwise and you may be happy with where you took your profit and got out. You can let a trade linger for days, minutes or hours- depending on you and your style. The beauty is that every system is personal, someone with a 100K account can pull off things and ride longer than someone with a $1K account.

 

If you are watching for a set-up- are you really heading over here to post about the set-up or are you going to pull the trigger on your trade, and then talk about it after you are "in?" Look at any of the "broker" sites out there- one is particularly comical to me. I won't name any names but it rhymes with BailyFX. The "experts" make their calls public after they have already rode the majority of the move (in their own accounts)- and then toss their "followers" the scraps- all the while preaching a far greater top or bottom of the move than EVER transpires.

The noobs who read it think the broker is actually "helping them" when in essence they are just herding the sheep into whatever pen they want. About 2 weeks ago I saw them post a message that was absolute it said:

 

BUY NOW at "XYZ price"

Target was 1000 pips above their "BUY IT NOW" price.

 

Results of this wonderful advice: The market dropped like a rock for over 100 pips (which would have taken the advice takers to the cleaners) and then spiked the next day. Sad part was- the rally never made it even close to their "target" the rally fell short by 400 pips.

 

Long story short, most everyone watches their trades first and their posting boards second. I can see why people don't post their set-ups here before they get in. Makes perfect sense to moi'

 

Sledge

Edited March 19, 2008 by Sledge

[brownsfan019 17]

Obviously if you have to ask , you haven't done any work on this . It's not for everybody. I'm surprised there is not more interested. Good trading.

erie

 

I have done ZERO work on this. Not interested too either.

 

As my post said, I was curious if any are actually making money with these ideas here. So far, not many saying they are. I realize it's the internet and an anonymous message board, but to me, as an outsider just peaking in, it seems like many of these ideas look great after the fact. I'm just curious how many can see the springs or whatever in REAL TIME. You know, when it actually counts...

[DbPhoenix 42]

I have done ZERO work on this. Not interested too either.

 

As my post said, I was curious if any are actually making money with these ideas here. So far, not many saying they are. I realize it's the internet and an anonymous message board, but to me, as an outsider just peaking in, it seems like many of these ideas look great after the fact. I'm just curious how many can see the springs or whatever in REAL TIME. You know, when it actually counts...

 

What interests me is the pre-planning, not the "call". Eiger, for example, makes a tentative effort in this direction in his last post, regarding the supposed "spring". However, it's not "just for fun". Or shouldn't be. This is the business of trading. One has to look not only at one possible scenario but all possible scenarios AND decide in advance what he will do in the event of each. It would also be helpful to read what principles are illustrated by each scenario. This is how one learns the principles. Or one can wait (and I'm not referring to anyone in particular) until it's all over and say Ah! Here's what I did based on one of the possible scenarios (which I didn't happen to address at the time). The last is common amongst those who sell services of one sort or another.

 

Incidentally, from a Wyckoff viewpoint, one would have gone long two days ago.

Edited March 19, 2008 by DbPhoenix

[erierambler 10]

I have done ZERO work on this. Not interested too either.

 

As my post said, I was curious if any are actually making money with these ideas here. So far, not many saying they are. I realize it's the internet and an anonymous message board, but to me, as an outsider just peaking in, it seems like many of these ideas look great after the fact. I'm just curious how many can see the springs or whatever in REAL TIME. You know, when it actually counts...

 

Then our conversation is pointless, sorry I tried to answer , I am not interested in anyone's use of indicators and stay away from those threads, why on earth would I? As to real-time I don't trade springs, so that doesn't apply either, other's may. good trading to ya...

erie

[CandleWhisperer 10]

I have done ZERO work on this. Not interested too either.

 

If I, or 10 others say yes, will you begin to study it? If not, what does it matter to you?

 

 

As my post said, I was curious if any are actually making money with these ideas here. So far, not many saying they are. I realize it's the internet and an anonymous message board, but to me, as an outsider just peaking in, it seems like many of these ideas look great after the fact. I'm just curious how many can see the springs or whatever in REAL TIME. You know, when it actually counts...

 

At best real time will only tell if someone can make calls. It does not show if one has the metal to stay in the trade when a dark WRB shows up counter to the up trend. It shows you how the caller is able or unable to handle a market that loses volatility right after entry.

 

I am sure you know of many people that can call direction but couldn't TRADE to save their lives.

 

As long as no one is here trying to see pdfs or mentoring services, there is really nothing to prove by real time calls. Even the videos can be suspect. Sebastian doesn't have to put the video on if the trade is a loss. We would never know it was even made.

 

Most traders here are trading on timeframes of 5 mins or less. It would seem to me to be hard to: (1) place a trade. (2) take a screen shot (3) make a post with an image (4) and oh by the way manage a real money trade : trailing stops, taking profits at targets, et all.

 

With all that said, it may be interesting if some of us attempt to make calls off a daily chart just to appease some of the nay sayers. But again, this proves nothing about a person's ability to trade the principles.

[CandleWhisperer 10]

What interests me is the pre-planning, not the "call". Eiger, for example, makes a tentative effort in this direction in his last post, regarding the supposed "spring". However, it's not "just for fun". Or shouldn't be. This is the business of trading. One has to look not only at one possible scenario but all possible scenarios AND decide in advance what he will do in the event of each. It would also be helpful to read what principles are illustrated by each scenario. This is how one learns the principles. ....

 

That is the key. One's approach to the market should tell a story. That story must be congruent with the trader's believe system. In other words, it matters less if you go long or short , as it does WHY you are going long or short. One's market beliefs should create and be consistent with whatever one's method is.

 

Yesterday for example when the Fed news came out, there was a large Dark WRB on the 5 min Euro chart. The volume was lite however. The next bar was an up bar that closed near its low on high volume. This bar also turned out to create a Long upper Shadow. Now this tells me that there was Supply entering on that bar. This is part of the story the market is telling me. The next bar closes even on more volume with a narrow range. Price is being held down. Why do I say this? Because my story says that narrow range increased volume means the market is being kept within a narrow range by those that can see both sides of the market. The next bar was the clincher: a buying bar (higher high but not a lower low) that closed near its low on volume less than the previous two. This is an upthrust in the form of no demand. Of course this candle was within both the Long Shadow and the Dark WRB.

 

My point. If you can tell the story than you can pull the trigger. It doesn't matter if you are right or wrong. This game is about making money, not ego busting thru being right.

 

Hinsight analysis helps us learn how to read the story the market is telling us. This is the pre-planning that come before any "Call" can be made.

[brownsfan019 17]

If I, or 10 others say yes, will you begin to study it? If not, what does it matter to you?

 

As my post said, I was curious to see if anyone is actually making real money. That's it - curiosity.

 

At best real time will only tell if someone can make calls. It does not show if one has the metal to stay in the trade when a dark WRB shows up counter to the up trend. It shows you how the caller is able or unable to handle a market that loses volatility right after entry.

 

I am sure you know of many people that can call direction but couldn't TRADE to save their lives.

 

As long as no one is here trying to see pdfs or mentoring services, there is really nothing to prove by real time calls. Even the videos can be suspect. Sebastian doesn't have to put the video on if the trade is a loss. We would never know it was even made.

 

Most traders here are trading on timeframes of 5 mins or less. It would seem to me to be hard to: (1) place a trade. (2) take a screen shot (3) make a post with an image (4) and oh by the way manage a real money trade : trailing stops, taking profits at targets, et all.

 

With all that said, it may be interesting if some of us attempt to make calls off a daily chart just to appease some of the nay sayers. But again, this proves nothing about a person's ability to trade the principles.

 

Interesting way of saying - nope, noone here has shown they can make money using this in real-time.

 

In all seriousness, my question was sincere as I enjoy lurking this thread, but have yet to see any real trading being done besides after the fact type stuff. It's REAL easy to find those S/R levels after they've been confirmed. But what about when they are forming? Is the trader in real-time jumping in to see if they do hold or not?

 

I'm just asking the questions that anyone would ask of a trading methodology.

 

I have to note as well that a few of these posts seem to have a sense of anger in them towards me. A "how dare you ask if this works" type thing, yet there doesn't seem to be many saying how good this VSA stuff really is in real-time. And that's all any trader should care about - can this be implemented in real-time with real money?

 

As you said CW, some screenshots, etc would be intriguing to see. You do not need much - take a screenshot of the dom at the time of trade and after. Then match it up with the chart. It's rather simple actually. Not nearly as labor intensive as you've implied. Trade filled, hit print screen, save image. Trade exited, hit print screen, save image. Done.

[CandleWhisperer 10]

My issue with your question is two fold:

 

1. You have a thread called candles and VSA (or volume) which implies you see some value in VSA/PVA.

 

2. You then stated that you have no desire to learn VSA,PVA,Wyckoff.

 

I have no intension of learning STR with all those channel lines. Interesting charts to look at though. But does it really matter if all those people on elitetrader can actually trade that way? Not if I am already predisposed to reject it.

[CandleWhisperer 10]

First, I hesitate to leave a chart. Not just because it is after the fact, but because as previously stated, my charts are designed to emulate PP.

 

However, my attempt to tell the story was a bit off as I was just trying to recall the price action. Here is a chart with what happened.

 

A: Large Dark WRB on Fed announcement. WRBs represent changes in supply/demand. The BBs use these type of news events to either load up or dump positions onto the herd. Note volume is higher than previous bars but not all that high for a news release.

 

B: Up close but we close on the lower portion of the bar. Notice that a Long Shadow is created. There is selling pressure (supply) on that Shadow. We now have 2 Zones: one created by the dark WRB and one Created by the Long Shadow.

 

C: Another up close. Note how volume has increased even more. Markets do not like up bars on high to ultra high volume.

 

D: Equal close on a buying bar. The move into new higher ground as opposed to the previous bar on low volume shows weakness.

 

E: Another buying bar. This one closes near its lows on volume less than the previous two bars. This is an up thrust in the form of no demand. The true intentions of the BBs is to take the market down. This is the "head" fake move for the heard that has seen all the "up volume" on the two up closes.

 

There is a story that unfolds here. It is congruent with my believe system. It is more important therefore that I am prepared to go short after the up thrust than be right.

[BlowFish 10]

.... I'm just curious how many can see the springs or whatever in REAL TIME. You know, when it actually counts...

 

Actually in many ways they are easier than spotting, I dunno, lets say a long legged doji. (if you can spot them, which I know you can, you can spot a spring). IMHO candle 'patterns' are actually a step further removed from the underlying supply and demand and needlessly 'complex' to boot. For example a hammer / hanging man, a piercing pattern, a long legged doji and a morning star are all pretty similar to me - price goes down is rejected and then comes back up again to finish near where its started.

 

Each to there own I guess

[Eiger 10]

First, I hesitate to leave a chart. Not just because it is after the fact, but because as previously stated, my charts are designed to emulate PP.

 

However, my attempt to tell the story was a bit off as I was just trying to recall the price action. Here is a chart with what happened.

 

A: Large Dark WRB on Fed announcement. WRBs represent changes in supply/demand. The BBs use these type of news events to either load up or dump positions onto the herd. Note volume is higher than previous bars but not all that high for a news release.

 

B: Up close but we close on the lower portion of the bar. Notice that a Long Shadow is created. There is selling pressure (supply) on that Shadow. We now have 2 Zones: one created by the dark WRB and one Created by the Long Shadow.

 

C: Another up close. Note how volume has increased even more. Markets do not like up bars on high to ultra high volume.

 

D: Equal close on a buying bar. The move into new higher ground as opposed to the previous bar on low volume shows weakness.

 

E: Another buying bar. This one closes near its lows on volume less than the previous two bars. This is an up thrust in the form of no demand. The true intentions of the BBs is to take the market down. This is the "head" fake move for the heard that has seen all the "up volume" on the two up closes.

 

There is a story that unfolds here. It is congruent with my believe system. It is more important therefore that I am prepared to go short after the up thrust than be right.

 

That's a nice analysis. It gives the flip side of what happened at the same time in the US Stock markets. Were you trading this, or were you using it to read the other markets?

 

Bar B is interesting. It looks like it went up to try to test the highs at A, and then price was soundly rejected. Then, even more volume on C and it slips lower and only regains about 1/2 of B. I like your thoughts about D being unable to hold its gains. I often discount these bars because of the level closes, but thinking about going into new high ground and closing back at the previous bar is a useful way to see these. Thanks.

 

Eiger

[Sledge 13]

Brownsfan:

Ok, Here is a real-time chart. I'll make a "live call"

 

1. You see the Wide Spread up bar

The bar was absorbed heavily (closing where it did)

 

2. The next bar is further absorbtion

 

3. You see the herd wet their pants on the drop at bar 2 and sell-off thus producting supply into the market which is why it rides up say the next 3 bars for simplicity.

 

4. Markets do not like supply, so now the market is ranging heavily. Herd is getting out, pro $ is setting up for the eventual 5:

 

5. This market will DROP.

 

This is a 15 min GBP chart.

 

Sledge

 

[wunderlich 10]

Hi Sledge!

 

Thanks for the Chart; my IB Chart is slightly different in volume and price.

 

What is your datafeed?

 

I would say, your timely signal was a little bit to early; 2 to 3 bars.(??)

 

w.

[Sledge 13]

wunderlich:

I'm not sure what you are trying to say.

Sledge