[VSA] Volume Spread Analysis Part II

[Sledge 13]

The close does'nt really matter to be honest Winnie, a low vol pullback is the same...

 

I'd have to disagree. The Close of the bar is very important in doing analysis of any kind.

[Seb Manby 11]

Hey Seb

 

whats your next step after VSA or are you happy with where your at? on a personnel level I won't rest until a full understanding of all the games that are played is achieved...... might take a while tho..:crap:

 

all the best

 

Hi Speres;

 

I assume that you are referring to my status quote, I just don't think there is anything else I can learn, I think I have reached the end of the road, and I have to say I am disappointed because life is most interesting when you are trying to overcome a hurdle, Tom Williams cannot teach me anything, he cannot find any faults in my analysis, can any of you out there teach me something about VSA technique I cannot see in a chart for myself?

 

So now what? do I just turn that knowledge into a fortune? I don't need anyones else's money, I have more than enough for my needs and wants, so will I be miserable for the rest of my life? Gavin wants me to run the educational side of TradeGuider, I have agreed to work for them on a part time basis.

 

Everyone in this room is talking about success, or trying to find it, but how many of you are thinking about the consequences of that success, and what will you find in yourself if you then arrive at that success? will you become bored of trading? will success make you slack in your discipline?

For me there is no challenge in reading the market anymore, no struggle to make me feel excited, I have thought of finding someone who has decimated their account and replenishing it for them, but what would that achieve?, be warned that if you reach the top of your tree, what expectations will you have then? That is the reason for my status quote under my name.

 

I am currently writing a book similar to Tom's, but explaining all the principles that Wyckoff wanted the public to understand, going into great detail, better than any book I have read, giving hundreds of charts in greater detail than my PDF postings last November, I am hoping that I can help someone with no experience to become someone who can support themselves financially on their own two feet, through the book and training videos, then I might not have a reason to exist after that. And Tom has been asking me to write a book for the last four years, so I caved in.

 

Best wishes to you all.

Sebastian

[dandxg 10]

Hi Speres;

 

I assume that you are referring to my status quote, I just don't think there is anything else I can learn, I think I have reached the end of the road, and I have to say I am disappointed because life is most interesting when you are trying to overcome a hurdle, Tom Williams cannot teach me anything, he cannot find any faults in my analysis, can any of you out there teach me something about VSA technique I cannot see in a chart for myself?

 

So now what? do I just turn that knowledge into a fortune? I don't need anyones else's money, I have more than enough for my needs and wants, so will I be miserable for the rest of my life? Gavin wants me to run the educational side of TradeGuider, I have agreed to work for them on a part time basis.

 

Everyone in this room is talking about success, or trying to find it, but how many of you are thinking about the consequences of that success, and what will you find in yourself if you then arrive at that success? will you become bored of trading? will success make you slack in your discipline?

For me there is no challenge in reading the market anymore, no struggle to make me feel excited, I have thought of finding someone who has decimated their account and replenishing it for them, but what would that achieve?, be warned that if you reach the top of your tree, what expectations will you have then? That is the reason for my status quote under my name.

 

I am currently writing a book similar to Tom's, but explaining all the principles that Wyckoff wanted the public to understand, going into great detail, better than any book I have read, giving hundreds of charts in greater detail than my PDF postings last November, I am hoping that I can help someone with no experience to become someone who can support themselves financially on their own two feet, through the book and training videos, then I might not have a reason to exist after that. And Tom has been asking me to write a book for the last four years, so I caved in.

 

Best wishes to you all.

Sebastian

 

First of all, thanks for all of your help. I really mean it. I wish you would do the daily video updates, they are quite good and informative.

 

I believe in giving back when I can, as do you, and I have been trying to get traders to drop the indicators and learn to trade with price and volume.

 

I think if I recall correctly, after reading your bio on T2win, you have been trading with VSA for about 8 years now? If you don't mind me asking how long did it take to get what you consider mastery? Just curious?

 

Maybe you should consider mentoring some folks since you like to help and are good at it? I know you said you like peace and quite, but obviously you like interaction otherwise you wouldn't do what you do right? Mentoring would definitely challenge you.

 

I look forward to your book.

[dandxg 10]

Here is example of some good tests, I believe, and the conditions that have to occur before you would want to consider buying them. I have tick volume in the bottom because I may be having some total volume issues with my data provider to confirm. I am not attempting to mark every VSA signal just the sequence for going long bars.

 

A. Stopping volume

 

B. Excessive volume, but look at the close on this one, way off the low. Buyers are stepping in.

 

The 2 C's. The begining of a 2 bar reversal. Also at the previous day's low, significant support most often as is the previous day's high.

The bar that completes the bottom reversal. Make a stab lower and closes almost higher than the entire previous bar's high, and look at the volume. Very bullish.

 

Step 1 is the stopping volume or selling climax. Step 2 is the bullish bottom reversal at the previous day's low. Now step 3 is to look for a test. A test in rising market would be really good, higher highs and/or higher lows made on bars.

 

D. Beautiful test bar. Closes down has a more narrow range ( that's what the pink markers are for ) and look at the volume. Much less than the previous 2 bars and much lower than the avg volume.

 

E. Test in a rising market.

 

F. Test in a rising market

 

G. A good example, I believe, of no supply, it's a level close in the middle but look at the volume, no existent, no selling pressure.

 

H. Another good no supply bar for the same reason as G.

 

I just noticed and wanted to point out another reason that PDL was so important is that it's the low on the daily chart of a test bar with the similar sequence I just mentioned. There is a 2 bar reversal on the daily and then a test and PDL was the area I marked that trade.

 

Maybe if Eiger or Sebastian gets a chance they could comment? BTW thanks again to both of you, and everyone else that has helped me out, it's coming together.

[speres 10]

Hi Speres;

 

I assume that you are referring to my status quote, I just don't think there is anything else I can learn, I think I have reached the end of the road, and I have to say I am disappointed because life is most interesting when you are trying to overcome a hurdle, Tom Williams cannot teach me anything, he cannot find any faults in my analysis, can any of you out there teach me something about VSA technique I cannot see in a chart for myself?

 

So now what? do I just turn that knowledge into a fortune? I don't need anyones else's money, I have more than enough for my needs and wants, so will I be miserable for the rest of my life? Gavin wants me to run the educational side of TradeGuider, I have agreed to work for them on a part time basis.

 

Everyone in this room is talking about success, or trying to find it, but how many of you are thinking about the consequences of that success, and what will you find in yourself if you then arrive at that success? will you become bored of trading? will success make you slack in your discipline?

For me there is no challenge in reading the market anymore, no struggle to make me feel excited, I have thought of finding someone who has decimated their account and replenishing it for them, but what would that achieve?, be warned that if you reach the top of your tree, what expectations will you have then? That is the reason for my status quote under my name.

 

I am currently writing a book similar to Tom's, but explaining all the principles that Wyckoff wanted the public to understand, going into great detail, better than any book I have read, giving hundreds of charts in greater detail than my PDF postings last November, I am hoping that I can help someone with no experience to become someone who can support themselves financially on their own two feet, through the book and training videos, then I might not have a reason to exist after that. And Tom has been asking me to write a book for the last four years, so I caved in.

 

Best wishes to you all.

Sebastian

 

Hey Seb

 

Yes I was and thanks for your honesty.Unfortunately I don't think I could currently teach you anything I'm afraid..... Reaching the enlightened level is still the goal for me, but I have often thought what would happen once this has been achieved...... I'm sure if you made someone a heap of money they would blow it in no time with little thanks.... I've been lucky enough to have had some mentoring over the last year or so from a price guru and a real nice bloke too, hes around but stays in the shadows so to speak.

i'm sure the book will be a great read and I hope you find your solace Seb

 

 

all the best

[speres 10]

I'd have to disagree. The Close of the bar is very important in doing analysis of any kind.

 

hey sledge

 

I agree and disagree, I would'nt say 'any kind' for example when reading the flow, bar close is'nt important...

 

all the best

[tawe trader 10]

Hey Seb

 

whats your next step after VSA or are you happy with where your at? on a personnel level I won't rest until a full understanding of all the games that are played is achieved...... might take a while tho..

 

all the best

 

Hello Sebastian,

 

Thank you for sharing your very honest thoughts in your reply to Speres. It's sounds like you have a motivation problem and I guess if your not money driven and you have mastered the art of chart reading then you are perhaps 'goalless.'

 

I'm no expert in this field but I guess you may be feeling what the majority of multi-millionaire lottery winners do a year or so after receiving the big cheque, jacking the job in and then going on a massive spending binge etc.

 

Maybe Eiger, being the expert ie the Clinical Psychologist could help you in this department, as myself and many others would hate to lose your VSA trading insights and observations.

 

I look forward to your book.

 

Regards

Tawe

Edited July 11, 2008 by tawe trader
_

[BlowFish 10]

Well I am glad Tradeguider have someone competent helping out on the education front. Nothing against "professional trader" Gavin as he now bills himself. (actually that's not strictly true I'm pretty sure he's simply a huckster) I thought your recent MSFT analysis was in a different league to anything anyone at TG has done. My worry is that people will realise that Tradeguider adds little to the VSA mix and you will be asked to tone it down a bit and big up the software. Time will tell.

[Eiger 10]

I am pretty tied up with other things today, so can't post much. Sebastian did a brilliant explanation of Tests in this week's TradeGuider Chart Of The Week. It is quite worth careful study and should answer questions. You can view it here:

 

http://www.tradeguider.com/cotw/cotw.wmv

[dandxg 10]

Yes Sebastian that was a great chart of the week you did, lots of specific details.

[dandxg 10]

Sebastian,

 

 

I was thinking about your post before and maybe you just need a vacation, a holiday as you call it. Greece is quite nice this time of year I hear. They have high speed internet if you want to stay in touch. As much as all of us want your time, because you are such an asset, nobody wanted to see unhappy.

 

I am also getting back meditation as it really helps with the stress level of trading. If you would like I can recommend a couple of starting places.

[Seb Manby 11]

Hi everyone;

 

I was not looking for praise, but thank you anyway. I am a straight shooter when it comes to questions that are put to me. I just said what I felt I had to say.

 

Thank you once again.

Sebastian

[tawe trader 10]

a holiday as you call it. Greece is quite nice this time of year I hear

 

dandxg,

 

Greece, Turkey, even Iran ............ any-bloody-where has got to be better than the South West of the UK at the moment, nothing but cold, crappy rain and it's JULY. If this is global warming - they can stick it !

 

I'm going to pack my computer and emigrate somewhere warm.......all I need is an internet connection.

 

Have a good weekend

Tawe

[deb99891 10]

It takes a little more than large volume on a 5-min chart to turn a trend. In VSA, we view ultra high volume on up bars as dangerous to bulls. The high volume indicates supply present in the market. You can see this clearly on the weekly chart attached. The highest volume on the chart occured on an up bar in May. We know that there was heavy supply on that bar because the next bar tried to rally higher, but failed and fell well into the spread of the high volume bar, closing on its lows and in the middle of the range of the high volume bar. We call this an UpThrust. The market then tried to rally the next week, but the volume was very light, indicating there was No Demand from the large, professional traders. So this combination of events is quite bearish, and the market falls.

 

The current downtrend on the daily chart has accelerated over the last two days, and is taking the market into a steeper stride or angle of decline. The 50 level has a confluence of support. There is a weekly Demand Line (green), a support level around which price had been stopped in late Feb/early march, then supported in late April (purple), the Demand line of the downtrend channel (red), and also the 1/2 - way point from the rally low at about 41 to its high at about 60. Given that the daily is accelerating with widening spread and volume is starting to rise, I would look to see if this market will find support around this level. If it does, the subsequent rally will tell you whether this has been a shakeout and new highs can be expexted, or lower prices will prevail and perhaps a trading range from the low at 41 to the resistance area between 56 - 60 will form.

u hav nicely posted the ut bar

tat part is good but the volume is towards higher end

so if ne one not going vsa can easily find the distribution volume there

[Canados 10]

wow,

I discovered VSA yesterday thanks to Sebastian on elitetrader. I think that VSA will improve my trading exponentially.

Does anyone use this concepts everyday and find them really useful? Did VSA improve your trading?

 

thanks

[Sledge 13]

wow,

I discovered VSA yesterday thanks to Sebastian on elitetrader. I think that VSA will improve my trading exponentially.

Does anyone use this concepts everyday and find them really useful? Did VSA improve your trading?

 

thanks

 

It will be a long road and a lot of studying and applying of concepts- but it will be very worth it! If you are one who wants an "easy road" this is not it- but put in the blood, sweat and tears- and it will reward you!

 

All I can say is YES to both of your questions. I utilize VSA on a daily basis to trade and YES it has opened my eyes to the world of trading. With it- you see the chart and they begin to "speak to you."

 

I'll give you a perfect example, many times I am looking for a long set-up, you see the bars drifting down and you see this little upthrust form. I like to call that bar "the early birds blowing their load too soon" bar as it drifts further down. Now when I see said bar forming, I wait for close to see if it is a true rise or an early jump on the bandwagon. I chuckle now as I am rarely fooled by the bars and the tricks the market likes to dish out. I owe the vast majority of my education acceleration to the teachings VSA brought me!

Sledge

[winnie 10]

Dear all experts,

 

When I use VSA in actual trading , I find it is very useful especially combine with Support/Resistance. However, how do we find out the support and resistance ? Any idea in finding it ? Sometimes , there are two many support and resistance and make near very price is S/R ? How do we select which one to use ?

 

Thanks

[Sledge 13]

Dear all experts,

 

When I use VSA in actual trading , I find it is very useful especially combine with Support/Resistance. However, how do we find out the support and resistance ? Any idea in finding it ? Sometimes , there are two many support and resistance and make near very price is S/R ? How do we select which one to use ?

 

Thanks

 

Winnie-

THAT is a very smart idea to implement! VSA with S/R is an outstanding combo.. kudos for that (see you are getting there, and making nice progress too)

 

As far as S/R: Finding them: Look at a longer timeframe and Zoom your chart out- look at the horizon, the dips and peaks should stick out to you like a sore thumb.

 

Ask yourself these questions:

 

1. If at Support or coming up upon it- what is the market doing? How it it acting around that level? Is it approaching the Support line like a freight train? Or a theme park kiddie train?

 

2. If approaching a Resistance area- did it close above it? Did it close above it CONVINCINGLY? Will this price hold, or was it rejected?

 

Hope this helps.

Aaron

[kuky969 10]

SEBASTIAN

Thank you for your great video. I have please two questions .

Maybe I didnt good understand (english is not my native) but I think that test bar has to make lower low than previous bar ...it is not true ???. and how do you well-define previous selling area where should be dip test-bar . Thank you for your time and helpfulness.

kuky

[Eiger 10]

VSA Analysis for Tuesday, 15 July 5-Minute ES

 

The market opend gap down under yesterday's lows indicating weakness (overnight data omitted)

 

A - No Demand. Expect lower prices with the background weakness.

 

B - Selling Climax. Note the acceleration to the downside, wide spreads, ultra high volume over two bars, and the strong close on B. Next bar is up but on fairly high volume indicating that there is still some supply in the market.

 

Market rallies, painting higher highs, higher lows, and higher closes. Note the volume is not in keeping with the rally, however. This tells us in advance that this rally will not get very far until the professional money tests the ultra high volume seen on the Selling Climax.

 

C - The market goes back down into the area of high volume and is unable to draw any significant supply. Next bar is up and market rallies, as expected.

 

D - Down bar on narrow spread and low volume. Not a true Test as this bar's volume is slightly higher than the previous two bars, but there is no supply drawn out as the professionals sell it down a bit in this nice uptrend. On the 3-minute chart, there was a nice Test shortly before D.

 

E - Ultra high volume, close in the middle on a wide spread as we come into the resistance area of yesterday's lows.

 

F - No Demand and the next bar is down. Note that on this reaction down to G that the volume does not expand to the downside, but instead remains light and tends to dry up the lower we go. Compare this to the volume on the rally from C to E. This tells us in advance to expect another rally.

 

G - Test, followed by a Hidden Test and the market rallies nicely.

 

H - Some supply enters as we reach the old top at E, but the background at this point is strong. We have had a Selling Climax that was tested (at C and again at D), a rally with volume expanding to the upside (to E), then a reaction on light volume (to G), and now the rally up off G was vigorous. All of this told us in advance that the opposition at E would likely be broken. Next bar is up.

 

I - A sudden increase in volume on a relatively wide spread bar, closing in the middle into a congestion area from yesterday. Next bar is a No Demand-like bar (volume slightly higher than the previous two bars, but indicates no demand, just the same). It's 1:00, we've been rallying for 3 hours, and the professional money is signalling that it's time for lunch!

 

J - This technically is a Test, but it comes at the wrong place. We now have supply in the background, not strength, so this is a bar we ignore.

 

K - Market drops to K where some buying comes in (note close, spread and volume). Next bar is a Test

 

L - The market rallies and there are two tests. The first L is a Test-like bar (spread a bit wide, volume a bit high, but it still indicates there is little supply at this level). The second L is an ideal Test.

 

M - Volume suddenly increases to ultra high (on a relative basis) on a fairly wide spread, close near the middle. This is followed by a No Demand bar, which is followed by a Top Reversal. The combination indicates significant weakness has entered the market. Also note the volume on the rally from K. Compare this volume with the rallies from G to I and from C to E. There was an overall level of no demand on this last rally. Professional money was signalling that it was no longer interested in higher prices.

 

After M, the market falls, making lower lows and lower highs virtually the entire way down. Note how the volume increases as the market moves lower. Compare this with the reactions to G and to K. There was a No Demand at N, and other No Demands on the 3-minute chart.

 

In VSA, we pay a lot of attention to the individual bars and volume, but we also look at how the market is moving on the rally and reaction waves. This is a good day to study these characteristics for future trading.

 

Hope this is helpful,

 

Eiger

[winnie 10]

Dear Eiger,

Thank for your hard work ! it is very helpful.

I have a question on your chart. On Point B, you said that "Next bar is up but on fairly high volume indicating that there is still some supply in the market." Do you refer to the bar just next to B as next bar ? if the bar is up and have higher volume, why you said it still some supply in the market ? Could we know there is supply in a up bar instead of down bar ?

Also what is "Hidden test " ?

 

Anyway thanks

[Eiger 10]

Winnie -

 

It is not hard work! I do this every night and find it quite enjoyable. This is what you need to do to hone and keep your chart reading skills, along with studying available material and practicing with bar replay.

 

After bar B is an up bar, but the volume is above average, so it is still fairly high volume. An axiom of VSA and Wyckoff is that markets do not like high volume on up bars with the exception of breaking through the opposition at support or resistance. High volume on an up bar says there was a lot of buying (because the bar is up), but there is also a lot of selling (because the volume is high). We become cautious with high volume up bars and look for testing of some sort to indicate supply has dried up.

 

Nice examples of the high volume and testing were evident again this AM on the 5-min ES chart:

 

A - the market rallies after dipping below yesterday's close. The rally is on wide spread and high volume. Markets do not like high volume on up bars and the market reacts. How it reacts is always important, and we see that the wave or leg down is on narrower spreads (compared to the wide spread up bars to A) and volume receds on the reaction (orange lines). Price comes back into the high volume area (red line) on relatively lighter volume and makes a higher low.

 

B - The market begins to rally and B offers a choice Test and a good location for a long entry.

 

C - The market rallies to C, but again on wide spread, ultra high volume. The next bar is down and the volume remains high. Note that for all that volume, there was not that much progress from A to C.

 

D - At D, we have an UpThrust. Note the volume was unable to match the previous rally volumes at A and at C. Markets are highly unlikely to break through the opposition of resistance on lower volume. You can also see that the advance from A to C to D has become progressively shorter. This is known as Shortening of the Thrust and is depicted on the blue line graph to the left.

 

E - No Demand after weakness has appeared and the second good location for a trade.

 

Wyckoff in his book, Studies in Tape Reading , said, "The study of responses is one of the most valuable in the Tape Readers education. It is an almost unerring guide to the technical position of the market" (italics added). I think this is very true and something I strive to follow.

 

Eiger

[Seb Manby 11]

SEBASTIAN

Thank you for your great video. I have please two questions .

Maybe I didnt good understand (english is not my native) but I think that test bar has to make lower low than previous bar ...it is not true ???. and how do you well-define previous selling area where should be dip test-bar . Thank you for your time and helpfulness.

kuky

 

test bar has to make lower low than previous bar

The low for me personally should be higher than the previous low.

 

how do you well-define previous selling area where should be dip test-bar

For a successful test, we must have strength(always on down bars) in the background.

 

Regards Sebastian

[elovemer 10]

....would someone please post a copy of this book on this website...

.... http://www.4shared.com

.... thanks very much

Winnie -

Wyckoff in his book, Studies in Tape Reading , said, "The study of responses is one of the most valuable in the Tape Readers education. It is an almost unerring guide to the technical position of the market" (italics added). I think this is very true and something I strive to follow.

Eiger

[Guest forsearch]

....would someone please post a copy of this book

....

.... thanks very much

 

Do a search on this site and you'll find it. A little bit of work goes a long way in this business...