[VSA] Volume Spread Analysis Part II

[DbPhoenix 42]

I'm going to be merciful here, largely because this is all so off-topic, and provide a short answer that is also a long answer.

 

Go to my blog (below) and open up the PVSR pdf in the Price/Volume Q&A thread. Flip through to p 50 and read from there to the end. Any questions can be posted to the blog.

[dandxg 10]

I'm going to be merciful here, largely because this is all so off-topic, and provide a short answer that is also a long answer.

 

Go to my blog (below) and open up the PVSR pdf in the Price/Volume Q&A thread. Flip through to p 50 and read from there to the end. Any questions can be posted to the blog.

 

Will you ban posters in your blog that use VSA and SMI terms?:rofl::)Sorry feeling punchy lack of sleep, couldn't help that. Thanks again for all that you do. I appreciate that you and others on this thread constructively challenge the thinking of members of this thread. It forces all of us to re-evaluate which leads to higher understand.

[DbPhoenix 42]

Will you ban posters in your blog that use VSA and SMI terms?:rofl:

 

No, just beat them about the head and shoulders (pun intended).

 

But to clarify, perhaps, there's absolutely nothing wrong with having a common language. If nothing else, communication requires it. And shortcuts are inevitable. Thus we eventually begin to believe that everybody knows what "float" means, and of course they don't necessarily.

 

But there is a danger in arriving at the point where the word becomes separated from its referent, and everybody forgets just why the word was coined in the first place. Whoever then tries to back up is in the position of holding Helen's hand under the water pump and spelling "water" into her hand, trying to get her to make the connection between the symbol and the thing that the symbol represents.

 

Picturing a Boy Scout scampering over the ice floes has as little to do with breaking through resistance as a train entering a tunnel has to do with sex.

[milliard 10]

I don't want to piss off the VSA people nor the MP people (the SMI people I don't care so much), but come on. When it gets to counting bars, much less measuring them, it's time to go sit down in a darkened and quiet place and think long and hard about where it all went wrong.

 

It's about buying pressure being more insistent than selling pressure, or vice versa. That's where it begins. If one is not attuned to that dynamic, then all the jargon in the world is not going to enlignten him.

 

:o The first paragraph will have me chuckling all w/end, nice one sir.

 

The second is simple, plain common sense. Unfortunately, those very pertinent comments will be lost & forgotten to most by the time the computers are switched off for the night.

[DbPhoenix 42]

This is a post I've saved. It may be off-topic, but I like it, so here it is.

 

First I spent many months drawing trend lines on charts until I understood a little something about "trend stages" and then followed price along in real time trying to apply the accelerating /decelerating trend thing.

 

But it wasn't enough.

 

So then I went through the same charts and wrote down the length of price bars during 3 different parts of the trading day, to find out what an expansion bar, a wide range bar, and a wide bodied bar were, and what was a normal or average price bar .( I was ashamed to ask about these at the time because it seemed that everybody already knew but me.)

 

But that was not enough.

 

So then I set out on the road to find the mystery about S/R. I looked at both price highs/lows, and calculated pivot points to find out which level price reacted to more often. I did this with a combination of trend lines and wide bodied bars or the lack there of. After a few months of doing this every day, I got a pretty good idea what S/R was all about.

 

In the beginning I also was studying an opening range breakout strategy, which first ignited the idea of contraction/expansion and how that affected the outcome of a BO.

 

Then I started looking at individual price bars, and where price opened and closed in relation to the overall range of the bar. On and on and on...

 

The point is that this is how I built up my base of understanding of P/V behaviour, by going over the same territory again and again and again with a new piece of the puzzle, and also carrying forward with each discovery.

 

If there is an easier way of learning what is important, I don't know what it is.

[zdo 20]

db

Everything you have posted in this thread has been off topic and off color,

AND everything you posted has been extremely grounding and helpful!

so stop trying to stop getting off topic and

stop trying to stop hijacking and

only get out of VSA II if you keep referring ppl to your blog instead of answering their questions... ie

just keep on coming with plain speak…

 

re:

“When I see selling drying up at support, I go long.“

“When I see buying dry up at resistance, I short”

 

For those who have never actually perceived ‘selling drying up’ what is the actual process you see. If chart patterns (or indicators, etc) aren’t used, then what is the process by which you ‘see’ selling drying up?

Basically, instead of what are the chart patterns? – What are your brain patterns?

 

Many thanks,

 

zdo

[dandxg 10]

Db, I took your suggestion and converted my VSA bar chart to a line on close very easy to strength and weakness, although I am not sure how I would trade off of it, but very nice for confirmation.

[DbPhoenix 42]

Db, I took your suggestion and converted my VSA bar chart to a line on close very easy to strength and weakness, although I am not sure how I would trade off of it, but very nice for confirmation.

 

Don't worry about trading off it. Just plot it in a separate window along with your usual bars and see if you can sense the flow. No hurry.

 

And, yes, it's very nice for confirmation.

[DbPhoenix 42]

 

For those who have never actually perceived ‘selling drying up’ what is the actual process you see.

 

Here's a simple, straightforward example. There are many others in the material in my blog.

 

Support is at 1800.

 

 

I doubt there's anything new here, whether one follows VSA or Wyckoff or SMI. But when I see the retest of support with far less trading activity, that says to me "We're done". And I know they're not lying because of what happens to price. Effort, result.

[mister ed 10]

OK, so we seem to have reached a stage on this thread where we want to see buying and selling pressure impacting on the price, where we want to see buying and selling pressure 'drying up', where we would like to see these things happening at 'support' and 'resistance'. We aint gonna use chart patterns, VSA, Wyckoff, MP ... we are just looking at a candle chart (1 minute right?).

 

Now, for those who have been trading long enough and are now punching the air and saying "Right On!" (or whatever it is the kids say now to show approval) this is all well and good. But for those still coming to grips with analysis of price and volume this might not work out.

 

Speaking only for myself, when I 'discovered' VSA it was like a lightbulb coming on in a darkened aircraft hangar. It didn't illuminate the whole place, but it was much better than stumbling around in the dark like I had been. As I learn't about VSA, and started to get an understanding of the labels and jargon, such as 'No Demand', a funny thing happened to me ... I started to question the concepts, to critically examine them, to question why they worked as well as how, as well as when ... and in that way I developed an even deeper understanding. I then discovered Wyckoff analysis, and the hangar is much, much brighter. I am working on some MP learning now to help with my analysis and already some more lights have come on. I would be nowhere near the stage I am at if it wasn't for this thread and the people who are active on it and who have been acitve on it in the past.

 

Along the way I have spoken with various people on a similar journey, and read the words of many others. Some have combined VSA with Elliot Wave, to great success. Not my cup of tea at all, but their success speaks very loudly. Some have come to VSA from other backgrounds, like MP, and found value. Some have stuck pretty much with just VSA and achieved great success. Some have furthered their knowledge of Wyckoff to a very deep level indeed. One of these people has been instrumental in my learning and for that I am incredibly grateful, he has helped me get off the back roads and onto the freeway.

 

A lot of these people have been at this thread at some stage, have asked questions, have contributed answers. The answers on this thread are not always 'right', but the philosophy of this forum takes care of that. TL is an environment of quality trading education, a place of learning; where we experiment, make mistakes, hopefully correct them, and move ever on.

 

So to those who have a very developed knowledge of price and volume analysis and are able to 'see' what is important on a simple chart, I say well done. But lets not forget that there are those who are maybe just starting out, or continuing in their development, who maybe want more overt structure to their analysis, who maybe want to take some of the really important insights that VSA/Wyckoff can offer and add it to their current techniques, who just don't 'see it' (yet, or at all), who maybe will want to learn things for themselves, to prove things for themselves ... there may even be those who disagree with what we tend to all agree on here... If the descriptions in this paragraph fit YOU I would encourage you to ask questions, to contribute, to join in. If you want to ask what is 'No Demand", go right ahead, if you want to ask about 'the background', go right ahead, if you don't know what a 'sign of strength' is, ask away, if you want to post a chart and ask a question, or respond to someone else's question, go right ahead.

[heretodaygone... 10]

Here's a simple, straightforward example. There are many others in the material in my blog.

 

Support is at 1800.

 

 

I doubt there's anything new here, whether one follows VSA or Wyckoff or SMI. But when I see the retest of support with far less trading activity, that says to me "We're done". And I know they're not lying because of what happens to price. Effort, result.

 

Is it simple?, is it straight forward? Does a temporary lack of supply = demand? Does a temporary lack of supply differ when in an downtrend as compared to a up trend? Fear, greed. Do the arrows that I drew show supply or demand? Effort, result.

 

I haven't looked at the outcome of the dated chart but lets assume for a minute that you were already short. Would your temporary lack of supply bar cause me to cover?, or would or should I be looking for areas to add on to my short?

 

Granted, one's timeframe and trading plan come into play when analyzing supply/demand and setups, but don't you think that you oversimplified that chart just a little bit?

[DbPhoenix 42]

Is it simple?, is it straight forward? Does a temporary lack of supply = demand? Does a temporary lack of supply differ when in an downtrend as compared to a up trend? Fear, greed. Do the arrows that I drew show supply or demand? Effort, result.

 

I haven't looked at the outcome of the dated chart but lets assume for a minute that you were already short. Would your temporary lack of supply bar cause me to cover?, or would or should I be looking for areas to add on to my short?

 

Granted, one's timeframe and trading plan come into play when analyzing supply/demand and setups, but don't you think that you oversimplified that chart just a little bit?

 

Depends entirely on your setup. Mine is based on support and resistance. I've very clearly defined what I want to see there. If I don't see it, I don't take the trade. If I do see it, I do take the trade. Without exception. There are hundreds of hammers, shooting stars, gravestones, dark cloud covers, no demand bars, upthrusts, shakeouts, etc, etc, etc in any given chart. It's up to the market student to determine which to pay attention to and which to ignore. I pay attention only to those which occur at support or resistance.

 

So whether or not the ease in selling pressure at support and the shift to buying pressure would cause you to cover or not is beside the point unless that is part of your setup. Since it was and is part of mine, it's my reason to cover. And adding to my short is not an option since that's not part of my setup. What price does thereafter is of no importance to me unless I've entered a long trade. But I didn't. I was done.

 

As to "temporary", the trader has no way of knowing whether the shift in balance is temporary or not. He has to act based on what's in front of him.

 

As to whether a lack of "supply", or, more accurately, selling pressure (unless you're talking about something that actually has a supply, like stocks) equals demand, or buying pressure, it depends on what's happening with price. If selling pressure eases and buying pressure takes up the slack, but no more, price will sit right where it is. If selling pressure eases and buying pressure increases, there will be less resistance to a move up in price, which is what happens in the first bar I've arrowed, as well as the second.

 

As to what happened afterward, price went pretty much nowhere, but, again, I didn't care. I entered where I was supposed to, rode it all the way down to support, and exited where I was supposed to. There were no further setups for me that day, though I'm sure there were plenty of setups for other people. And if all this seems oversimplified, I'd have to agree. That's exactly what you have to do in your setups and your trading: oversimplify. Make it as simple and straightforward as possible so that you know exactly what to look for and exactly what to do if and when you see it. No panic. No euphoria. You see it, you act. You don't see it, you play solitaire.

 

If I may, the following is from the "journal" post to my blog:

 

Therefore, focus on the setup. One setup. Determine its characteristics. Define it so specifically and so thoroughly that you can recognize it without any doubt whatsoever in real time. Decide provisionally where best to enter, what the target ought to be, where the stop should be placed, and so on. Only after the setup is defined and tested (and it can't, ipso facto, be tested until it's been defined) can one even begin to think about trading it with real money, much less trading multiple setups. Attempting to shortcut this process merely expands the amount of time it will take to develop the necessary skills. Nothing is gained by painting the house before scraping it, cleaning it, and priming it since you'll have to do it all over again sooner rather than later.

 

You are free to create your own based on whatever jingles your bells. You may, for example, focus on divergence. Or higher swing lows and lower swing highs. Or candlesticks of one sort or another. Or trendline breaks. Or base breakouts. Doesn't really matter. What matters is that you keep four concepts in mind: demand/supply, support/resistance, price/volume, and trend. In this way, you can create your own setups which hundreds of thousands of other traders won't be watching along with you. You must understand, however, that what determines the success of the trade is the trader, not the setup. If you're looking for something that "works", you may as well save yourself a lot of time and stop right here. What will “work” – or won’t, as the case may be – will be you.

 

 

As for the bars, just for grins, compare this chart to the one I posted earlier:

 

Edited March 1, 2008 by DbPhoenix

[heretodaygone... 10]

Candles, lines, histograms,.Still shows temporary lack of supply and no demand.

 

Have to hand it to you though, your a battle hardened trading board combatant.

[DbPhoenix 42]

It's not my intention to be combative. But if there were no demand, price wouldn't rise.

 

Good luck to you.

[Bearbull 10]

Candles, lines, histograms,.Still shows temporary lack of supply and no demand.

 

Have to hand it to you though, your a battle hardened trading board combatant.

 

When anybody posts and explains/defends from a position of sound immutable knowledge, it appears as combatant. I have no particular affiliation with Db, just realise that what he states has solid irrefutable logic, that is if one keeps an open mind, Db I think in all his threads has always maintained that his trading is based on reading pure price action with volume against relevant support and resistance levels, period. He does not engage in cutesy names, dragonfly, butterfly, greenhorn, or as in the TG Bootcamp

"Palm tree in Alaska", "Polar Bear in Hawaii".

Quite difficult to understand why is it that folks have to engage in combative arguments in these instances whereas when there is an attempt to expose charlatons, which could save many newbies coming to these threads from throwing away their savings, that some come out to defend them, well will have to put it down to quirk of human nature:

[BlowFish 10]

The whole temporary business implies prediction. You can not predict (i.e. you can not know temporary before the event). These approaches/tools are great for seeing what is happening right now. I am guilty of wanting to predict now and then it is a 'psychological trading flaw' and a fundamental human trait imho. Trading need not be about predicting (imho again). Anticipate what might happen (e.g. Supply will enter at 'support'). Monitor what is actually happening now. Take appropriate action (enter long).

 

If things change take appropriate fresh action. If what you anticipated is 'temporary' you can only know when things change. 'Appropriate' might be take half off and stop to BE, close, reverse etc.

 

The trouble is recognising unambiguously and consistently what is happening now. That only comes with lots of screen time.

[erierambler 10]

I have no particular affiliation with Db, just realise that what he states has solid irrefutable logic, that is if one keeps an open mind, Db I think in all his threads has always maintained that his trading is based on reading pure price action with volume against relevant support and resistance levels, period. :

 

I have to agree, it is as if he is a perfectionist who has honed his skill, but then in this business you better have a firm foundation for what price will throw at you ,or perish. A lot of the principles occur over and over again, such that if you wait , you will be rewarded. No hurries , only in action. This is a very mind stimulating occupation for me. take care everyone

erie

[DbPhoenix 42]

The whole temporary business implies prediction. You can not predict (i.e. you can not know temporary before the event). These approaches/tools are great for seeing what is happening right now. I am guilty of wanting to predict now and then it is a 'psychological trading flaw' and a fundamental human trait imho. Trading need not be about predicting (imho again). Anticipate what might happen (e.g. Supply will enter at 'support'). Monitor what is actually happening now. Take appropriate action (enter long).

 

If things change take appropriate fresh action. If what you anticipated is 'temporary' you can only know when things change. 'Appropriate' might be take half off and stop to BE, close, reverse etc.

 

The trouble is recognising unambiguously and consistently what is happening now. That only comes with lots of screen time.

 

I should point out here that none of this is about How I Trade. If I get into that, then I'm just "selling" yet another system for somebody to copy ("but where do you enter . . . "). I provided a specfic example of what I look for under a specific set of circumstances because somebody asked for it.

 

But these trades are not, of course, 100%. Sometimes the entry doesn't work. Sometimes it doesn't work in consecutive attempts. Not because the activity has been misread and not because the setup is bad but because it just happens (Mark Douglas is an important accessory to any trading approach). The concepts of the selling climax and the buying climax, the tests, the selling/buying dryups (or "no demand/supply") are important if not critical to determining turning points. But even if they are there, and even if they are called with dead accuracy, that does not mean that the turning point will actually occur. A "no demand" scenario is not forever, nor does it guarantee a move that will pay for that condo in Aspen. It means that there is no demand at that moment. It does not mean that demand will not suddenly reappear two or three or four or twenty bars later. I've found that if all of this occurs at support or resistance, the odds of the scenario playing out as expected are increased enormously (which is where MP can make its own contribution), which is why I ignore everything else. I've also found that support and resistance appear to be the determinants of whether or not other "patterns" work or not, such as the so-called "Ross hook".

 

Therefore, again, it ain't a sure thing. On the other hand, just because it didn't work out doesn't mean that the trader screwed up. Nor does it mean that the approach "doesn't work". Caca pasa. You fold and wait for the market to deal the next hand.

[Eiger 10]

The whole temporary business implies prediction. You can not predict (i.e. you can not know temporary before the event). These approaches/tools are great for seeing what is happening right now. I am guilty of wanting to predict now and then it is a 'psychological trading flaw' and a fundamental human trait imho. Trading need not be about predicting (imho again). Anticipate what might happen (e.g. Supply will enter at 'support'). Monitor what is actually happening now. Take appropriate action (enter long).

 

If things change take appropriate fresh action. If what you anticipated is 'temporary' you can only know when things change. 'Appropriate' might be take half off and stop to BE, close, reverse etc.

 

The trouble is recognising unambiguously and consistently what is happening now. That only comes with lots of screen time.

 

Boy, do I ever agree with this. I have to remind myself when trading not to try to predict the market. It really limits me. I consciously try to use "anticipate." When I see, for example, a sign of weakness, I then anticipate no demand. If that occurs, I then anticipate an upthrust. If that occurs, I can take the trade. Thinking this way helps me be more patient -- something I am always working on.

 

I remember reading from Mike Douglas that in the markets, "anything can happen." Sometimes, it seems, that anything does happen. When I am predicting, I start to narrow my mind and filter out contradictory information. I am not open to what the market is telling me. The "anything can happen" seems to occur more frequently when I am predicting, because I'm not in tune with the market. I can't tell you how many times I have taken a short, the market goes down a bit, and then paints a low volume, narrow range bar with a decent close. Because I was predicting, I ignored this signal that the market was likely going to attempt a rally. When I am trading well and anticipating, I can "see" the market better and I am out of the short on the next open.

 

This was such a problem for me for so long, I started keeping a journal just on this. I called it, "The Predictor Speaks," and recorded every time I did this. Slowly, I began to realize that predicting the market was feeding my ego. Every time I predicted and the market did as I predicted (mind you, I was never in those trades!) I felt self-satisfied. In reality, was fooling myself that I really "knew" the market and "understood" it. I came to learn that for me, prediction = ego, and getting my ego involved is a stupid way to trade.

 

I found that predicting limits my trading. I don't see alternatives, I have more losses, and I miss opportunities. Thanks for that post: Anticipating is such a better mindset.

 

Eiger

[Bearbull 10]

The whole temporary business implies prediction. You can not predict (i.e. you can not know temporary before the event). These approaches/tools are great for seeing what is happening right now. I am guilty of wanting to predict now and then it is a 'psychological trading flaw' and a fundamental human trait imho. Trading need not be about predicting (imho again). Anticipate what might happen (e.g. Supply will enter at 'support'). Monitor what is actually happening now. Take appropriate action (enter long).

 

If things change take appropriate fresh action. If what you anticipated is 'temporary' you can only know when things change. 'Appropriate' might be take half off and stop to BE, close, reverse etc.

 

The trouble is recognising unambiguously and consistently what is happening now. That only comes with lots of screen time.

 

Brilliant Post Blowfish, essence of Mark Douglas.

[Kiwi 16]

Boy, do I ever agree with this. I have to remind myself when trading not to try to predict the market. It really limits me. I consciously try to use "anticipate." When I see, for example, a sign of weakness, I then anticipate no demand. If that occurs, I then anticipate an upthrust. If that occurs, I can take the trade. Thinking this way helps me be more patient -- something I am always working on.

 

I remember reading from Mike Douglas that in the markets, "anything can happen." Sometimes, it seems, that anything does happen. When I am predicting, I start to narrow my mind and filter out contradictory information. I am not open to what the market is telling me. The "anything can happen" seems to occur more frequently when I am predicting, because I'm not in tune with the market. I can't tell you how many times I have taken a short, the market goes down a bit, and then paints a low volume, narrow range bar with a decent close. Because I was predicting, I ignored this signal that the market was likely going to attempt a rally. When I am trading well and anticipating, I can "see" the market better and I am out of the short on the next open.

 

This was such a problem for me for so long, I started keeping a journal just on this. I called it, "The Predictor Speaks," and recorded every time I did this. Slowly, I began to realize that predicting the market was feeding my ego. Every time I predicted and the market did as I predicted (mind you, I was never in those trades!) I felt self-satisfied. In reality, was fooling myself that I really "knew" the market and "understood" it. I came to learn that for me, prediction = ego, and getting my ego involved is a stupid way to trade.

 

I found that predicting limits my trading. I don't see alternatives, I have more losses, and I miss opportunities. Thanks for that post: Anticipating is such a better mindset.

 

Eiger

 

A good response Eiger.

 

I have often argued that trading is always about predicting because we are making a statistically based prediction. For example, I am entering because their is a 68% chance that price will reach my target before retracing to my stop when this pattern occurs in this situation. I've found the "you do not predict" school to be frustrating because they mean one thing when they use the word predict and I mean another thing.

 

Here you clearly identify prediction in an almost Buddhist sense.

 

Buddhist's don't have a problem with wanting something ... their problem is with the attachment to that wanting. That's the source of the unsatisfactoriness/unhappiness. Similarly there isn't a problem with predicting that there is a 68% chance of X if Y ... but the problem is the attachment to a statistical prediction. So you use the word anticipate to describe a prediction without attachment to the outcome.

 

So it seems that by saying "I anticipate" instead of "I predict" one can avoid the attachment, the ego issues, and the difficulty in then simply following your process and the market without distortion.

[zeon 10]

Hi everybody. I've been an old ET member, but somebody told me there's a lot of VSA talk going on here lately. I took the time to digest the latest 100 posts or so and have some questions. I've read the Tom Williams books but they seem somewhat different than what is being told here. In 'undeclared secrets of the stock market' there is a lot of focus on single bars and this always gets me on the wrong side of the market when trading for real.

 

It's easy to say that this or that bar is "no demand" or a "test" in hindsight. But when the market is open there can be conflicting signals and I don't yet completely understand how a trader can identify the right spikes in volume as demand/supply/etc, especially on such a low timeframe as the 1-min charts that have been posted here.

 

I hope people don't mind me asking, but several things are unclear... Thanks to everybody for providing such a decent thread, I really hope to make 'the next step' in my trading here. I'm sorry if this goes back a bit, there sure is a lot posting going on here and I prefer to read everything first and then launch a number of questions. Most of this is directed at dbphoenix. However, I decided not to post this to his blog as mister_ed said we could ask anything we wanted and some of my questions are directed at other people, but it made sense to bundle them together.

 

Note that the selling climax does not exactly jump out at you. If you didn't have support drawn at 1765, you might not even notice it. But there or nearby is the place to enter, if you're going to enter at all.

 

In you chart from post #138, could you not draw resistance at 1778? It looks like there was a slight volume spike around 13:09 immediately followed by a downbar, isn't this a rejection? It looks like price found resistance on the previous day there too. And it is around that 'special' 1780 level that you've talked about too...

 

Beginning at the end of the day on the 21st, then tested twice on the 25th. It didn't seem to be more than minor support for pre-planning, but price didn't think of it as minor when it was reached for the second time that day. That entire zone from 1760 to 1770 established on the 19th and 20th offered potential support, of course, but 1765 became a kind of fine-tuning.

 

But how do you know if support from a previous day or week will still be important? If you look at a chart and you can point out where support is, do you take note of that level? I mean the next day it might be breached and so you think it's incorrect. But the day after that it may be tested. Is support from two weeks ago as important as from two days ago? I find it hard to reconciliate all these different support levels from various days and various different timeframes... It looks like support (or resistance) is all over the place all of the time :\

 

I hesitate even to bring up S/R since the behavioral dynamic driving price here may not even lend itself to trading ranges, or at least not the pretty kind one finds in futures.

 

So are you saying that FX moves are less "clean" than those in futures? May I ask if there is any reason in particular you are trading the Nasdaq? Over at ET a lot of people are trading the S&P. Do you think the Nasdaq is less choppier?

 

I'm not ignoring you. I have a very difficult time dealing with all the layers and layers of overcomplication and nonsense jargon that have been laid over what are essentially basic and really very simple concepts. Wyckoff founded the SMI in Phoenix? Wyckoff died in 1934.

 

A final question, I looked at your "recommended literature", but there seems to be nothing relating to Wyckoff about it. I have already read the Day Traders Bible in the past, but to be honest it didn't really help me understand the markets better, there are little charts in it too. So perhaps somebody could point me in the right direction and tell me where to find all these Wyckoff gems?

 

This philosophy is diametrically opposed to the philosophy of Market Profile, whose principles rely on the notion of a fair, two-sided auctioning process.

Soultrader, I guess what I'm objecting to with VSA is the tendency to attribute every little move to the "smart money".

 

Sorry for my lack of understanding Tasuki, but what do you mean with "the auctioning process"? I thought the "smart" money - or whatever you want to call it - is that part of the market participants that are able to move price. We, all miniature puppets, are unable to do anything than just ride that momentum until it runs out of steam. You've also mentioned the taking out of stops as something that's not manipulated. So are you saying it isn't true that the professionals are able to see where the stops are placed then? I read about these things in several books and one thing always came back: that they can and will take your stop out.

 

Here's a simple, straightforward example. There are many others in the material in my blog.

 

Support is at 1800.

 

I doubt there's anything new here, whether one follows VSA or Wyckoff or SMI. But when I see the retest of support with far less trading activity, that says to me "We're done". And I know they're not lying because of what happens to price. Effort, result.

 

It certainly "looks" simple and easy, but one man's exit signal can be another man's entry signal. I mean why did you not go long where you closed out? You said support was at 1800, so would this not be a valid entry then?

 

Could you also point me towards your homepage? The link provided in your profile doesn't redirect properly.

 

I'm sorry for this rather longish post If you have some time to reply to all my questions, I'd be very thankful. Thanks in advance for all the insightful posts. Definitely a lot to ponder about.

Zeon.

Edited March 2, 2008 by zeon

[DbPhoenix 42]

Hello, zeon. If it's all the same to you, and since most of your questions are directed toward me, I'd like to move all this over to Sledge's Real Time Price Action thread:

 

http://www.traderslaboratory.com/forums/f34/real-time-price-action-clue-to-3494.html

 

Even though VSA is rooted in Wyckoff, Williams added his own flourishes. And TradeGuider took it in a direction that to me is misguided. But this just isn't the place to debate that point. If someone wants to learn the TG way, what business is it of mine? And by moving this discussion to the other thread, elements of VSA, MP, Wyckoff and whatever the hell else can all be blended together and simmered to come up with something that may do nicely without necessarily having a name.

[zeon 10]

Hello, zeon. If it's all the same to you, and since most of your questions are directed toward me, I'd like to move all this over to Sledge's Real Time Price Action thread:

 

http://www.traderslaboratory.com/forums/f34/real-time-price-action-clue-to-3494.html

 

Even though VSA is rooted in Wyckoff, Williams added his own flourishes. And TradeGuider took it in a direction that to me is misguided. But this just isn't the place to debate that point. If someone wants to learn the TG way, what business is it of mine? And by moving this discussion to the other thread, elements of VSA, MP, Wyckoff and whatever the hell else can all be blended together and simmered to come up with something that may do nicely without necessarily having a name.

 

 

Hello and thank you for the quick reply. For some reason my posts don't come up anymore though: they need to be approved :\ Anyway, if you or someone else knows how to move my post, please do so. I didn't know about the other thread, will have a look now.

 

As for Tradeguider, I don't know much about that, so my mind probably isn't as polluted yet.

[Eiger 10]

A good response Eiger.

 

I have often argued that trading is always about predicting because we are making a statistically based prediction. For example, I am entering because their is a 68% chance that price will reach my target before retracing to my stop when this pattern occurs in this situation. I've found the "you do not predict" school to be frustrating because they mean one thing when they use the word predict and I mean another thing.

 

Here you clearly identify prediction in an almost Buddhist sense.

 

Buddhist's don't have a problem with wanting something ... their problem is with the attachment to that wanting. That's the source of the unsatisfactoriness/unhappiness. Similarly there isn't a problem with predicting that there is a 68% chance of X if Y ... but the problem is the attachment to a statistical prediction. So you use the word anticipate to describe a prediction without attachment to the outcome.

 

So it seems that by saying "I anticipate" instead of "I predict" one can avoid the attachment, the ego issues, and the difficulty in then simply following your process and the market without distortion.

 

That's excellent, Kiwi. In my book, there is nothing wrong about predicting an outcome based on odds. In fact, if traders thought more in terms of probabilities, they would have better results. And you're right, it's really about not getting attached to an outcome. Well said.

 

Besides being a trader, I am also a psychologist, so I apply a lot of psychological science to my trading (and I work with a few other traders, as well). There is an awful lot about the markets that you cannot control. VSA and Wyckoff help us to read the markets pretty darn well, but even with these skills, outcomes are never guaranteed. There is only one thing a trader can control, and that's himself or herself. Having a probablistic mindset, remaining unattached to outcomes (which I do via anticipation), and keeping one's mind-in-the-moment to be able to effectively use VSA are some of the psychological keys needed for good trading. These are the things a trader can control, or bring under control with a little effort.

 

Eiger

Edited March 2, 2008 by Eiger