VSA : Crock or Not?

[VolumeJedi 10]

2) for liquid and illiquid instruments, why do we think that the BBs are operating in concert with each other? The fact is, there is no evidence that I've seen that they act in collusion, and there is significant evidence from those who have worked in the big trading houses that they are just as much competitive with each other as they are with "the masses." However, one regularly hears VSA proponents saying that "the Big Boys are buying here, or selling there" when the truth is probably closer to "some Big Boys are buying here and other Big Boys are selling here." For living proof of this, listen to the squawk box for a few days and you'll see (OK, you'll *hear*) what I mean. So, the question becomes--how can they move the market if they are fighting each other?.

 

Tasuki, I have to take issue here. VSA does not state that the BBs are in some cigar smoke filled back room deciding to "take'm down today boys". On the contrary, VSA states that the BBs are in combat with both the herd and themselves. The net effect, or composite, of all the BBs is what is seen in the volume and price bar. It is true that many here say "the BBs are buying here", while it is more accurate to say, "the net effect of all the BBs action is more buying than selling took place".

 

Think about a test bar. The BBs (the bullish ones) are testing to see if there are any sellers underneath. But they are not testing for sellers amongst the herd only. They are testing for other BB sellers. If all BBs were in concert, there would be no need to test. Since as a group working as one, they would completely absorb any selling by the herd.

 

This is where the term "Composite Operator" comes from: what can be viewed on the price chart is the composite, the sum total, of all the BBs' actions.

[HAKUNA 10]

Why not just get away from all this "big boys" stuff, what matters to a retail trader like most on this website or forum or thread is whether there is Buying pressure or Selling pressure.

 

Best to stick to the price action and not worry about who is doing what to whom:)

 

Moreover as I have learnt from other posts, it is not a question of whether this method or an indicator works or not, the trader has to make it work.

Know many traders who are very successful with using RSI, MaCD, Stoch divergence etc which as most realise has 50/50 odds in the long run.

(please no lecture on probability laws:)

 

Supply and Demand is intrinsic to the market, that is what Wyckoff pointed out, hence VSA which is derived from wyckoff has some merits, simple as that. As for other personalities connected with VSA, Tom being father or mother of VSA is totally irrelevant, he studied Wyckoff SMI course , and then attempted to convey what he learnt in simple terms via his "Undeclared Secrets........

 

By the same token any derivative, be it price based or mechanical (trendlines etc) IM0 will flag up support and resistance levels which as incidental if I understand Db correctly.

BTW have also verified this with my own observations for myself.

[HAKUNA 10]

Here is a post byy MRW from another thread which is also pertinent here:

 

I got a feel for just how much TradeGuider changed and moved away from Tom's work when I read Tom's Undeclared Secrets book. While that uses VSA software to illustrate concepts, it does not act as though the software itself is what's necessary for understanding the market.

 

The Master the Markets book has removed a great deal of discussion from the original work, does not use multiple timeframe illustrations, and is promoting the software throughout. TradeGuider has now gone on to use pivots, and all sorts of things Tom never spoke of in, I believe, an effort to make it more popular with a public that loves indicators, Fib numbers, pivots, etc.

 

Now they have a trading room that is $99 a month where Gavin will spoon-feed traders set-ups, while harping on "mainipulation," as if the only way to beat this supposed manipulation is to use TradeGuider. Last year's oil market action was used over and over to try and scare people with examples and fears of manipulation. I was a futures floor trader sometime back, and from my experience, manipluation is almost never the case. All that needs to happen for a giant rise is no offers. Would yuo have sold oil when it was screaming up last Spring? Conversely, would yuo have tried to buy it as it's falling several dollars a day on the way down? A huge imbalance in bids and offers (or supply and demand if yuo will) are all that's necessary. I'll spare yuo the many, many stories from the floor of this taking place.

 

I had several terse conversations in e-mails with Gavin over this whole "manipulation" scare tactic, the deviation from Tom's original ideas, etc, and finally told him to...well, to take me off their mailing list and not contact me again.

 

I obtained a copy of the Boot Camp DVD quite some time back, and in viewing that again yesterday, got to wondering what had happened to Todd. Googled him in and saw the whole court case, and then found the blogspot.

[monad 10]

Hakuna,

You have valid points, will go along with MRW, have had similar experience with VSA crowd myself. There is value there buried under all that hype though. Am presently attempting to put all this in context with other methods like Taylor, again this is not everybody's cup of tea, some love it, some loathe it, some consider it obsolete as it is all from 1950s way before computers, does that mean wyckoff and for that matter VSA is also obsolete????????????? what do you say.

[BlowFish 10]

Many peoples view of types of market participant, their motivations, and their methods, is naive in the extreme. Harris (Trading and Exchanges: Market Microstructure for Practitioners) details participants, there motivations and considers which tend to loose when another category wins and the conditions this will occur under.

 

There is so much miss information floating around (actually its mainly rhetoric and sound bites rather than information) I am starting to think that some sort of text on market microstructure should be mandatory reading for novice traders.

 

Sadly Tradeguider do little for their own credibility or for the credibility of VSA by presenting this half baked rhetoric as a fundamental truth and a corner stone of their marketing.

 

On the subject of keeping threads on topic I think the benefits are plain for most to see. If they are not take a look at the Wycoff corner and compare it to reading say the first VSA thread. As has been pointed out people are free to start their own threads with their own particular view. Mind you the suggestion that the purists leave made me simultaneously :o and :bang head:

[monad 10]

 

Sadly Tradeguider do little for their own credibility or for the credibility of VSA by presenting this half baked rhetoric as a fundamental truth and a corner stone of their marketing.

 

 

Don't think they have much problem with credibility, their cyberspace rooms are packed with suckers who are led to believe they are onto something unique. Just listened to a recent video sent by jj, same old stuff, Tom sounded worn out, Manby (needs voice modulation lessons), Gavin announcing the release of new Tradeguider Software pack, plus all the exciting seminars, events, chatrooms for 2009,

so there you go, does not matter what anybody thinks of VSA in here, can keep on debating till doomsday, TG is going from strength to strength for the time being:)

[DbPhoenix 42]

does that mean wyckoff and for that matter VSA is also obsolete????????????? what do you say.

 

As I posted elsewhere,

There's a great deal of Wyckoff wrote this and Wyckoff wrote that floating around the internet, much (most?) of which is not true. Wyckoff, for example, never used the term "smart money" in his course, much less equate it with the Composite Man or Composite Operator. In fact, he pointed out that

there is no Composite Operator, but the effect of the combined operations of bankers, pools, large operators, floor traders

and the public

[bold mine] is, when boiled down on the tape, of the same effect as if it were produced by one man’s operations. It is important that you observe the market from this standpoint, and that your trading operations are based, not on what you formerly regarded as the market’s characteristics but on the fundamental law of supply and demand, which is at the bottom of every move that is made in every stock in the market at all time. This law is working and will continue to work always and forever. There can be no getting away from it. It does not matter whether the buying and the selling, or both, are genuine or artificial, that is, manipulative, designed for a purpose.

Nor did he care much about the open, nor about bar-by-bar analysis, much less about pattern.

 

A final note: professional money is often but not necessarily "big" money. And big money is not necessarily "smart" money (evidence would suggest, in fact, that just the opposite is true). Big money is just big, and that, in terms of the footprint, is enough for both the retail trader and the professional trader who is himself looking for footprints. For the trader who is not "big", however else he might be characterized, to equate "big" with "smart" can lead to many trading errors, often expensive. "Big" is simply "big", and nothing more. One can either trade with that flow or trade against it. But he should never assume that "big" constitutes "smart".

Gurus breed where novices rely on what somebody says or writes about something rather than read -- much less study -- the original material, which is why I posted the original material, or as close to it as I could get, in the Beginners thread. The term "smart money" appears nowhere in Williams' original work. Nor does the term "composite operator". But when a dozen gurus preach their individual versions of what is "true", confusion reigns. He who bypasses all of that and seeks out the source material is far more likely than the usual groupie to understand just what is being said. If he doesn't want to take the time and make the effort to do so, he has no one to blame but himself.

[monad 10]

Exactly, majority are just happy to regurgitate the latest fancy names of patterns or bars which they have picked up via seminars, DVDs, books etc. and then aggregate onto these threads where they all can talk the same lingo. (feel good factor-part of the gang) Check out woodie who stands out above all with all his Ghosts, shamu, and god knows what else. Same has happened with VSA(UK) once it changed to Tradeguider in US

[BlowFish 10]

A distinct feeling fo deja vu with that post DB. Some things bear repeating for people new to the discussion or for those where it still has not sunk in.

[deepblue27 10]

Could a poll be in order by any chance? As opposed to constantly kicking up the mud with the same old arguments. I think the thread has a lot of good food for thought issues and it would be nice to see the more experienced members put their bias/opinion in some form of vote if thats feasible. Quicker than writing half a page too!

 

I don't have the requisite knowledge to decide fair options to choose from though. I dunno maybe:

 

a) I profitably trade VSA circa '93 (rather than that of post 2003)

b) I pick n mix elements of all VSA for profitable trading

c) I profitably trade VSA post 2003 rather than circa '93*

d) The only thing I spread is butter on my toast

 

*Is it a required improvement for profitable trading. I think you all know what I'm hinting at regarding the dates

 

Although for some its pretty obvious where they stand .

[monad 10]

Enough has been said on this subject, best to leave it at that. Otherwise it will all start again - if you have been reading similar threads in the past week or so.

 

It does not make an iota of difference to TG what we think or debate here, they are on the roll.

If VSA (all or some of it) is useful to your trading, go for it other wise leave it, move on to another method.

Edited January 23, 2009 by monad

[bgtrader 10]

Hi all,

Best wishes to all. I wanted to chime in and say that I've had the privilege recently of watching most of the educational material by Tom Williams, Sebastian Manby, Todd Krueger, and Gavin Holmes (all currently and Todd formerly of Tradeguider). And, I wanted to communicate that I've learned tons by watching their unique approaches to the markets. It's like previous posters have said that each technique will provide an edge and also, different approaches (i.e. Tom William's VSA) will appeal to different folk's trading personalities. For example, the trader Sebastian Manby is an interesting fellow, who pays no attention to fundamental news whatsoever and uses no trendlines nor support/resistance on his charts at all. Only thing on his charts are high/low/close bars and volume-and this forms the basis of his approach to VSA; he also usually turns the Tradeguider signals (Tom's dialog boxes) off. And he reads those charts bar by bar and trades Forex and eminis in this way, and will often trade around news events totally ignorant to what those events are and what their expected influence will be, which to me represents a great confidence in his method (more on this confidence thing later). He also videos all of his trades and goes over them again and again to refine his techniques. Gavin will uses many of Sebastian's techniques plus pivot points, support/resistance, a volatility trending system, and volume & the hi/lo/close bars... For me, being a 2 year novice in the markets, watching Sebastian's very simple chart approach was somewhat of a revolution, the idea being that one's own mind can be the best analyze of the basic price & volume data. Now, obviously I haven't seen these men's bank account statements, however, after watching them teach, trade, and analyze charts for hours and hours, I will say that they are extremely confident in their approach to the markets, and that confidence is what will really make a mediocre or great technique truly shine. There are tons of examples of this among traders who have the oddest of techniques that many will say are absolute rubbish, however due to their confidence in the techniques and the great match that the given technique(s) have with the traders' personality (very important), they simply work. An interesting fellow in this regard is Dr. Al Larson over at Moneytide.Com, who daytrades the ES using his own math models of Moon tidal energy waves occurring at different times and how they supposedly effect trader's emotions. I've sat in on trading sessions with Dr. Al, and he's great, his method works, it's crazy. I'll post a chart of his moon tide forecast, it's very interesting....but that's not my point, the point is Dr. Al likes moon tides, Tom Williams & Seb Manby & Gavin & Todd like their take on VSA, I like learning about tons of methods right now, and so on. I'm so thankful for this forum, very good folks here posting great perspectives, keep up the great work everyone. -best wishes, B