Is There Any VSA Analysis I Am Missing on My Entries?

[daedalus 10]

I've been focused heavily on trying to improve my win rate in the system I trade.

 

I think the key to a lot of this might be found in adding volume analysis to my entries. However, I have been unable to find a consistent way of using volume to filter a winning entry from a losing entry.

 

The arrows are trade entry signals that I have taken. 2 Winners, 2 Losers. Is there anything you guys can see using VSA or any other Volume analysis that is apparent that might be able to filter the losers and retain the winners?

 

Is there any key tell tale signs in the volume histogram as the swing is made before my entry off the retracement?

 

 

 

Thanks for your help in advance!

[MC 10]

I'm no VSA expert but I've found tick charts are not the ideal for VSA in my time studying. The candles and volume don't have enough time to form and set up. 10-15 minute charts seemed to work best for me in the past.

 

Another thought/question is 2 for 4 is reasonable...but what are you doing with the winners. Are you letting them run?

[daedalus 10]

Yea, the winners run for the most part. In backtesting (manual of course) using strict entry/exit rules yields generally about a 1 risk : 2 reward setup most of the times.

 

Stops are placed 2 ticks below the low of the previous candle.

 

Your right on the tick chart stuff, time charts show volume much better but at this time i'm unable to see how I could incorporate the two into my method since I don't want to be waiting on a time chart to close and miss my ideal entry on the tick chart.

 

Hypothetically though, shouldn't the same kind of rules still apply?

[brownsfan019 17]

Hypothetically though, shouldn't the same kind of rules still apply?

 

Perhaps in theory, but more often than not it will result in different results in real-time.

 

For example, using the ABC setup on a minute chart vs. tick chart vs. volume chart vs. range chart will all yield different results using the exact same setup.

[dandxg 10]

VSA seems to work best when you combine it with a higher time frame, this is just basic trading 101, or when you combine it with S/R. I found that using my charts, Sierra, that ticks charts with volume would recalculate the volume so quick for the range of chart that I couldn't even make out a changes.

 

If you go back and review Eiger's posts in VSA thread 2 it works pretty well when combined with a higher time frame. If you want a better entry take an No demand in down trend, because close is high, or a low close test in an uptrend either off S/R or after you see a VSA signal on higher time frame.

 

Good luck.

[sevensa 10]

Your right on the tick chart stuff, time charts show volume much better but at this time i'm unable to see how I could incorporate the two into my method since I don't want to be waiting on a time chart to close and miss my ideal entry on the tick chart.

 

I don't really understand the part of your statement which I marked in bold and I will preface my questions with admitting that I don't use tick charts. Since tick charts are based on x number of ticks, doesn't this mean that you have to wait for the number of ticks to complete until the close of the bar anyway to take your entry? Or do you enter before the close of the tick bar, and if you do that, why can't you do it on time charts too?

 

Also with regards to this question of you...

 

Hypothetically though, shouldn't the same kind of rules still apply?

 

The signals will not lined up and will be different, but hypothetically, shouldn't your system rules apply to both tick and time charts?

[daedalus 10]

I just mean that tick charts take X amount of ticks to close, it isn't a constant like a 2 minute bar, etc. So if the bar i'm waiting to close closes in 1:28 seconds and i'm waiting for the 2 minute bar to confirm, i could potentially "miss the entry".

 

My system entries apply to both tick and time charts, I just prefer to trade tick charts personally.

[daedalus 10]

Well, i can be flexible guys, so here are some more signals from today and last week on time charts.

 

Is there anything more evident in them now?

 

 

 

Thanks again for all the input gent's!

[sevensa 10]

What do you do if your 500 Tick chart still have 200 ticks before it close? Couldn't you miss the entry then too? I guess I am confused when you say you will miss an entry on a time based chart. Isn't the whole point to wait for the bar close, regardless if this is a tick or minute chart?

 

Would you also say that if a trade confirms on a 200 tick chart, that you missed it when you are trading on a 500 tick chart and it didn't confirm there?

 

I guess the point I am trying to make is that you will always feel that you miss a trade if you look at one timeframe/interval and wait for it to confirm on another. If you trade on a specific interval, tick, minute, volume, or whatever, then this is your trading chart. You cannot consider trades missed because they occurred on another timeframe/interval, but not on the one you trade. If you look at it that way, you will always have missed trades.

[daedalus 10]

I get what you're saying, but i think we are speaking in cross references. I agree with you 110%. I don't trade different time frames, what i was speaking too was the suggestion that I should look at a longer term time chart to confirm my entries on a tick chart.

[sevensa 10]

I don't think when it is said that you need to confirm your entries on the bigger time frame, it is meant that you actually need to get a signal there or wait for the bar to close.

 

If you are using VSA, I would suggest to use the bigger time frame to determine the strength of the market, is it going up, down or nowhere (and one bar is not enough to determine that, you need to look at the overall picture, i.e. one no demand bar does not mean the market is weak), and then take your signals as they come on your tick chart.

 

I wouldn't wait for a bar to close on the higher frame time chart if I have already determined the direction there.

[BlowFish 10]

Well, i can be flexible guys, so here are some more signals from today and last week on time charts.

 

Is there anything more evident in them now?

 

 

Thanks again for all the input gent's!

 

Well it looks like you are 3 of 4 now....thats 75% rather tha 50%! of course rather a small sample:)

 

Tick charts do a good job of 'obscuring' volume. I think you would agree the second set of charts show clearer variations? This is because high volume tends to be accompanied with higher numbers of ticks (i.e. more transactions) so the volume tends to get smoothed out over more bars.

 

A couple of practical 'solutions' to this 'problem'.

 

Is it possible to divide your two signals as set up and trigger? thus nullifying the timing issue. Have the trigger on a faster chart if neccassary.

 

Alternatively think of it as setup and filter.

[CandleWhisperer 10]

First off, people use VSA in different ways.

 

The first thing I noticed was that the winners (short trades) are signaled within the body of WRBs.

 

As for the chart I have marked up here, there is a major sign of weakness on that dark hammer candle. In VSA parlance, it is an Up Thrust.

 

Quit frankly, the two charts you have hear show some good trades. Although I do not know how long you held the positions and where stops were placed. I would argue that the first thing you are doing correctly has to do with the WRBs even if you do not know what a WRB is.

 

Anyway, I hope this helps and I hope more VSAers will leave some input.

[daedalus 10]

Thats EXACTLY what i was looking for in a reply Whisper... Can't thank you enough!!!

[herkfsu 10]

Candle, can you help me with something real quick.

 

On the chart you posted between 11 and 1130, would the down WRB tell us anything about what the smart money is doing. I know the volume is telling us they are active, but are we looking for any particular move(up or down) after a WRB on ultra high volume closes near its lows. Or do we have to wait to for no supply or a test? Do tests have to follow no supply/demand? It looks like the 11:12 bar is a successful test showing little interest left in selling. but the bar two to the right of that one shows some high volume on a medium ranged bar closing on its lows. Is there conflicting signs all throughout here? Thank you for your help!

[CandleWhisperer 10]

Herkfsu;

 

Welcome.

 

Before I get to the question, there are a couple of things that we need to take into consideration.

 

Element #1:

 

There are two main types of price action traders. Type 1 looks at price patterns or signals to define the price action. Type 2 looks at the price action prior to and in conjunction with the price patterns or signals. So for type 2 price action traders, the price action defines the patterns or signals and not the other way around as it is for type 1.

 

Element #2:

 

WRB analysis is not the same thing as VSA. VSA does not look at the open. My contention, however, is that if Tom Williams did look at the open he would have come up with WRB analysis. WRB is also independent of Japanese Candlesticks. Thus WRB analysis can be done on OHLC bar charts.

 

Now I will try to answer your question. I will attempt to show the direct relationship (sameness) of WRB analysis and VSA as I answer your specific question.

 

VSA:

 

The first thing a VSAer should be asking on that bar/candle is, "Was there a news event associated with that Ultra High Volume?". This is using price action to define the pattern/signal. Upon seeing a wide spread bar/candle, VSAers should be asking the same question. Simply, weather we see that wide spread ultra high volume candle/bar in hindsight or at the right edge of the chart, the question is "what caused that?"

 

This is why every VSA trader should have ForexFactory, or some other site with news release times up on their computer.

 

WRB:

 

The first thing WRBer should be asking on that candle/bar is, "Was there a news event that created that WRB?".

 

***As this is not my chart or market, I do not know what caused this WRB. But that does not matter for our purposes here. We will assume some news release, like durable goods came out.***

 

VSA:

 

VSA sees a wide spread bar/candle on ultra high volume that closes off its lows. If all that volume was selling, then the close should be on its lows. Yet, we need to see the next bar to be sure. However, had the close been greater than the midpoint of the bar/candle, we could be certain that demand did indeed enter. That would not mean we could be buyers at that point though. The Ultra High volume tells us that the BBs were in the market on this interval doing something.

 

WRB:

 

WRB tells us that a Wide Range Body represents a possible shift or change is Supply/Demand dynamic. The WRB tells us that for some reason the price area represented by the body of the interval is important to the BBs. It is important to them because they are the big players; the ones that can change the supply/demand dynamic. WRB make no distinction about the close being off the lows. Nor does WRB analysis say which way price should move. THE KEY IS THAT AN OPTIMAL AREA TO BOTH SEE THE CHANGE IN THE SUPPLY/DEMAND DYNAMIC AND TAKE A TRADE WILL BE WITHIN THE BODY OF THE WRB.

 

VSA:

 

VSA STATES THAT THE IDEAL SIGNAL IS A LOW VOLUME BAR WITHIN THE RANGE OF A HIGH VOLUME BAR (No Demand, No Supply. Tests). ALTHOUGH UPTHURSTS AND HIGH VOLUME NARROW RANGE BARS (squats) COUNT ALSO.

 

***Simply, BOTH are looking for something to occur within the range of this high volume bar/candle. WRB re-defines range to mean body (open to close).

So both are looking at more or less the same area for a pattern or signal that has been defined by the price action and not the other way around. Also with WRB analysis you would need to wait for the next bar to know if you have a valid significant WRB.

 

This is a two part answer so please see next post for conclusion.

[CandleWhisperer 10]

Candle, can you help me with something real quick.

 

On the chart you posted between 11 and 1130, would the down WRB tell us anything about what the smart money is doing. I know the volume is telling us they are active, but are we looking for any particular move(up or down) after a WRB on ultra high volume closes near its lows. Or do we have to wait to for no supply or a test? Do tests have to follow no supply/demand? It looks like the 11:12 bar is a successful test showing little interest left in selling. but the bar two to the right of that one shows some high volume on a medium ranged bar closing on its lows. Is there conflicting signs all throughout here? Thank you for your help!

 

Continued.

 

Therefore, with WRB analysis we are not looking for direction but rather trade location. From a VSA perspective, we see the Ultra High volume close off the low with the next bar up and know that demand entered the market. We now want to see a low volume signal like a test within the range of this bar/candle. From a WRB perspective this range is more acutely defined as the body (open to close) of this high volume bar/candle.

 

Take a look at the chart below. The area where we are looking to see the change is supply/demand manifest itself is marked on the chart.

 

Let's look at each interval after the WRB. Before we do that, however, one thing must be remembered. This is only 1 timeframe analysis. To better understand the background, we should be looking at a higher timeframe (at least 1).

 

1. The WRB on Ultra High volume is followed by an up candle showing us that some demand entered. The very next candle is down candle on volume less than the previous two. This is No Supply. Personally, I do not like it as it makes a higher high than the previous candle. For the hyper aggressive, this could be a buy sign.

 

2. The next candle close up on even less volume. An up bar/candle with volume less than the previous two would be No Demand. We have had strength enter on the WRB and seen low volume on a down bar, This No demand might be out of place. (NOTE : here is a good example of where looking at a higher timeframe would be helpful).

 

3. If you wait for confirmation, on the No Demand, you see that the next bar/candle is an UpThurst. It makes a higher high and closes on its lows. The fact that it makes a higher high than the No Demand bar makes me not like the No Demand (especially since the volume is not the lowest volume in the last 20 intervals). As for this UpThrust, we have to wonder about it because we saw strength come in on the WRB, not weakness. Plus, it does not close up from the previous bar, which would be ideal.

 

4. The next bar/candle closes down but on reduced volume. Just as importantly, it fails to close below the close of the WRB, nor does it make a lower low than the WRB (Ultra High Volume interval).

 

5. The proceeding interval is an up close with increasing volume. The previous bar was indeed supportive of price and now we can lean towards trades to the upside. For some, this qualifies as a two bar reversal and is a place to entry long.

 

6. Skip ahead 3 bars/candles. This is a low volume bar/candle within the range of an Ultra High Volume bar/candle. This is No Supply. Note how this bar/candle also closes within the Long Shadow of the UpThrust.

 

Admittedly, looking at just this one chart is tricky and seemingly contradictory. This is why Eiger and other continue to emphasize multiple timeframe analysis. For example, suppose that you also looked at a 15 min chart. If that chart was showing demand entering at around this same time, you would be predisposed to ignore the No Demands and UpThrusts right off the bat.

[herkfsu 10]

Thanks Candle. A few questions.

 

You say you do not like the the first NO SUPPLY bar because it closes up. What do you mean you do not like it? Are you say it is not giving a clear signal?

 

Why can't the first NO SUPPLY bar be a test down? It looks like a successful test bar to me.

 

If you did go long on the close of that bar would you probably get back on on the close of the NO DEMAND bar?

 

About the bar you called an up thrust. Couldn't you call that a test bar as well? This bar is showing there is plenty of supply still in the market since it closed on its lows with high volume. If you did go long(I know its aggressive) on the first NO SUPPLY bar, you would surely get out at the close of this bar correct? It is giving a signal of supply still in the market.

 

There seems like plenty of places to either go long or short. Personally what do you wait for in terms of entering or exiting a trade? Why do you look particularly within the WRB for signals? What makes it more prone to give "clear" signals?

 

Thank you so much for your help.

[CandleWhisperer 10]

Thanks Candle. A few questions.

 

You say you do not like the the first NO SUPPLY bar because it closes up. What do you mean you do not like it? Are you say it is not giving a clear signal?............

 

 

To answer this question, I have added another chart from now. The candle in question is marked A.

 

Right after a Shake Out we have a narrow range candle, closing down and just below the middle of its range, on volume less than the previous two bars. What I do not like about this bar/candle is that it makes a HIGHER HIGH than the previous bar/candle. Therefore, it is both making a higher high and closing lower than the previous interval.

 

The down close on low volume is a good sign of strength. However, the fact that the market made a high then was taken back down is NOT strength. It signals SUPPLY above the price and thus negates the bar/candle as No Supply.

[herkfsu 10]

Thanks Candle!

 

Another question about the image you just posted. How you know that's a shake out and not a failed test for more selling? But if it were a test would it be considered a failed test since it closed on highs? It shows there is DEMAND in the market since it closed on its high. Why do tests have to be low volume?

[CandleWhisperer 10]

Thanks Candle!

 

Another question about the image you just posted. How you know that's a shake out and not a failed test for more selling? But if it were a test would it be considered a failed test since it closed on highs? It shows there is DEMAND in the market since it closed on its high. Why do tests have to be low volume?

 

The range of the bar/candle is wider than we would want to see with a test. If that candle was narrower and the volume the same, then I would see it as a failed test. Failed tests still ideally close in the middle or on the highs.

 

What is a test?

 

It is the BBs looking to see if there is supply still in the market. Prices can not rise substantially if there is still supply in the market. The volume need be low because that means as the price was marked down, NO SELLERS (SUPPLY) WERE FOUND. Price is marked down to find sellers and marked up to find buyers. This is why, to answer another of your questions, why a test can not be to the upside. With that said, however, an UpThrust in the form of No Demand can be seen as an upside test if you like.

[herkfsu 10]

But if the BBs mark the price down rapidly to find sellers and the price then shoots back up and it closes on highs this would be a bullish sign to me, even if the volume is high. because you know a lot of that volume is DEMAND coming into the market. Why is this not the case?

 

You said failed tests close from middle to highs of the bar. How is this the case because like I said before, it shows there is DEMAND in the market.

 

If the test closed on bottom with low volume it would show to me there are is NO DEMAND or plenty of SUPPLY left in the market, thus resulting in a failed test.

 

Thank you!

[herkfsu 10]

Also, it appears that a lot of narrow range up bars can be considered either NO DEMAND or a SQUAT bar. unless the volume is slightly above normal, one of the two could be seen as true. Am I missing something here?

[CandleWhisperer 10]

Also, it appears that a lot of narrow range up bars can be considered either NO DEMAND or a SQUAT bar. unless the volume is slightly above normal, one of the two could be seen as true. Am I missing something here?

 

Well, A No Demand bar has volume less than the previous two bars. A Squat is a narrow range bar with volume greater than the previous bar. Pretty simple.

 

But if the BBs mark the price down rapidly to find sellers and the price then shoots back up and it closes on highs this would be a bullish sign to me, even if the volume is high. because you know a lot of that volume is DEMAND coming into the market. Why is this not the case?

 

You said failed tests close from middle to highs of the bar. How is this the case because like I said before, it shows there is DEMAND in the market.

 

If the test closed on bottom with low volume it would show to me there are is NO DEMAND or plenty of SUPPLY left in the market, thus resulting in a failed test.

 

Thank you!

 

First, on a test the BBs mark the market down (this is manipulation). Price closes back on the high, not because buyers come in and push it up, but because it was manipulated down in the first place.

 

Second, it is bullish when the volume is low because there are no sellers when price is manipulated down. High volume implies sellers willing to enter the market on the down move, not the up close.

 

I suggest you re-read the book. TG also has a number of videos you can watch.

[herkfsu 10]

Candle

 

What if the close of the test bar is on its lows?

 

Are tests that test for buying the same thing as upthrust?