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

[CandleWhisperer 10]

  herkfsu said:

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

 

There are two types of UpThrusts.

 

TYPE1: High volume UpThrust.

TYPE2: UpThrust on low volume which is an UpThrust in the form of No Demand.

 

But what you really need to understand is the purpose of an UpThrust versus a Test.

 

UpThrusts are intended to rapidly mark price up to get the herd to go long or to gun for stops. Tests are intended to rapidly mark price down to look for supply(selling) by the BBs.

 

So in other words, one is looking to create/find activity, while the other wants none. One is looking to bring in the herd, while the other is looking to see if the Smart Money is done selling.

 

I have attached a chart with a nice UpThrust. Notice the high volume as the BBs try to entice the herd to go long. In a perfect world, this candle would close up, but it does make a higher high and close near its lows. The astute among you might pick up on the fact that this is a squat also.

 

An UpThrust in the form of No Demand will have low volume (volume less than the previous two bars/candles). No Demand would mean there is no/little BB activity on the side of higher prices. If you must, you could think of this type of UpThrust as an upside test. But that is only because of the low volume. This is important, since a test on high volume will either be a failed test, or result in little upside movement (which will come back into that area for a re-test). But a high volume UpThrust remains valid as an UpThrust. It merely moves from a TYPE2 to a TYPE1.

 

  herkfsu said:

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

 

Simply, it is not a test.

[herkfsu 10]

I do not see the logic behind a test bar. Why would the smart money sell a lower prices if they could sell at higher prices. If the price gets marked down rapidly and the smart money does not sell, why does that automatically mean they wont sell when the price gets a little higher?

 

A test bar on low volume that closes on its highs only shows selling is gone at the lower prices. and again, even if it were on high volume(that closed on highs) wouldn't it show there are buyers who came in and bought. Why would this test fail? It is showing support in the market. It would be the opposite of an upthrust bar imo.

 

What is the opposite to an upthrust bar? When BBs fish for stops on the downside.

[Guest burjtjiz]

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.

[Eiger 10]

  burjtjiz said:

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.

 

 

VSA works very well when combined with higher time frames. For day trading

try using the 60-minute and higher charts (e.g., 180-minute to daily, though the 60-min usually works pretty well) to frame out the structure of the market (i.e., overall trend, S/R, areas significantly oversold/overbought, etc.). During the day, keep an eye on the 30-min or 45-minute chart. Look for typical VSA indications of SOS, SOW, No Demands & Tests, etc. on this time frame. It gives you a very good clue on how the market will be trading for the next hour to the next several hours. You can then coordinate smaller time frame VSA indications for reliable trades.

 

Support and Resistance is important. Typically reliable trades set up with VSA indications at these areas. Look at both horizontal S/R as well as trend line S/R. Pay attention to the S/R from your analysis of the structure of the market on the 60-minute chart as well as S/R that sets up during the day.

 

Don't just mindlessly buy or sell at S/R, though. Wait for a VSA indication. People seem to misinterpret Sebastian's comments on the Symposium DVD regarding S/R. He very much pays attention to S/R levels and looks in these areas for VSA setups. What he doesn't do is just buy or sell because price has reached S/R. That was the point he was making.

 

It sounds like you may be using too small a time frame with tick charts. VSA is best used on a 10-minute down to a 3-minute chart when day trading. Anything lower than that will give too much noise for VSA setups and will cause frustration and doubt. Try using the 5 & 3-minute charts during the day. VSA indications typically set up several times during the course of the trading day on these two time frames, unless, of course, the day is a low volume, narrow range, flat day.

 

Hope this is helpful for you,

 

Eiger

[mcfotos 10]

Hi,

 

As I would also like to learn from my mistakes (or what I missed in interpreting the chart with VSA) I posted a chart from my recent trade. It’s a daily chart from the Commerzbank (CBK).

Here is what I read on this chart (see attachment):

 

A: WRB with ultra high volume and the close off the low. So there might be some buying in this bar. For confirmation: waiting next bar to see higher close.

 

B: The close is lower than the bar before and the bar is a narrow bar, so I interpreted is as: In the bar before (point A) there was buying in bar but supply overcame demand as this bar is down. However due to the fact that the bar is a narrow bar and the volume is even higher than bar A, I thought this means professional money is heavily buying (that’s why the bar is narrow adn the volume even higher). Actually I interpreted it as a squat bar. I learned in this forum here, that it is probable that -+1 bar after the squat bar there might be a trend change.

 

C: This bar is a down bar: close is lower but with much lower volume than bar B. So I thought this was a No supply bar. And here I entered the trade long (green arrow)

 

D: This bar is again a down bar on again lower volume, which I interpreted as an No Supply bar again.

 

E: Kicked out due to my Stop Loss

 

 

So I would very much appreciate if you can help showing my mistakes:

 

- Had I made some mistakes in the interpretation the points A-C / D?

- I have to admit that the interpretation of the background was quite hard for me, but I thought the areas around G, H, I were showing some accumulation?

- Was it because the week I did the trade was the option expiring trade and VSA is not very reliable in this kind of week?

- Was it because the “signal” was not within the WRB and thus not so reliable?

- …because I didn’t look on the higher timeframe (weekly bar)?

 

 

Thanks a lot for any kind of help learning to read this (and in general) chart better!

mcfotos

[HAKUNA 10]

mcfotos,

Perhaps you jumped in too early IMO, or entry could have been made via a buy stop order above that no supply bar as you call it. At that point it just means that sellers are not meeting any resistance ie. support from buyers and are able to push prices down with ease. I would keep my mind free of big boys and small boys and just focus on supply and demand. It is not important at all to know who is buying and why. movement of price is what matters. In this respect knowledge of both VSA and Wyckoff is desirable.

 

However far better entry depending on your risk tolerance and albeit not right at the bottom where everybody prefers to enter, would be to wait for a slight rally after a high vol down bar and then a test via down bar on a narrow range with low vol. In other words allow a cause to be built for a rally. A buy stop order above that would be the place where I would enter. That is what I do intraday. no reason why same principles will not operate on day charts or weekly charts.

 

It may work or not but the odds are in your favor that way.

 

You can ofcource wait for prices to rise above the moving average or above previous swing high and then a test on low supply. That would be more conservative.

[Eiger 10]

  mcfotos said:

.. As I would also like to learn from my mistakes (or what I missed in interpreting the chart with VSA) I posted a chart from my recent trade... mcfotos

 

Hi Mcfotos,

 

Thanks for posting this chart & trade. You have the exact right attitude about learning from losses. A friend who is a trader used to play the pro circuit in tennis always remarks on how the best players were always trying to make improvements in their game. When they made some error, they didn't get down on themselves (like so many do). Instead, they became excited at the potential for now learnng something new about their game and a chance to improve. It's a very useful attitude.

 

I think this may have been difficult because of the background. It didn't really favor the long side. It started out favoring the long side, but it didn't pan out.

 

I say it started out favoring the long side because of the Shortening of the Thrust, meaning that the legs down I, H, G, F showed less and less downside movement. SOT is one (early) way to identify a potential trend change. It also broke the trend channel (upper, or Supply Line). All of this is potentially bullish.

 

It didn't pan out, however, because we got no good rally after the SOT and breaking of the trend line. Note that the market contiuned to put in lower lows. If you look carefully at the bars in this congestion area, you see no real evidence of buying going on. You would want to see the up bars in the two small rallies that occured to have wider spreads, closes near the highs, and some volume come in. Instead, you got narrow spreads and light volume - No Demand.

 

A great clue for the future is to look for a rally that breaks an old top or high and puts in the first higher high (reverse this for changes in up trends). Had this market rallied well, it would have taken out the high made after G. The odds would then be very favorable for more upside progress had that rally occurred. So, one good thing to remember is to look for the largest rally to occur in the downtrend to indicate demand has entered the market before deciding that the trend has changed from down to up.

 

On the bars at A-E: As A is approaching the support area at F (red line), both spread and volume pick up - not a good sign. The close at A is in the lower half - more bearish than bullish. B is narrow and has a lot of volume, but look carefully. Bar B is a down bar closing on its lows and closing under the support line at F. Same with the next bars. THis market was unable to rally away from the support level. This support level was the danger point for this market. If it can't rally away from the danger point, it will fall through it, which is what happened here.

 

I drew what more bullish bars would look like to the left. Note that the closes would generally be clustered near one another, even though price was popping down lower. This would say that there is a price level that is tending to hold on the closes. Also, the closes are near the highs, and they are closing above the danger point or the support line from F.

 

Hope this is helpful, and don't lose that good atttude of learning!

 

Eiger

[Eiger 10]

When describing the lack or rally power after breaking the downtrend channel in the post above, I said that the market made lower lows. It should be lower highs - i.e., the market continued to make lower highs. Same with the chart - i.e., it should show LH rather than LL. Sorry for any confusion.

[HAKUNA 10]

Now there is an explanation and a half:)

 

Great stuff Eiger. plus a marvellous attitude, courtesy, respect and politeness., treating others like mature adults and not kids. Wish some would take lessons.

[mcfotos 10]

Hi Eiger,

 

thanks a lot for taking time to post this detailed analysis and helping to improve ...

can only add myself to the comment of Hakuna

 

...great "helpful" stuff

 

mcfotos

[bunny 10]

  daedalus said:

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!

 

Sorry to bump this thread.

I think the Wide Range Body (WRB) is an important indicator. Often after such wide down bar, minor retracements are seen due to reduction in selling pressure. even in this case, if you observe, the open price of the WRB bar serves as the resistance just before the price plummets again.

 

There are mnay who use such WRB as primary indicators in trading.

[raven4ns 10]

Hello,

Many times I read about traders looking at the background if they are using VSA. I'm not sure what they mean by background, would someone please explain what they mean by this term? Thank you.

 

 

Tim

[bbj_anchor 10]

I'm warning all to not give CC# to TradeGuider or VSA club as they will never stop charging you. And refunds dont come... lots of talk but then I dont know why that happens is retort. I had to get visa involved and 3 months charges still havent been returned. Just FYI