[VSA] Volume Spread Analsysis Part III

[Eiger 10]

Although there are no tops in the background, you do have trendlines indicating an overbought position and a break of the demand line. Drawing lines is important in framing the background

[teodosy87 10]

Although there are no tops in the background, you do have trendlines indicating an overbought position and a break of the demand line. Drawing lines is important in framing the background

 

Thanks alot for this!You`ve been most helpful i will continue visiting this thread every day i hope samo day i will answer otehr traders questions about VSA.REally thanks!Because in these days most people are selfish and keep everyting for themself you seems to defer! :applaud:

[Eiger 10]

Background

 

Last night, another trader and I were looking at the background conditions of the S&P emini's and SPYs. Here is what we saw.

 

On the 60-minute ES, the market fell yesterday into an oversold position outside the Demand (lower) Line. It did so on receding volume indicating supply was tiring. A last push to the downside yesterday afternoon drew the heaviest volume of the day for that hourly period (double arrow). We identified this as buying since the heavy volume (effort) did not result in further downside progress.

 

On the daily chart, the SPYs reached the Demand Line of the up trend channel.

 

So, the background said higher prices today, which occurred. We looked for price to potentially trade into the resistance zone of 894 - 898. The Supply line comes in around the 900 level, which would be the probable upper cap to the upside, at least for today. All of this is seen on the 60-minute chart.

[azuremaster 10]

Hello everyone, I am new here and still learning VSA. I have a question-which broker you guys use to trade forex with VSA? I have compared about 10 different brokers, and they all have different volume data. Sometimes differences are huge. I know that e-signal is probably the best choice, but just want to know your opinion about free mt4 brokers.

And if someone could post some forex charts here (lets say GBPUSD 5min and hourly from e-signal or TG), that would be great. I will compare it with my mt4 brokers data.

[sillykiddo 10]

Hii..

If anyone can help me here getting the defination of followings? Thanks in advance

 

No Demand

No Supply

Test

Stopping Volume

[sevensa 10]

Hii..

If anyone can help me here getting the defination of followings? Thanks in advance

 

No Demand

No Supply

Test

Stopping Volume

 

Try reading the Undeclared secrets book mentioned numerous times in the VSA threads, or just read through the threads. When you try to learn something, you need to start at the beginning.

[bbj_anchor 10]

I joined this thread a month or so ago, posted a file that I asked for input as to whether VSA could pick trades from it to make them better. I got do some studying etc... I did and attended a webinar hosted by Gavin at TradeGuider yesterday... he got 4 pts from a trade I got 12 ! I was commenting to him and he was quite surprised and said "good call" to me on the webinar (I believe it can be watched from site archives) I also called up at shows end. run went from 912 to 900 opposite thrust from 901 to 906 and then thrust again from 906 to 898! ... ~24 points in 2 hours on ES minis esm09? which I have never even traded and had to call and ask what we were trading! and the only indicator I even worry about is "thrusts" up or down. Analysing my file with just that... I had 60 wins- 7 losses and 12 likely minor win/loss/even vs origional file with 80 wins- 25 losses -8 whatevers....

 

The "thrusts" are waaay strong and the need to confirm etc is somewhat a loss of valuable profit. The only other thing I watch now is where the resistance and supports are... BBands & 50 day MA & previous Highs and Lows. I watch these as the BIGs are aware of them and that's why stocks often stop/stall there... you will want ample room to have a large trade potential.

 

Thanks to a couple guys who blew me off and got me motivated to read the books and think a bit, BillyBob

[bbj_anchor 10]

Now a PLEADING... anyone done an excel program that points out any of the patterns... ie weakness vs strength etc? I'd love to see it if so... I've messed with building a thrust indicator but I'm not an excel or programming guy. I got something that works well enough, but misses a lot of real thrusts... kinda junk actually, but I tried. I have an old VSA7 that works but getting data into it is a problem as I forgot how. Any ideas there? I can get the metastock files created, but have forgotten the last step to get VSA to see them (oldtimers disease?). Any help would be appreciated,

 

thanks BillyBob

[Tasuki 10]

and the only indicator I even worry about is "thrusts" up or down.

The "thrusts" are waaay strong and the need to confirm etc is somewhat a loss of valuable profit.

 

bbj,

What are these "thrusts"? Is this something on Tradeguider? Or a VSA pattern I'm unfamiliar with?

Thanks,

Tasuki

[monad 10]

Tasuki,

If you get hold of the original Wyckoff(available in microfilm for some $100 I believe), in Section 21M all this is explained.

Thrusts are opposite to shakeout.

There are 2 kinds of shakeouts, terminal and ordinary and same for thrusts.

 

Shakeouts are signs of buying pressure,

Thrusts are signs of selling pressure.

All in the right context ofcourse.

Forget the professional money nonsense, who cares who is responsible.

 

In the attached thrusts (blue arrow) 2 are in the right context,

Green arrows (shakeouts),, a terminal one is normally on large vol. spike. at the end of an extended downtrend.

.

and as bbjanchor says you could do well just focussing on these. You don't require any of the extra stuff from TG, certainly not Gavin's waffle;) his primary goal is to sell the software, DVDs , VSA club and ongoing bootcamp/seminars( with the help of the once booted out Sebastian now branded as the world's only Chart Reading Machine(hindsight ofcourse) .ie. to fool the masses into thinking they have something unique to offer whereas all that is required is to study the original wyckoff together with the original Tom Williams "Undeclared secrets............" period......

Edited May 22, 2009 by monad

[monad 10]

And as it is unfolding now in the live European bourses

 

ofcourse not all are going to hand out large profits .

90% is management of trade and depends on the timeframe.

Edited May 22, 2009 by monad

[rigel 10]

Great explanation Monad,

 

Like bbj, I got an email from Gavin co. and watched the presentation, have seen a few before, same rattle, quite unnecessary complication of the display of charts with trend clusters ,diamonds, trend and other indicators. It was clear the onus is on getting people to buy the new program, seminar/bootcamp DVDs, and then hook them in to attend more seminars etc.

 

Same garbage on professionals money, markets do not like upbars on high vol and markets do not like downbars on high vol. why not? depends on the timeframe and where you are in the trend.

 

Coming out of an accumulation phase, the strong upbar and sideways correction represent absorption and actually points the trader in the right direction as to the intention of the market , that demand is of good quality. and vice versa.

 

unfortunately these lot are creating followers engaged in analysis of every itty-witty bar and missing the context. as you say the 2 original material is quite sufficient to work with price/vol, afterall all of Tom's work comes out of Wyckoff.

[drsushi 10]

Can you show why, from the perspective of the background, that this was a choice short?

 

Eiger,

 

It wasn't my post, but I wanted to take a stab at why it was a choice short.

 

My guess is because there is a "doji" for lack of a better term on high volume. Very narrow spread on high volume so the background is indicating selling. I'm just learning, so please comment. Thanks.

 

David

[monad 10]

Great explanation Monad,

 

Like bbj, I got an email from Gavin co. and watched the presentation, have seen a few before, same rattle, quite unnecessary complication of the display of charts with trend clusters ,diamonds, trend and other indicators. It was clear the onus is on getting people to buy the new program, seminar/bootcamp DVDs, and then hook them in to attend more seminars etc.

 

Same garbage on professionals money, markets do not like upbars on high vol and markets do not like downbars on high vol. why not? depends on the timeframe and where you are in the trend.

 

Coming out of an accumulation phase, the strong upbar and sideways correction represent absorption and actually points the trader in the right direction as to the intention of the market , that demand is of good quality. and vice versa.

 

unfortunately these lot are creating followers engaged in analysis of every itty-witty bar and missing the context. as you say the 2 original material is quite sufficient to work with price/vol, afterall all of Tom's work comes out of Wyckoff.

 

Absolutely, depends entirely on the timeframe and context,

here in live market, an upbar on pretty heavy vol closing in the middle, representing absorption and not weakness as taught by TG crowd. On the 4bar after that upbar prices rise on low vol which would be wrapped in the no demand jargon bu TG, whereas here it is a clear sign of lack of offerings and that supply has dwindled.

 

The fact is prices are rising showing demand. when demand exceeds supply prices rise,simple, period.

 

Here is the quote from the original Wyckoff " Not all of the manipulaters' moves can be detected. Not all of the moves are made by manipulators. Infact it does not matter to the tape reader or the chart reader whether the moves are real or artificial, that is, the result of actual buying and selling by the public and bona fide investors or artificial buying and selling by large operators"

Edited May 22, 2009 by monad

[Dutchy 10]

Since the VSA II thread now has over 2,200 posts and 128,000 visits, it seemed time to start VSA III. To get us rolling, here is quick VSA look at how the market unfolded this morning on the 3-minute time frame (S&P e-minis).

 

Hope this is helpful,

 

Eiger

 

Hello Eiger & others ,

 

Great work on this thread.

 

Is there a summary list of VSA signals & properties available?.

 

Such a list would enable anyone to build the indicators in his (hers) preferred language (I use Easylanguage)

 

Below a list of what I have already found, maybe al it takes is confirmation of the properties. Anyone?

 

List could ideally look like

UpThrust (SOW 58) : BAR down, Close low, Volume avg, Spread vwide, Change wide. Trend ?

 

etc for other know bartypes

 

Help is greatly appreciated

 

Cheers, Dutchy

 

--------------------------

 

Below a list of the pros already found: Please confirm Ok's or report errors..

 

 

NAME # NAME # BAR # CLOSE # VOLUME # SPREAD # CHANGE

UP-THRUST # (SOW-58)- Trap up move # down # low # avg # vwide # wide

UP-THRUST # (SOW-2) -Basic Up-Thrust # up # low # vhigh # vwide # avg

UP-THRUST # (SOW-2)- Basic Up-Thrust # up # low # high # avg # narrow

UP-THRUST # (SOW-2)- Basic Up-Thrust # up # low # low # avg # narrow

UP-THRUST # (SOW-2)- Trap up move # down # low # vhigh # uwide # wide

UP-THRUST # (SOW-29)- Up thrust after weakness # down # low # avg # wide # narrow

REVERSE UP-THRUST # nop # up # high # high # wide # nop

Shake out # (SOS-125)-Shake out # up # high # high # wide # vwide

LIKELY MARKET TOP # nop # up # high # high # narrow # narrow

ABSORPTION VOLUME # nop # down # high # uhigh # uwide # unarrow

STOPPING VOLUME # (SOS-3)-Stopping volume # Gap down/down # high # high # narrow # narrow

FALLING PRESSURE # nop # down # low # low # wide # wide

BUYING CLIMAX # nop # up # high # vhigh # vwide # nop

EFFORT TO RISE # nop # up # high # high # wide # nop

EFFORT TO FALL # nop # down # low # high # wide # nop

SELLING PRESSURE # (SOS-131)- Selling Pressure # up # high # high # vwide # uwide

SUPPLY COMING IN # (SOW-26)- Supply coming in # down # low # high # vwide # wide

END OF A RISING MARKET # (SOW-22)- End of rising market # Gap up/up # middle/high # high # narrow # vwide

NO DEMAND # (SOW-55)- No demand # up # middle # low # narrow # vnarrow

NO DEMAND # (SOW-55)- No demand # up # high # vlow # narrow # vnarrow

NO DEMAND # (SOW-37)- No demand # up # high # low # average # average

No progress on up volume (this is not a tradeguider indicator) # nop # Gap up/up # middle # high # average/wide # vwide

INCREASE SELLING- SUPPLY PRESENT # (SOW-92) # down # low # uhigh # uwide # uwide

SELLING CLIMAX # nop # down/up?(doubts) # high # high/vhigh # wide/vwide # nop

NARROW SPREADS AND HIGH VOLUME (SQUAT BARS) # nop # up # high?(doubts) # high # narrow # nop

BAG HOLDING (not sure if this is a TG indicator. I´ve seen it in a forum) # nop # down # low # high/vhigh # narrow # nop

[Eiger 10]

Eiger,

 

It wasn't my post, but I wanted to take a stab at why it was a choice short.

 

My guess is because there is a "doji" for lack of a better term on high volume. Very narrow spread on high volume so the background is indicating selling. I'm just learning, so please comment. Thanks.

 

David

 

Hi David,

 

I assume you are referring to bar #3 as the 'doji' type bar (circled). I don't think in terms of candlesticks, but many do. In any event, volume did increase on that bar and, unable to rally higher, it closed on it's low and below the low of the previous bar. The combination of an increased volume, narrower spread, close, and location of the bar in an overbought position in the trend channel is a clear sign supply has taken control. Because this market was in an overbought position in the trend channel, it was quite vulnerable to supply at that point and made this indication meaningful. Had this bar shown up elsewhere in the up trend, it might not have had such significance.

 

Background always dominates the individual bars. When the bar reflects the background as in this case, it becomes significant.

 

Typically, when significant indications of weakness appear as in this case, the market will tend to give us even more 'supporting evidence' as it unfolds. The small hidden upthrust three bars after bar #3 was one. Another is the widespread down bar closing on its low on an increase in volume (white arrows). This is a clear change in behavior since the uptrend began -- all other reactions were on light volume and narrower spread. This told us in advance that the demand line of the uptrend channel would likely break, which it did, and was further evidence of a more sizable reaction. This was followed by a weak rally (further evidence of change in behavior as rallies heretofore were on increasing volume, wide spreads, and stong closes), etc.

 

Keep comparing current bars and conditions with the background.

 

 

Hope this is helpful,

 

Eiger

[drsushi 10]

Eiger,

 

Thanks for the explanation. That makes good sense. I was acctually refering to the bar prior to bar #1 indicated on the chart. That bar had high volume and narrow spread prior to bars 1, 2 and 3 forming. I thought that is what you mean about background. How far back to the left shoud we look when talking about background? Is there any rule of thumb on that. Also, in this example chart are there two trades here or do is waiting on the hidden upthrust necessary?

 

One area I have an issue with in all aspects of trading is what is my trigger to get in. Since VSA does not use things like a cross of this or that, what is generally the "trigger" for a VSA trade? Is it taking out the low or high of a bar depending on direction?

 

David

 

Hi David,

 

I assume you are referring to bar #3 as the 'doji' type bar (circled). I don't think in terms of candlesticks, but many do. In any event, volume did increase on that bar and, unable to rally higher, it closed on it's low and below the low of the previous bar. The combination of an increased volume, narrower spread, close, and location of the bar in an overbought position in the trend channel is a clear sign supply has taken control. Because this market was in an overbought position in the trend channel, it was quite vulnerable to supply at that point and made this indication meaningful. Had this bar shown up elsewhere in the up trend, it might not have had such significance.

 

Background always dominates the individual bars. When the bar reflects the background as in this case, it becomes significant.

 

Typically, when significant indications of weakness appear as in this case, the market will tend to give us even more 'supporting evidence' as it unfolds. The small hidden upthrust three bars after bar #3 was one. Another is the widespread down bar closing on its low on an increase in volume (white arrows). This is a clear change in behavior since the uptrend began -- all other reactions were on light volume and narrower spread. This told us in advance that the demand line of the uptrend channel would likely break, which it did, and was further evidence of a more sizable reaction. This was followed by a weak rally (further evidence of change in behavior as rallies heretofore were on increasing volume, wide spreads, and stong closes), etc.

 

Keep comparing current bars and conditions with the background.

 

 

Hope this is helpful,

 

Eiger

[Tasuki 10]

Tasuki,

If you get hold of the original Wyckoff(available in microfilm for some $100 I believe), in Section 21M all this is explained.

Thrusts are opposite to shakeout.

There are 2 kinds of shakeouts, terminal and ordinary and same for thrusts.

 

Shakeouts are signs of buying pressure,

Thrusts are signs of selling pressure.

All in the right context ofcourse.

Forget the professional money nonsense, who cares who is responsible.

 

In the attached thrusts (blue arrow) 2 are in the right context,

Green arrows (shakeouts),, a terminal one is normally on large vol. spike. at the end of an extended downtrend.

.

and as bbjanchor says you could do well just focussing on these. You don't require any of the extra stuff from TG, certainly not Gavin's waffle;) his primary goal is to sell the software, DVDs , VSA club and ongoing bootcamp/seminars( with the help of the once booted out Sebastian now branded as the world's only Chart Reading Machine(hindsight ofcourse) .ie. to fool the masses into thinking they have something unique to offer whereas all that is required is to study the original wyckoff together with the original Tom Williams "Undeclared secrets............" period......

 

monad et al,

 

Here's my advice: never get old. Just avoid it like the plague. Here's the reason: your brain starts to atrophy. Cheese and crackers I'm not sure what I wasn't thinking, but "thrusts" are just VSA "UPthrusts". Sure, I know what upthrusts are, but I guess I was having a senior moment to not see that thrusts are upthrusts. Duh! Oh well, now I know. Whew. I thought this was some new pattern I'd never heard of.

So, they kicked out Sebastian? But he was the best they had. Nevermind.

So, I've got Tom's book, "Master the Markets". How different is the original "Undeclared Secrets" book? Does anybody know whether it's worth it to try to find "Undeclared Secrets" if one has already got (and read, numerous times) the "Master the Markets" book? Yeah, I know, the original doesn't have any Tradeguider BS in it. But beyond that, is the original sufficiently different to merit a search for it? Or should I just hunt down the original Wyckoff?

[drsushi 10]

This is very nice. Thanks for this. This is similar to the Better Volume Indicator by the guy at Emini-watch.com. I like this one better because it seems easier to understand.

 

How did you get the candles to paint the same color as the volume. I have the volume, but no the candles.

 

Thanks again.

 

David

 

Hi Eiger

 

I've been hesitant to post the volume indicator I am using because I am not a very efficient programmer and also don't really want to start supporting indicators, but here it goes... Maybe someone can use this as a building block, or optimize the code.

 

The colors used are:

Green = Regular up bar

Dark Green = No Demand

Red = Regular down bar

Dark Red = No Supply

White = Same close than previous bar on higher volume

Yellow = Same close than previous bar on lowest volume in two bars

Magenta = Highest Volume of last two bars, smallest range of last two bar and at a 5 bar high or low.

 

I also plot the 20 bar moving average of volume and 1.5 and 2 times the average volume.

 

I am using MultiCharts, but the code should compile on TradeStation.

 

inputs:	PlotAvg(True), 
	AvgLength(20 ), 
	Val1(1.5),
	Val2(2),
	UpColor(Green),
	DownColor(Red),
	NoDemandColor(DarkGreen),
	NoSupplyColor(DarkRed),
	ChurnColor(magenta);	

variables: 
Vol( 0 ),
VolAvg( 0 ),
StdVal(0),
Body(0);

If BarType >= 2 then Vol = Volume else Vol = Ticks;	

VolAvg = AverageFC(Vol, AvgLength ) ; 
StdVal = StandardDev(Vol, AvgLength, 1) ;

Plot1(Vol, "Vol" );
If PlotAvg then begin
Plot2(VolAvg, "VolAvg" ) ;
Plot3(VolAvg * Val1,"SDV1");
Plot4(VolAvg * Val2,"SDV2");
end;	


if C > C[1] then begin
SetPlotColor( 1, UpColor ); 
If Vol < Lowest(Vol,2)[1] then SetPlotColor(1,NoDemandColor);
end	
else if C < C[1] then begin
SetPlotColor( 1, DownColor ) ;
If Vol < Lowest(Vol,2)[1] then SetPlotColor(1,NoSupplyColor);	
end	
else begin
if C = C[1] then SetPlotColor(1,White);
If Vol < Lowest(Vol,2)[1] then SetPlotColor(1,Yellow);	
end;	

If (Vol > Vol[1] and Vol > Vol[2]) and Range <= Lowest(Range,2)[1] and 
(High = Highest(High,5) or Low = Lowest(low,5)) then SetPlotColor(1,ChurnColor);

[monad 10]

I have both, Master the Market is somewhat glossed up once VSA changed to Tradeguider for marketing in US, Todd Kruger was the partner at that time and along with Tom was I believe largely responsible for publishing that.

Whereas "Undeclared secret........ is Tom's original writing, not a great of difference though, numerous typo errors but some illustrations are much better in keeping with Wyckoff.

As for Wyckoff's original course, I understand it is not that difficult to get, microfilm is available at nominal cost, search the Wyckoff forum for more info.

 

As for Manby, he was left out whenTodd was there, once Todd left, Gavin needed Manby to promote the Software, where the real profit is and ofcourse the ongoing bootcamps and seminars and vsa club , whereas the basic principles are relatively easy to grasp and then screentime is required to observe and assimilate, period.

[Eiger 10]

... So, they kicked out Sebastian? But he was the best they had. Nevermind...

 

FWIW: Sebastian was never kicked out and still works with TG. In fact, he did an advanced chart reading/live trading session in Chicago this past weekend at the request of some of TG's customers.

Edited May 22, 2009 by Eiger

[Eiger 10]

Eiger,

 

... I was actually refering to the bar prior to bar #1 indicated on the chart. ...

David

 

You are rigth David, that bar had significance, but it was really the subsequent bars that were telling. Many times we will see a bar like this show up in an uptrend and the market will pause or have a small reaction as it does indicate some level of supply has entered the market and the market will respond to it. But, on it's own, it isn't all that significant. It is more the combination of several price bar and volume events that all add up together to indicate a change in the market, as in the case we've been talking about. When these price bar and volume events occur at important technical areas like S/R or a trendline, it paints a more compelling picture.

 

The background really isn't defined by some number of bars or how far the lookback. It is more about support/resistance levels, areas of high volume, trend channels, and higher time frame market behavior. Take a look at the pure VSA thread. There is a pretty good discussion on the background there.

 

Hope this is helpful,

 

Eiger

[rigel 10]

FWIW: Sebastian was never kicked out and still works with TG. In fact, he did an advanced chart reading/live trading session in Chicago this past weekend at the request of some of TG's customers.

 

Folks in London know the whole history of this circus going back over 10-15yrs, their first public presentation when Gavin took over the Co. was to the Institute of Technical Analysts here in London. Infact know traders who still have the old VSA 2 and 3 versions.

There was not much success in U.K with that product.

 

Once Todd Kruger from US entered the scene, Gavin used that opportunity to launch VSA in US as Tradeguider. As Manby was associated with Tom, he tagged along for a while and then dumped as he never got along with Gavin,

 

Watch even the recent London symposium DVD.

 

Once Todd and Gavin fell out, Gavin had to bring in Manby. As you say now there have advanced chart reading and all sorts of gimmicks and as monad pointed out none of this is required if you make a concerted effort to study Tom's book and its original source ie. Wyckoff .

You are not going to get any more advanced than what is already presented in Wyckoff no matter which way it is sliced, diced and twisted with fancy charts and terms.

[Eiger 10]

Thank you for those thoughts, Rigel. Let's now please bring this back to VSA rather than rehashing old ground.

[monad 10]

Right, who gives a toss as to who left and who has joined TG.

 

What matters to them is there are enough suckers out there to be hooked in, and they are on the roll, even Manby is not going to turn away from those green notes pouring over him no matter what transpired before with Gavin.

 

Those who wish to learn price/vol via VSA/Wyckoff can do so without getting mired into all that with personal effort and screentime rather than relying on advanced class seminars etc.

 

We have a long weekend with a Bank holiday, good trading to you all.