[VSA] Volume Spread Analysis Part I

[volume 10]

//http://www.metastock.com

 

thanking you jj

[JDNeeman 10]

Hello, Hope you all be ok, i just wanted to ask Sebastian if he can explain the different meanings of the bars a long with the volume for example: low bar closing on the lows with high volume will mean: streght or weakness no supply or no demmand??....

 

Thank you Sebastian...

[JDNeeman 10]

Here is an example....a graphic

[Seb Manby 11]

Hello, Hope you all be ok, i just wanted to ask Sebastian if he can explain the different meanings of the bars along with the volume for example: low bar closing on the lows with high volume will mean: strength or weakness no supply or no demand??....

 

Thank you Sebastian...

 

low bar closing on the lows with high volume will mean:

I assume you mean a down bar, if it is a down bar with a wide spread closing on the lows on high volume, then this is weakness unless the next bar is up, if it has a narrow spread and very low volume, then yes strength has appeared, but it should be in a rising market with a shakeout in the background, or some sort of strength.

Regards S

 

 

 

Regards

[Seb Manby 11]

Please forgive me everyone if I fail to reply to your questions quickly, I have so little time spare, I try to answer when I have time. If others can help out if they know the answer, then I would be grateful.

 

Regards S

[Seb Manby 11]

I don't suppose you'd share your code?

 

Sorry, I cannot as they are VSA indicators as Tom wanted them in TradeGuider, I would be in breach of copyright, and Tom says that he does not object to me having them on my chart as long as I don't give them away.

Regards S

[Seb Manby 11]

VSA question for PP/Sebastian:

 

Under what circumstances can a 1. Wide Ranging Bar with Low vol and

2. WRB with High Volume (above average but not

excessive

be considered bullish???

 

other VSA traders, please feel free to comment, am sure all inputs will shed more light

 

Must be on a down bar on high volume, with next bar up. Look for testing in a rising market or higher prices. If bar closes off the low, then demand swamping supply(bullish)

 

Regards S

[Seb Manby 11]

Sebastian,

 

The chart looks like a 20-min chart to me.

You are correct, 20m bar, I think I switched quickly and forgot to restore 15m chart, but results are the same

 

In any case, how far back do you go to analyze the background and would you say there was weakness in the background?

There was an old top in the background, and the previous bar was weak too

 

I assume by confirmation you mean this: the 1620 red no demand bar got painted red when the 1640 bar closed and it was a down bar.

Correct

 

Your trade was so simple and so profitable. Congratulations to you.

Thank you, I try to keep it simple with no clutter on my charts, else you cannot see what is happening

 

Thanks for all your contributions,

Bert

 

You are most welcome

 

P.S. The chart attached is Sebastian's from several posts ago.

 

Regards Sebastian

[dick_dastardly 10]

Dick Dastardly ... love it! Muttley must be around somewhere too.

 

I am no computer expert but I think there are a couple of things to try to get the presentation working properly for you. Check you have a recent version of Windows Media Player - at least version 9. If it still doesn't work you may need to download some codecs. I tried a Google search for "wmv audio no video" and found a few places to get up to date codecs so give that a try.

 

Let us know how you go.

 

Cheers for that mister ed

 

I've got it sorted now.

 

dd

[bertg 10]

Hi,

 

May I ask a question or two on the attached DJ30 chart?

 

Yesterday, on the 22nd, I saw what I thought was a failed test (volume was highest in the last 6 months or so), so I thought supply was still present. At the same time the hammer was bullish....... The bar is a long shadow down bar which closed off the high. ?So there was buying in that bar proved by today's bar?

 

It's great reading my own paragraph above. I am not making any sense and I can't make up my mind if it's a "weak" or "strong" bar, as Sebastian would call a bar. I'm wondering if I even know what a test is... One would think I should, what with PP's and others' scores of examples...

 

Today's candle (the 23rd) was an up bar, closed just off the high with huge volume. But how would you see it if the 22nd were the last bar on the chart?

 

Thank you,

Bert

[ranj 10]

Hi,

 

May I ask a question or two on the attached DJ30 chart?

 

Yesterday, on the 22nd, I saw what I thought was a failed test (volume was highest in the last 6 months or so), so I thought supply was still present. At the same time the hammer was bullish....... The bar is a long shadow down bar which closed off the high. ?So there was buying in that bar proved by today's bar?

 

It's great reading my own paragraph above. I am not making any sense and I can't make up my mind if it's a "weak" or "strong" bar, as Sebastian would call a bar. I'm wondering if I even know what a test is... One would think I should, what with PP's and others' scores of examples...

 

Today's candle (the 23rd) was an up bar, closed just off the high with huge volume. But how would you see it if the 22nd were the last bar on the chart?

 

Thank you,

Bert

 

 

Hey Bert,

Take a look at DIA or SPY, The market really opened on the low and not near the highs on 1/22

Anyway that should not change things much since VSA does not look at the open.

You have a high volume down bar closing on the Highs. That is strength. Look to enter long on the low vol test of the area the 1/22 bar.

Didn't happen on the 23rd, which was a high vol up bar closing on the highs. We have to wait for the 24th bar to paint to determine if this is strength or weakness. I am personally looking for a no demand like bar within the zone of 125 to 127.5 on the DIA. But who knows what the market will bring.

[mister ed 10]

Hi,

But how would you see it if the 22nd were the last bar on the chart?

 

Thank you,

Bert

 

My thoughts on the 22nd as the last bar (please keep laughter down to a small guffaw)...

 

And, of course, this is all with the benefit of hindsight.

 

There has been a sustained move down since just before the 14th, on huge volume, with the highest volume of all on the 22nd (ignoring the 23rd here). Highest volume after such a big move down suggests capitulation to me.

 

There is a long shadow/tail, the price closed towards its highs (well, at least in the upper quarter). Big effort to fall, result - close is strong - not bearish. There must have been good buying on this bar.

 

My rudimentary knowledge of Wyckoff analysis has got to tell me this is NOT a bearish bar and I would be looking for buy opportunities on the following bars. My inner-candlestick guy is screaming at me that it's a fantastic looking hammer too - and taking all that background into account is making it even stronger (try as I might to smother him with Wyckoff I cannot shut the inner-candlestick guy up).

[mister ed 10]

Ranj beats me to it...

[ranj 10]

Ranj beats me to it...

 

Sorry, Working late, had some down time :missy:

[Anonymous 11]

Hi,

 

May I ask a question or two on the attached DJ30 chart?

 

Yesterday, on the 22nd, I saw what I thought was a failed test (volume was highest in the last 6 months or so), so I thought supply was still present. At the same time the hammer was bullish....... The bar is a long shadow down bar which closed off the high. ?So there was buying in that bar proved by today's bar?

 

It's great reading my own paragraph above. I am not making any sense and I can't make up my mind if it's a "weak" or "strong" bar, as Sebastian would call a bar. I'm wondering if I even know what a test is... One would think I should, what with PP's and others' scores of examples...

 

Today's candle (the 23rd) was an up bar, closed just off the high with huge volume. But how would you see it if the 22nd were the last bar on the chart?

 

Thank you,

Bert

 

First off, High volume on down bars usually means selling. Unless the volume is excessive. If it is ultra high and a close on or near the low, one needs to look at the next bar. If that next bar is up, then the down bar must of contained buying. Here we do see many Ultra High down bars (prior to the 22) but they have down bars following them. This means the bars are weak.

 

Also there are no Test bars. For one thing the volume during this period is way to high. There could be a failed Test with this high volume, but in this case there is not.

 

The "hammer" on the 22 clearly shows strength (demand entering). It is a down bar that closes in its upper portion on Ultra High Volume. If the volume on that candle represented selling, the close would have to be lower. The candle on the 23 is a STRONG BAR. it closes near its high, does not make a lower low, but makes a higher high (buying bar). What you would be looking for is either a down bar on low volume that trades down into the Long Shadow of the Hammer candle and closes on or near is highs: This would be a test. If the Smart Money is still not yet interested in higher prices, we should see a narrow range up candle on low volume (volume less than the previous two).

 

Remember: markets do not like high volume on up bars. So, while the last candle is strong, there could be no follow through. We may see price move sideways. But at some point should trade back down into the area of the Long Shadow for a test.

[bertg 10]

ranj, Mister ED and PP,

 

Thank you all for your comments. I am learning.

 

Mister Ed, as far as "please keep laughter down to a small guffaw," I am the one that may need to request that.

 

Good trading day to all.

[Piggyback_Trader 10]

Hello All,

 

One of the best trading treads on the net, well done, keep up the great work.

 

First post, want to share my sucess story with you...I've posted this at several sites, just sharing here.

 

My Sucess Story

 

After spending thousands of dollars and countless hours on trading books, systems, indicators, psychological seminars, and the like, I was exasperated. I accepted that for me it was impossible to consistently trade profitably. Just could not do it. I became one of the 90-95% of traders that deposited money into trading accounts over and over without ever withdrawing a single dollar.

 

Pretty much went through the standard trading experience. Well funded, began with stocks, multiple time frames, daily charts, switched to commodities and stock index futures, options, and then of course back to stocks, you get the picture.

I have now discovered that what stood between me and making money in the market was me. I could not trust myself to trust the system because whatever system I traded was hit and miss - more miss than hit. Then of course, I jumped to another system only to see the prior system work while I lost money on the latest system, it was a cycle of terror.

 

Last year, through remarkable faith, I met Joel Pozen who introduced me to the concept that markets are in fact manipulated. "Market Merchandizing" as Joel labels it, is how the specialist, insiders, professional - call them what you'd like - make the big money. They move markets so that they can buy low and sell high, every day, in every market, in all time frames.

 

As you all know, markets are not as we are led to believe. What I learned from Joel is that the big money traders load up on inventory (buy) when the heard sells and unload inventory (sell) at higher prices when the masses buy. Joel trained me on how to piggyback these moves by understanding volume and price bars, and how price leads volume.

 

Now I have fun trading while I extract money from the market. I trust myself to trust my system because I’ve learned how to exploit the tell tale signs market manipulators leave on the charts. Once you learn what to look for it’s really very simple and works because that is how the market works.

 

I'm not selling anything; I have no vested interest in getting you to sign up for Joel’s course. I posted this success story as my way of giving back to Joel, and for those of you who have staked your money, and in some cases your financial future, on marking money in the markets.

 

Good luck.

Edited January 25, 2008 by MrPaul

[Anonymous 11]

Just the Chart right now, analysis may follow but the chart is pretty self explanatory.

 

[monad 10]

PP,

Very Informative chart with MP value areas,

 

Interestingly, as I observed previously either DRH or DRL will inevitably have a value equal to the previous days midrange i.e (H-L)/2 , here DRL is around 1.4684 simply because the pdiff is the difference between POC and the midrange value, which is then either subtracted or added to it.

 

What does RR stand for????

 

What happens in a situation where there is congestion for a few hours and then a strong trend for the rest of the day. The traditional MP construction would then have more TPO in the congestion zone (POC) where that based on (H+L+2*C)/4 would be quite different, under these circumstances do the value areas differ widely in your experience or are they still relevant to trade with???

[Anonymous 11]

.............What does RR stand for????

 

RR: Reaction Range.

 

What happens in a situation where there is congestion for a few hours and then a strong trend for the rest of the day. The traditional MP construction would then have more TPO in the congestion zone (POC) where that based on (H+L+2*C)/4 would be quite different, under these circumstances do the value areas differ widely in your experience or are they still relevant to trade with???

 

Those are two different questions. It is possible, even likely, that they differ in a case like this. Are they still relevant to trade with? Yes. Actually, this gets down to the crux of the matter: even if the PivotProfile does not match market profile, an entire way of looking at the market is still created and useful. The PivotProfile still gives us various ranges of where price traded and where support/resistance may be found. More over, it gives me a way to distinguish one "No Demand", for example, over another.

 

The previous example is a case in point. The very astute among you may notice that the No Demand signaling the short trade on the 5 min does not perfect fit into the body of the WRB. So why take the trade? Well, besides the weakness in the background, we have price closing within the Deviation Range (Value Area) for two 15 minute bars. This sets up a "value area trade" along with the trade back to the POC. These are market profile concepts. We can co-opt the concepts. In other words, even if the value area is not the same and the Poc is not the same as actual Market Profile, we still have created a contextual backdrop through which to view the market and filter trades.

[mister ed 10]

One of the best trading treads on the net, well done, keep up the great work.

 

Thanks Piggyback (good name for a Wyckoff trader!); the thread has been held together by the efforts of PivotProfiler, and his outstanding efforts have been complemented by plenty of other notable contributors - I am sure they all appreciate your kind words. Your mentor's name, Joel, has been mentioned a few times in this thread and always in a good way.

 

I appreciate you sharing your personal story and while no two traders will share the same story I think the 'lightbulb effect' of being introduced to, and then gaining an understanding of, Wyckoff analysis (of which VSA is a part) is a common link amongst those of us who participate how we can in this thread.

 

Maybe you could stick around?

[Anonymous 11]

monad, see my post in the Market Profile section for more info on Pivot Profile. I am going to be posting stuff there........Mentally using MP thread.

[bh_trade 10]

Through remarkable faith huh - lol

 

You forgot to list your website and price for your holy grail Mr. vendor.

 

 

Hello All,

 

One of the best trading treads on the net, well done, keep up the great work.

 

First post, want to share my sucess story with you...I've posted this at several sites, just sharing here.

 

My Sucess Story

 

After spending thousands of dollars and countless hours on trading books, systems, indicators, psychological seminars, and the like, I was exasperated. I accepted that for me it was impossible to consistently trade profitably. Just could not do it. I became one of the 90-95% of traders that deposited money into trading accounts over and over without ever withdrawing a single dollar.

 

Pretty much went through the standard trading experience. Well funded, began with stocks, multiple time frames, daily charts, switched to commodities and stock index futures, options, and then of course back to stocks, you get the picture.

I have now discovered that what stood between me and making money in the market was me. I could not trust myself to trust the system because whatever system I traded was hit and miss - more miss than hit. Then of course, I jumped to another system only to see the prior system work while I lost money on the latest system, it was a cycle of terror.

 

Last year, through remarkable faith, I met Joel Pozen who introduced me to the concept that markets are in fact manipulated. "Market Merchandizing" as Joel labels it, is how the specialist, insiders, professional - call them what you'd like - make the big money. They move markets so that they can buy low and sell high, every day, in every market, in all time frames.

 

As you all know, markets are not as we are led to believe. What I learned from Joel is that the big money traders load up on inventory (buy) when the heard sells and unload inventory (sell) at higher prices when the masses buy. Joel trained me on how to piggyback these moves by understanding volume and price bars, and how price leads volume.

 

Now I have fun trading while I extract money from the market. I trust myself to trust my system because I’ve learned how to exploit the tell tale signs market manipulators leave on the charts. Once you learn what to look for it’s really very simple and works because that is how the market works.

 

I'm not selling anything; I have no vested interest in getting you to sign up for Joel’s course. I posted this success story as my way of giving back to Joel, and for those of you who have staked your money, and in some cases your financial future, on marking money in the markets.

 

Good luck.

[MrPaul 10]

Through remarkable faith huh - lol

 

You forgot to list your website and price for your holy grail Mr. vendor.

 

I edited the post and deleted the web address

[monad 10]

Folks,

check out the link below, pure wyckoff by Dbphoenix, infact one of the charts illustrates a couple of principles explained in Vadym Graifer's book, which was recommended by Ravin and also brought Dbphoenix to my attention:thumbs up:, I have to thank him for that, good on you mate:thumbs up:

 

Here is the link:

 

http://www.trade2win.com/boards/general-trading-chat/28444-most-indicators-useless-why-does-anyone-bother-them-11.html