[VSA] Volume Spread Analysis Part I

[Piggyback_Trader 10]

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?

 

Thank you! Really don't know how much value I can add here, there is some great talent already on this thread.

 

Willing to share though....

 

I have a very narrow focus. I trade the emini Russell (ER2) at the open (I have a day job that keeps me busy).

 

One trade per day, win or lose.

 

3 minute chart with a target of 1.10 point and 1 point stop. Winning trades add $100 per contract (.10 covers commission and slippage) into the account. I then add one contract for every $3,500 (current ER2 margin) incremental gain in the account. Started with a $50K account trading 10 contracts.

 

If margin requirement goes to say $4K per contract, then I'll add one lot for every $4K gain in the account and so forth. Boring, but the return on capital is very good.

 

Your point on the parallels of Wyckoff and VSA makes sense. My style is a little different, I exploit the merchandising the big money lays out on the charts and piggyback their trades, low risk and simple.

 

Thanks again!

[chappy 10]

Hi piggyback trader, i to was lucky enough to be introduced to Joel pozen and i agree with you 100%, he is a class act, a man of his word and a great educator, and like you i spent thousands of dollars and years losing money until i found Joel,

i was also lucky enough to have had a training session with Sebastian as Joel invited him in and that was a great experience.

 

Joel, Sebastian, tom and PP are master and we are lucky they are willing to pass on there knowledge. its amazing how one can see what's going to happen before it actually does, no indicator gave me this much clarity.

 

and again i am not asking anyone to sign up to Joel course, as just like piggyback trader i am posting this as a thank you to not only Joel but all the others that are willing to share the knowledge.

 

and also may be piggyback trader we could email each other as me and a few other from Joel course get together on Skype and chat about what we have learnt.

 

 

regards

 

chappy

[bertg 10]

ES Analysis for Monday 28th jan 08

 

Sebastian, or anyone that can answer,

 

I am learning quite a bit. I can say that I analyze more and more situations correctly.

 

But this had me puzzled. At the 17:51 mark in your video you said "I'd say that was a weak bar because the high is greater than the high of the previous bar and we're really looking for a bar with the high lower than the high of the previous bar." In a future video can you take a second to explain that?

 

Thanks to PP, I have read over and over that strength comes on down bars and vice-versa. Is this what you are talking about?

 

Thank you very much,

Bert

[habi 10]

ES Analysis for Monday 28th jan 08

 

Thanks Sebastian for the video. eSignal has a one day delay for daly volume bars. See here #1299

 

http://www.traderslaboratory.com/forums/28201-post1299.html

Edited January 29, 2008 by habi

[Anonymous 11]

Rough pre-Fed day so far.

 

There was a short on the left side of chart based on No Demand in the body of a WRB and Re-entry into the Value Area on the 15 min chart. Looking for a touch of the POC and possibly a touch of the other side of value.

 

However, it is not shown. I want to focus on this interesting set-up. First take a look at the chart an note that the Bottom Reversal comes on our Psych level of 1.4700. Also not that the Poc (not shown was hit).

 

The rest of the post will focus on what can be seen and makes no reference to the Pivot Profile. Well, maybe one or two .

 

 

A: Wide Spread down candle, which also happens to be a WRB, closing off its lows on increasing volume. Next bar close up , does not make a lower low and closes on its high on higher volume. This is a Bottom Reversal. If the Dark WRB had been selling then the next bar should not be up. Plus the close should be closer to the low.

 

B: Huge candle. The close is in the lower portion forming a Long Shadow. The close is up from the previous candle and the volume is lower. There was clearly some selling in this bar.

 

C: Down bar on volume less than the previous two bars, closing on its lows and with a lesser range: No Supply. There was selling on the previous bar, but this candle indicates that there is no real desire to go lower. Most of the Selling was likely absorbed therefore on the previous bar.

 

D: This is a Test. Candle trades lower into higher volume territory and closes near its high. The volume, however is higher than the previous bar. This is a sign of strength but we would like to see less volume on a Test candle. As such, we expect a muted up move or sideways action at best.

 

E: No Demand. Price moves up from the Test. The Smart Money is not yet ready to take the market up. They did not like the volume on the Test bar.

 

F: Down bar closing in it upper portion on high volume. This bar is a selling bar. It makes a lower low and not a higher high. Note it trades down below the Test bar. But we know that Strength comes in on down bars. This candle could not be selling with a close in the upper portion like that. Note also that the next bar is down.

 

G: We skip two bars ahead. We have seen a White WRB appear on high volume. The next bar was down but made a higher high and closed near the middle of its range. Then we see a Test. BINGO. We now have a Test that is both within the body of a WRB and within the shadow of a Long Shadow. Notice that the Test candle does not trade lower than the mid-point of the WRBs body.

 

H: No Demand. Narrow range bar with volume less than the previous two bars. Not a sign of weakness at this point. More a sign of immediate disinterest by the BBs (Big Boys).

 

I: Narrow range bar closing on its low on volume higher than the previous bar. This is a Squat. This is an indication of strength. We are expecting the next bar to be up. It was not. It was not down either.

 

J: At the time of the screen shot, we have a narrow range candle with the close on its high on volume less than the previous two bars. The period is still going so it could be a possible Test. This would make sense after the higher volume squat bar that did not have an immediate result.

 

 

 

It turns out to be a bullish engulfing candle..........

[monad 10]

Hi piggyback trader, i to was lucky enough to be introduced to Joel pozen and i agree with you 100%, he is a class act, a man of his word and a great educator, and like you i spent thousands of dollars and years losing money until i found Joel,

i was also lucky enough to have had a training session with Sebastian as Joel invited him in and that was a great experience.

 

Joel, Sebastian, tom and PP are master and we are lucky they are willing to pass on there knowledge. its amazing how one can see what's going to happen before it actually does, no indicator gave me this much clarity.

 

and again i am not asking anyone to sign up to Joel course, as just like piggyback trader i am posting this as a thank you to not only Joel but all the others that are willing to share the knowledge.

 

and also may be piggyback trader we could email each other as me and a few other from Joel course get together on Skype and chat about what we have learnt.

 

 

regards

 

chappy

 

Would you ,piggyback and others who have gained insights into price/vol relationships be it via Tom, Wyckoff or Joel, care to share them via some charts , trades and comments as PP has just illustrated.

[GeneTrash 10]

Hey guys,

 

I was reading about VSA this weekend and was fortunate enough to see what I think is a perfect example of it this morning. Let me know what you think.

 

The YM had just broke through it's opening 15 minute max range which usually causes a spike in volume as the herd jumps on the sell off. As soon as I saw the 8:15 bar close I knew something was up. I recalled a quote I read last night from a nice article.

 

"A properly trained trader understands instantly that when the bar closes in the middle like this, with massive volume, it signifies a transfer of ownership from the professionals to what VSA refers to as “weak holders,” traders that will soon be on the wrong side of the trade."

 

http://www.sfomag.com/homefeaturedetail.asp?ID=363568822&MonthNameID=June&YearID=2006

 

Once the pros stopped accumulating there wasn't enough buying to continue the sell off and the the price had no option but to climb.

[Nvesta81 10]

Good observation. Worth noting that it occured at yesterday's VAH (value high), it was a perfect bounce off support. I played that trade and got a good 50 points before I took an exit.

[Piggyback_Trader 10]

Would you ,piggyback and others who have gained insights into price/vol relationships be it via Tom, Wyckoff or Joel, care to share them via some charts , trades and comments as PP has just illustrated.

 

Sure, I'll post some charts, with trades on them, along with notes on entries and exits. Could not find a link on how to post charts, could someone please provide a link?

 

TIA!

[Soultrader 12]

Hi Piggyback,

 

Take a look at our manual.

[Soultrader 12]

Interesting chart here:

 

 

[mister ed 10]

James - thanks for the charts, the I R/T charts are nice and clear ... looks like trade ideas today might fizzle out from now until the FOMC announcement

[Soultrader 12]

Short setup here:

 

 

Stop @ 1364. Continued from previous chart post located here.

[Soultrader 12]

First exit and 2nd exit target level plotted:

 

 

[brownsfan019 17]

Short setup here:

 

 

Stop @ 1364. Continued from previous chart post located here.

 

Nice doji to short there James!

 

I was right with you there but for different reasons.

 

[Soultrader 12]

Thanks brownsfan. That setup worked out nicely. Second exit chart shown below. Demand volume appearing here at VAL pivot.

 

[mister ed 10]

Nicely done guys.

[jjthetrader 10]

Thanks brownsfan. That setup worked out nicely. Second exit chart shown below. Demand volume appearing here at VAL pivot.

 

Nice work James! I like how you use a multiple 'techniques' to trade with. You've got MP, Fib, VSA etc. Good work using complimentary approaches.

What software are you using?

JJ

[Soultrader 12]

Nice work James! I like how you use a multiple 'techniques' to trade with. You've got MP, Fib, VSA etc. Good work using complimentary approaches.

What software are you using?

JJ

 

Thanks JJ. The software Im using now is Investor RT. Pretty isnt it? Comes with auto pivots and mp levels so makes my life easier.

[jjthetrader 10]

Thanks JJ. The software Im using now is Investor RT. Pretty isnt it? Comes with auto pivots and mp levels so makes my life easier.

 

Ya, it's very clean and visually appealing. Looks like it would be easy to stare at all day.

Again, nice work. I appreciate the post with charts etc.

[mister ed 10]

James - thanks a lot for the video showing this trade, really makes it clear what you were doing and why

[bertg 10]

James:

Which pivot formula do you use? Classic? Do you calculate them on 24h trading? It seems your charts are not 0930-1615 ET.

 

Mr Paul:

Should I see something on your website? It's blank right now.

 

JJ:

James is using Investor R/T, as mentioned above.

 

Regards,

Bert

 

edit: LOL, post 1422 (JJ's) was the last one when I started typing...

[MrPaul 10]

James:

Which pivot formula do you use? Classic? Do you calculate them on 24h trading? It seems your charts are not 0930-1615 ET.

 

Mr Paul:

Should I see something on your website? It's blank right now.

 

JJ:

James is using Investor R/T, as mentioned above.

 

Regards,

Bert

 

edit: LOL, post 1422 (JJ's) was the last one when I started typing...

 

I was in the process of starting a really great blog, but then I totally lost interest and am still wondering what I should do with it.

 

[Soultrader 12]

James:

Which pivot formula do you use? Classic? Do you calculate them on 24h trading? It seems your charts are not 0930-1615 ET.

 

I dont use pivots that much for trade locations anymore.. I use them as reference point in case Im in a trade and wondering why supply/demand is approaching.

 

I use 24 hour charts for all my intraday charts besides the MP chart. Pivots are using the classic formula.

[Piggyback_Trader 10]

Hello All,

 

As mentioned before, very narrow focus for me, but I'll contribute for educational purposes, you all have a good thing going here.

 

I make one trade per day, win or lose. I only trade the ER2 on 3 minute chart with 1.1 point target, 1 point stop. As account grows I add one contract per $3,500 (margin on ER2) gain and conversely decrease one contract with any decline of $3.5K in equity.

 

I only take simple, easy trades. It's all about market manipulation, merchandising as Joel Pozen defines it. So my style is to look for the setup (merchandising), then a permission bar (confirmation) and then the entry.

 

Here's today's trade.

 

1. Setup - two wide range up bars (blue) with heavy volume at 7:09.

 

Now looking for confirmation of weakness to go short or strength after weakness for long.

 

2. Permission - Green test bar tested price at 7:18, slight increase in volume shows buying came in, bar closed at it's high - strength after weakness.

 

Market has given me permission to enter long, so I wait for entry.

 

3. Entry - Narrow range down bar, with very low volume at 7:21, closes at center of bar. Enter long

 

4. Get my fill and 1.1 point profit in one bar, less than two minutes actually. Trade went like 4-5 ticks against me.

 

Keep in mind, the big money sold into those two wide range bars, tested price on that green bar, and ceased selling on the narrow red bar. Once that no demand printed, I piggybacked the move, pretty straightforward. I did not know, nor does it matter to me, if the market goes higher or lower, I made my money.

 

Tradestation labels my entry and exit, "Market" order for entry and "Limit" target 1.1 higher.