[VSA] Volume Spread Analysis Part I

[dkbradbury 10]

Thank you Sebastan. Appreciate your making VSA clearer for us.

[CandleWhisperer 10]

 

For 'No demand' to be correct, you have to have weakness in the background, if you get a sign of strength followed by no demand, then it means that the smart money are not interested in higher prices at that time, and you should be careful if going in, the other thing I find is that most of you seem to view the VSA indicators in isolation, instead of putting them all together to create a complete picture, you have to view the indicators in the same way as a musician, ie read the script and put it all together as the time unfolds.

 

Hope this post was helpful.

 

Regards S

 

"Basically you will be watching out for a low volume up-bar, on a narrow spread." Tom Williams Master The Markets, pg. 32.

 

At TradeGuider Systems, we define a "No demand" situation as a narrow spread bar, on low volume, that closes in the middle or low." Tom Williams Master The Markets, pg.153.

 

Simply put, you are half wrong.

 

PP defined No demand bars as they are indeed defined. What he did not mention was that all no demand bars are not created equally. They show up in different intensities and in more effective locations, i.e. with background weakness. Therefore, every up bar on volume less than the previous two bars is not a reason to short or expect lower prices. It is still a sign of immediate lack of professional interest. And thus acurrately defined as "No demand".

[CandleWhisperer 10]

I like DB. He is a welcome addition to the forum as a whole. Truth is, PP mentioned him in this thread long before anybody else did in the other thread. However, the new thread seems to be getting off topic. So this is a bump to raise the original VSA thread up to the top so actual VSA teaching and learning can go on.

 

Also, If you have a problem with Joel, grow a pair and tell him. Don't use this thread to not so subtly mask your disdain or inability to grasp what he tried to impart.

[Tasuki 10]

Also, If you have a problem with Joel, grow a pair and tell him. Don't use this thread to not so subtly mask your disdain or inability to grasp what he tried to impart.

 

I will thank you to please keep the conversation civil. If you cannot do that, then please post elsewhere.

[CandleWhisperer 10]

Here's a chart provided by DB.

 

From a VSA perspective, we see a bar that represents climatic action. Or stopping volume. It makes a lower low and closes near its high on ultra high volume after a down trend. Like the name implies, this stops the down move. Price then move up. Suddenly we see an up bar on ultra high volume that closes in the middle of its range. Note that this is the highest volume bar on the chart. If there were just buying on this bar on all that volume, then price should not close in the middle of the range.

 

Price moves down a bit and then we get a test. Note how little volume there is on this candle. If there is no supply, which is what they are testing for, then price is free to go up. It does.

[DbPhoenix 42]

If there were just buying on this bar on all that volume, then price should not close in the middle of the range.

 

An important observation, and of course from a Wyckoff perspective as well.

 

However, this particular bar did not play a part in the setup. But even if it had, I likely would have dismissed it because it is literally a tick bar. Therefore the data is suspect, partly because of the brevity of it but mostly because of what you observed and concluded.

[Soultrader 12]

Hello traders,

 

Please refer to Volume Spread Analysis Part II thread for further posts. I have decided to close this thread.

[Soultrader 12]

Hi,

 

I have reopened this thread and made it a sticky. We have a Part II thread but hopefully folks with any questions on this particular thread can interact here as well. Thanks!

[pmxgs0 10]

Hello Sebastian,

 

thanks for your posts.

I'm starting to learn new things about price-volume analysis.

Could you please give any advice on what/where can I find more information on the subject?

For example, what books/courses do you consider being the most important to you as a trader and where you learned the most.

 

thanks in advance,

 

Regards

P

[gg80108 10]

Anyone tried the 30 days and got a refund.. Seems like starting the time for the refund the day you order and having them receive the sw back withing the 30 days,, just isnt 30 day trial but something else..

[CandleWhisperer 10]

Anyone tried the 30 days and got a refund.. Seems like starting the time for the refund the day you order and having them receive the sw back withing the 30 days,, just isnt 30 day trial but something else..

 

First, this was not the best place for this post.

 

Second, MOST companies (trading related or not) that offer 30 day money back guarantees, require the product to be sent back (received by the company) within the 30 day period. So the customer does not actually get to try the product for 30 days.

 

To be sure, there are many things to dislike about TG. That they employ the same "30 day" scam that Most companies do can't really be one of them. If they make you jump thru additional hoops, that would be a different story.

[gg80108 10]

So where was the best place to post this??? The other posts say come here and now you say go to there,, buy no sell no !!

 

Probably doesn't matter much if you take back underwear you didn't like for 30 days,, since you had a full 30 days to try it out. When there is only around 20 trading days a month, right away thats 1/3 of the time gone, take another 5 days for shipping back and forth,, now you are down to a 15 day trial and not 30 days of usable time. So thats only $200 a day bet you making,, hey doesn't sound so bad like that! Club 3000.

 

I didn't use the "S" word.. but there are some other hoops they make you jump through.

[CandleWhisperer 10]

This is VSA thread part 1, the active thread is part 2.

 

Moreover, the general consensus among both threads is that TG sucks. Simply, you are preaching to the choir.

[giorgio411 10]

I think volume spread analysis has to be use with other elements of the market to have winning trades, some of those elements i have noticed include but am sure are not limited to the following, product type (equities, commodities,currency, bonds etc), days high, week high, month highs and lows, your brokers mark-ups especially in the retail forex market which i don't trade cos it's not very liquid. Market liquidity is also very important considering the fact that in commodities for example buyers can only offer a price that they are sure they can sell it for to manufacturers that was clearly displayed in the crude oil markets this year, at $4 or $147 a barrels demand dried up and they had no choice but to sell at a lower price. If you look at the open interest in october crude contract was 220,000 a month before contract expiration on expiration its was 23,000 contracts that tells you how much speculative trade exist on the up side or down side. When trading equities volume spread analysis has to be used with the call and put options contract volume and strike prices of those contracts. I also think since our volume (your trade volume) especially in the commodity market is part of the market it distorts your analysis for those trading on a short time frame. I would be glad if anyone corrects me on some my market opinions.

[jjthetrader 10]

sweet....I'm getting the hang of it. hehe. The doji at R1, too...closing in the lower portion of the spread with real heavy volume (comparatively)...showing we've got a direction change coming up. That turned out to be a nice trade of about 40 points.

 

Please post a chart if you want to discuss a trade. We don't even know what market you're trading.

[dip 10]

Hello MP Trader,

 

You have done a great work.

 

Are your indicators available for other traders?

 

Dip

[metamp 10]

Please see attached video

 

regards Sebastian

 

Why is that chart upside down ?

It's a little confusing ..but thx for the video

[metamp 10]

I'm trying understand this price action but it's a choppy one

can someone help to interpret this

 

thx

[humdesggg 10]

Metamp

 

the best way to read forex charts is on ninjatrader. u can do this by going to http://www.ampforex.com. sign up for a NT forex demo account, and u can have your charts using gain capital's forex feed. the chart u showed is completely spagetti and unreadable using any TA or VSA. it shouys stay out@!!!!

[januszon 10]

I've been using Volume sticks on my Globex trading (SP500, YMM) and , after some eperience it really can tell me lot about marked intenion,sentiment, player, but you have watch them same as candle invidualy and in group(for example they often clealy tell you when minitrend is abut to end, is eny enthusiasm left in market.

I recenly came across VSA, read a book, watched several prezentation, and must say that many times their conlusions are correct ( I recognized the action, now I know it is.. kind of invening a wheel thing..)...and I did not use their pricely courses or software ( I'm sure they a prefectly ok.), but often VSA pattern is there, but results not as predicted.

( on courses they rarly show you thouse )

.I would rather, if you think that Volume is imnportant (if you can meassured it; I hear in Forex is not possible ), treat these Volume sticks as candles you study every day both togher to see relation, and not only invidualy but also bigger picture.

Anyway, it's my penny, whatever is it worth.

IF you need more details, chart example - let me know.

 

Happy ticking verybody!

 

Januszom

[tawe trader 10]

Januszom,

 

Thanks for posting, maybe you could re-post on the latest VSA thread where there are more followers.

 

http://www.traderslaboratory.com/forums/151/vsa-volume-spread-analysis-part-ii-3428-218.html#post60610

 

Also, I would like to see a chart of your volume sticks, as they say:- a picture paints a thousands words.

 

Regards

Tawe

[januszon 10]

thank you. I did.

 

Januszon

[bbj_anchor 10]

I think volume spread analysis has to be use with other elements of the market to have winning trades, some of those elements i have noticed include but am sure are not limited to the following, product type (equities, commodities,currency, bonds etc), days high, week high, month highs and lows, your brokers mark-ups especially in the retail forex market which i don't trade cos it's not very liquid. Market liquidity is also very important considering the fact that in commodities for example buyers can only offer a price that they are sure they can sell it for to manufacturers that was clearly displayed in the crude oil markets this year, at $4 or $147 a barrels demand dried up and they had no choice but to sell at a lower price. If you look at the open interest in october crude contract was 220,000 a month before contract expiration on expiration its was 23,000 contracts that tells you how much speculative trade exist on the up side or down side. When trading equities volume spread analysis has to be used with the call and put options contract volume and strike prices of those contracts. I also think since our volume (your trade volume) especially in the commodity market is part of the market it distorts your analysis for those trading on a short time frame. I would be glad if anyone corrects me on some my market opinions.

 

Can you explain more of how to use VSA for equity options? I am interested in options and think VSA might be of use.

 

Thanks, BBJ

[godfrey 10]

Thank you for starting this thread. I hope it will continue to grow and be a real source of learning and sharing of ideas.

 

Volume Spread Analysis is a very valuable tool in my opinion.

 

Just some quick observations:

 

1. We have a wide spread candle with volume that is higher than any volume bar that can be seen on the chart. This candle closes lower than the previous candle, but in the upper portion of its range. Clearly there is demand (buying) going on in this bar.

 

VSA does not care about the open, so the fact that the candle is red means little to use. (personally I do like to see the open on some candles, but technically we do not use them.)

 

The more you use VSA, the more you will see Professional activity around the key numbers (aka Floor pivots). Time and time again, the Smart Money shows itself around these levels.

 

2. The very next candle is narrow, closes down from the previous bar, closes near its low and has volume less than the previous two bars. THIS IS NO SUPPLY.

 

immediately after the Smart Money enters in the form of demand (buying), there is a No Supply bar. That means all the excess supply was soaked up on that wide range previous bar. Note surprisingly, the previous bar has a long tail where supply was swamped by demand (buyers swamping sellers).

 

3. While not VSA, the No Supply bar shows a divergence with your Delta tick tool. Very interesting. VSA gets its roots from Wyckoff more than 100 years ago. Way before any tick delta tool could be made. Not saying it's a bad tool, saying it is great how this new tool hits the nail on the head in this situation.

 

the 1520 bar looks like another No supply bar and again there is a green dot on the bar.

 

4. Price comes back down to the area of the pivot. This bar is wide spread with volume less than the previous two bars and closes in the middle of its range. Again, No Supply. Bars that close in the middle of their range should always draw your attention.

 

Look one bar back. This bar has high volume-relative to the volume bars before it. Now if this bar, which closes down, was truly weakness then why does the next bar close equal to it and not down? Because there was some buying going on in the bar.

 

Note that this last No Supply bar actually has less volume than the first one in this same area. At this point, price is definitely poised to rise...........

 

P.S. LOL I just realized that TTM (or H.A.) is on the candles, so I could be wrong about the close of these candles

 

 

 

what chart are you refering to?

[qant2007 10]

Volume Spread Analysis for MT4

enyone can help