[VSA] Volume Spread Analysis Part I

[TinGull 10]

 

Just something that came across my "desk" today.

[ranj 10]

TG,

 

DLTR Looks like a selling climax. But it is part of the discount variety store industry and that sector has not been doing to hot as of late.

 

Rajiv

[TinGull 10]

Ah very true. Ive got to remember to look at sector performance with stocks. Ugh, it's all so new to me

 

thanks Rajiv!

[jjthetrader 10]

That new program you have TinGull will scan and rate your stock compared to it's parent index and sector.

[TinGull 10]

Thanks JJ...I'll check that out

[BlowFish 10]

Just something that came across my "desk" today.

 

Be interesting how this plays out it certainly looks like a selling climax however it should be noted that the volume is much greater than the mid august low it is testing so could develop into a failed test. I'd be interested to hear what the VSA experts have to say (is PP around at the moment).

 

This is exactly the kind of scenario that I mentioned a dozen or more pages back when is a selling climax not a selling climax. Certainly on index futures on iintraday time scales I have seen this sort of setup develop into a stair step down with even more volume on the next leg. Perhaps you could post a chart next friday tin? Much more interesting (and tougher) at the hard right edge.

 

Cheers.

[jjthetrader 10]

This actually looks like a shakeout rather than a selling Climax which is a two bar phenomena, I wait for a second bar confirmation anyway.

Shake out the weak holders. It's a nice sign of strength. I agree that testing will probably need to occur for this bad boy to rise.

[jjthetrader 10]

Here's just a quick example of CLimatic Action in which the down move actually closes on it's low with the following bar up where as a shakeout closes near the highs.

[bertg 10]

Hi, folks,

 

I pm-ed the below to a member that is active in this thread, but I should have just posted here.

 

<begin pm paraphrase>I am new to this forum. I have been reading the VSA thread yesterday and today and I am almost half way through. I am having somewhat of a hard time, because some of the terms used are well known to everybody, but not me.

 

I am not ready to pay $2000 for tradeguider software, but VSA got me really intrigued.

 

Is there a book/ebook that I can buy or other (free) resources?

 

I am yet to trade real money. I traded the NQ ES minis in simulator with live feeds and using the good ol' MACD, STO, RSI... I had never even heard of VSA, but I knew I wasn't ready for real money as I knew the sharks prey on ignoramuses like me. I knew there's got to be a way to "know" what the big dogs are doing and how they are trying to steer the markets. I am so excited about VSA and maybe other tools that will help me at least have an idea of what the pros are doing.

<end pm paraphrase>

There are some in this thread that could write a ebook with charts and all. I'd obviously be willing to pay for that.

 

In any case, I am grateful to the posters in this thread, as it does contain a lot of great info.

 

Kind regards,

Bert

[TinGull 10]

Thanks for the kind words, Bert! I think this is one of the best resources out there in a public forum for VSA...so as for any other resources...I think you have a seriously great start right here. If you've got questions, ask! We'll do our best to help you in your understanding. There are a LOT of fabulously smart people here.

[RAVIN 10]

Hi, folks,

 

I pm-ed the below to a member that is active in this thread, but I should have just posted here.

 

<begin pm paraphrase>I am new to this forum. I have been reading the VSA thread yesterday and today and I am almost half way through. I am having somewhat of a hard time, because some of the terms used are well known to everybody, but not me.

 

I am not ready to pay $2000 for tradeguider software, but VSA got me really intrigued.

 

Is there a book/ebook that I can buy or other (free) resources?

 

I am yet to trade real money. I traded the NQ ES minis in simulator with live feeds and using the good ol' MACD, STO, RSI... I had never even heard of VSA, but I knew I wasn't ready for real money as I knew the sharks prey on ignoramuses like me. I knew there's got to be a way to "know" what the big dogs are doing and how they are trying to steer the markets. I am so excited about VSA and maybe other tools that will help me at least have an idea of what the pros are doing.

<end pm paraphrase>

There are some in this thread that could write a ebook with charts and all. I'd obviously be willing to pay for that.

 

In any case, I am grateful to the posters in this thread, as it does contain a lot of great info.

 

Kind regards,

Bert

 

Refer to POST 561, you can get a free download of e-book, the Bootcamp CD is highly recommended as there are many hours of seminar with comments by Tom Williams and will really help in absorbing the VSA principles which at first appear to be counterintuitive especially when we have gotten accustomed to the traditional price based maths. indicators (RSI, CCI etc)

 

However the software is not at all necessary to work with the methodology in realtime trading.

 

Hope this helps

[jjthetrader 10]

tradethetruth.com has a copy of the ebook.

Ravin's right, you don't need the software, it's just a great visual learning aid and once you've had it for a while will no longer be needed. You can just look at a bar and see what's happening.

There's way more to the software than VSA as well that you may not want/need.

If you use TradeStation I'd recommend Soul Traders Pivots and watch the VSA action around these points for setups.

[jjthetrader 10]

I'd like to see charts of trades that people have made, successful and not, based on VSA with an explanation of their thinking when they got into the trade and out.

Anyone interested in sharing?

[TinGull 10]

 

Here's an exit that was VSA defined.

[ranj 10]

TG,

 

Looks like a nice short setup coming here . Maybe a narrow spread no demand bar within the body of the WRB down bar. I also think the wide spread bar from friday is called Lack of buying pressure.

[TinGull 10]

Absolutely...and so far thats what is happening today.

[bertg 10]

Ravin, TinGull, jj,

 

Thank you! I downloaded the ebook. Wow! 188 pages! I am so thrilled. Soon I will be able to better understand your charts, notes, etc. in this thread.

 

Regards,

Bert

 

edit: btw, the site that worked was tradefortruth. Anyone know if Bill Wermine's (tradethetruth website guy) strategies are based on VSA?

[jjthetrader 10]

After a nice upbar like that I think it was a good idea taking your position off the table. Nice. That was a decent move for a couple days.

[jjthetrader 10]

//http://www.tradethetruth.com/pics/mtmv3.pdf

 

If that helps anybody.

[Blu-Ray 10]

Not sure if this is the right place to ask this, but I wanted to ask for your thoughts regarding some action that has been happening for the last month.

 

On the chart attached, since 3rd October, there has been more sellers than buyers, however today has seen a test of the recent high, but it finished as a down candle with more buyers than sellers and much lower volume.

 

I'm unsure what to make of this, my intitial thoughts are that it's a bull trap and we're headed for a move south, but I'm very keen to hear your views on it please.

 

 

Cheers

 

Blu-Ray

[MC 10]

Not sure if this is the right place to ask this, but I wanted to ask for your thoughts regarding some action that has been happening for the last month.

 

On the chart attached, since 3rd October, there has been more sellers than buyers, however today has seen a test of the recent high, but it finished as a down candle with more buyers than sellers and much lower volume.

 

I'm unsure what to make of this, my intitial thoughts are that it's a bull trap and we're headed for a move south, but I'm very keen to hear your views on it please.

 

 

Cheers

 

Blu-Ray

 

My 2 cents is a tick at bid isn't always a seller and vice versa on hits at ask.

So the ticks at bid causing the red bars on tick delta could very well be buyers.

 

You probably knew that already though. I am curious to hear a more seasoned VSA'ers side of this chart though. That sure was a low volume test of a monthly high.

[ranj 10]

Blu-Ray,

The last bar is an up bar on low volume with a narrow spread. Typically that would be a no demand bar. VSA normally does not use the open, but I think the open does help.

 

In this situation the bar gapped up and then sold off during the day. So you have low vol (little effort to do down), no result (narrow spread and close near the prior close).

Second there are no signs of distribution on the chart. High Vol Up Closing off the highs, or High vol, WS up bare with the next bar down.

Third the high volume bar from 9/18 (very important) was tested twice (9/25 and 10/22) and stood up with no problem.

(Look at charts that are weak and look at the price action around 9/18 to the 9/19)

Lastly today was a low volume day all around, (or at least for all the charts that I looked at), so hard to take away too much from this one bar.

 

Just my two cents

Rajiv

[bigboy 10]

Great Thread. You're onto it.

bigboy

[mister ed 10]

Reply to Blu-Ray's post 595 re the month of more volume at bid than ask.

 

My first thoughts when I looked at the period in question is to check the integrity of the data. There is 18 consecutive days of red over green, before beginning any analysis that would set off alarm bells in my head.

 

If the data is correct then on with the analysis...

[jjthetrader 10]

To compound your no demand bar you've got volume dropping off for the last 4 bars on a rally.

FOMC announcement on Wed may be keeping a lot of traders from taking positions at the moment. It's hard to say. But in most North American index's yesterday was a no demand up bar. The following bars will tell us wether this is temporary or the start of Wave C.