Pure VSA

[2trade]

Originally Posted by humdesggg I have been out of action on VSA metholody and would like to pick up the pieces. here is my interpretation of the VSA setups on the Emini S&p. of course newer traders are advised to read the volume spread action on the 5minute against the background of the 15,60 charts, which gives more clues on resistance and support levels 1. We are in uptrend, marked by closes in the upper range. the prior bar has high volume, but the current bar has decreased volume and price close on the low. this is bearish and a setup for a short, subject to following bars closing below the low of this bar. 2. An up bar on reduced or average volume suggests no active buying interest, and a sign of no demand. the close below the low of this bar on the following bar is proof of further weakness. 3. Siminlarly, a no demand bar. 4. a Contraction of bars, seen in the spread narrowing, always foretells something coming. a close on the low shows further weakness. 5. Huge volume flowed in on previous bar. If there is active selling, we expect follow thru. However, this bar shows reduce volume and a close in the middle. Bears, altough showing desperation, lack power to pull down prices. A sign to get out of shorts. 6. After a contraction of bars for longer period, this bar fails to take out the low of the previous bar 2 bars ago. Volume interested also dries up. This is a test of the lows at no 5. 7. Great volume is needed to push above the highs at the left side. Cautious, conservative traders would wait for a test to get a safe entry, which comes 2 bars after this. Trendline traders would be happy to jump the soup train here, as clearly a downward trendline is broken. 8. The uptrend is in doubled, with a close on the low on volume higher than average. 9. a successful to see if there are sellers lurking somewhere. The bears fail to come and price can resume its upward trek. 10. Weakness comes in on up bars. this is a no demand bar. 11. a little contraction is always helpful to learn which way price is going. here a close on the low open floodgates to the south. 12. a Shakeout,a bullish sign of a trend reversal or uptrend resuming.

Hello Humdesggg

Your bar marked number 1 on your ensign chart has the point of supply arriving with the close down on the lows the 2 previous upbars also show supply. Three bars past your marked on chart point 1 can be considered the best risk entry point the ND no demand as there has been more supply coming in after the high this is confirmed as a place to remain short on the following bar the mini UT or hidden upthrust as it probes above for buyers and closes on its lows. Using price breakdown trigger points is an approach that can get you in on the wrong conditions ie you may enter not knowing what the bar ends up being and with your short trade you dont want to be taking up bars on average relative range on increasing volume for your short(potential strength coming in) even though it activated your short trigger point by passing below your mentioned "below the closes". It would be a better oppertunity to enter short on a no demand or upthrust or at least something resembling these in appearance and volume that way there is a better chance of not getting caught on the wrong side during entry.

Hope this helps a little 2trade

[bbj_anchor]

I'm warning all to not give CC# to TradeGuider or VSA club as they will never stop charging you. And refunds dont come... lots of talk but then I dont know why that happens is retort. I had to get visa involved and 3 months charges still havent been returned. Just FYI

[chrisp]

First thanks very much to Eiger for his wonderful thread. Second, as a beginner I thought it might be useful to say a little about certain VSA notions. It's not always easy to follow these because, depending on context (& Eiger points this out constantly), you can have what seem to be contradictory propositions. Gavin Homes refers to this, with some amusement, in one of the TG videos, & asks Tom Williams how can it be that weakness appears on high volume up bars AND low volume up bars.

So here goes, old hands are welcome to correct me & I hope this will help others who are still not sure.

I'll talk here about volume on down bars and the VSA classic: “When strength appears it appears on down bars.” This is a very valuable insight because it is counter-intuitive & invites us to look carefully at price action. “A big angry red bar with volume shooting up & I should be thinking of longs?” Well yes, BUT not just yet. We must look at the before and the after. Although we may look at individual bars we want see the market, and more precisely, the supply/demand relation, as a whole. Personally, as I look at each bar I also try to see it flowing from the previous bar and into the next.

One of the VSA signs of strength is the Bottom Reversal: a 2 bar signal. Bar 1 is down, preferably making a lower low than the previous 4 bars, with increased volume and at least average range or spread. Bar 2 is an up bar, closing on its high & preferably with a higher high than bar 1. VSA explains this by saying that the down barn, bar 1 contained buying & so the up bar, bar 2, is an up bar closing on the high. This is the meaning of: “When strength appears it appears on down bars.” We can nuance this a little

First, let's note here that we only see 2 bars because of our choice of time frame. If this was, say, 30 minute bars, then on the 1 hour time frame we would see a single bar closing high. A 15 minute time fralm would show 4 bars, with the final bar closing on its high. But the song remains the same, and it is this: in this 1 hour of price action (our 2 half hour bars), there was 1. significant activity (the volume) & 2. buyers were buying at higher prices & sellers were refusing lower prices: the supply/demand dynamic is causing higher prices. Let's call this Buying Pressure.

Once we have identified Buying Pressure we can go a little further by asking what kind of pressure-keen new buyers or frightened shorts covering? To answer this we have to look at what came before the bar(s) in question.

Would we go long on the evidence of this Bottom Reversal? Well, the conservative answer is no, we look for confirmation of strength in the market: a test bar. This will be a down bar but this time we are looking for low volume on the down bar, with narrow spread, & a close off the lows. (A no supply bar would also do just as well but I won't talk about that specifically here.). We want this bar to appear in an area where there was higher volume, ideally in the area of the Bottom Reversal but that won't always happen. Lower volume in an area where before there was higher volume tells us that market participants have moved on, this area no longer attracts activity. The narrow spread confirms this: the market is struggling to go down. And finally the down bar fails to close on the low. The path of least resistance is up.

The two bars confirm each other. The Bottom Reversal high volume down bar, bar 1, is confirmed by the low volume down bar which follows, the test. The low volume test bar is significant because it was preceeded by the high volume down bar in the Bottom Reversal.

With this in mind we can see that if bar 1 in our Bottom Reversal, a down bar, had been followed by another down bar, especially with increasd volume & at least average spread, then we would conclude that buyers were refusing to buy at higher prices and sellers were willing to sell at lower prices: a weak market. In every case we are asking: what is the balance between demand & supply. “When strength appears it appears on down bars” can be seen as an invitation to do just that. Like all VSA principles it has to be applied in context.

[rigel]

Chrisp,
Well put and well thought out, however the scenario you outlined does not always pan out especially in a strong downtrend, Have a look at Bearbulls thread "Trading the Wyckoff Way"

Many a times the reversals just last for a few bars, then the prices head south on low vol, not because supply has been removed or market is probing into high vol area, but
THERE ARE NO BUYERS, ONLY SELLERS, HENCE LACK OF VOL.

Similar scenario on in a strong Uptrend, also explained in Bearbull's thread

HAPPY NEW YEAR

[chrisp]

Thanks for your post Rigel. I suddenly realised when I made my post that this was New Year's Eve & that if I was looking at ES charts this must be my new idea of having a good time. A little weird I thought, so I was glad to see someone else looking at the posts.

Anyway, yes, I agree price can go up or down on low volume, no problem there for me or VSA.

I think in the TG video I mentioned GH does answer the question about weakness on up bars, & how it can manifest in both low volume & high volume. I wanted to do the same kind of thing for down bars, pausing on the way to talk about context & what I think is the fundamental behind all the VSA principals: the supply/demand relation.

I'm just across the water from you in Toulouse

Season's Greetings
Chris

[rigel]

Hi chrisp,
It is during these holiday periods that my mind is somewhat free from my own trading, however it would be a mistake to assume that Institutions are absent, infact they are very much vigilant, waiting like leopards for the right opportunity to make a killing,

Have a look at the following link: REGISTRATION IS FREE

Brooks Price Action - Log in

They bored the whole world to death for hours letting the market drift sideways, all the while cunningly selling short, then it was the final push up to suck in the longs before taking it south IN THE FINAL 30MIN with huge vol.
Most traders would have been left dazzled like the deer in the headlights of a car))

So today the big boys celebrate expecting huge bonuses to splash out in the exotic tropical Islands.

HAPPY AND PROSPEROUS NEW YEAR TO YOU

[millerol]

Here is my first attempt at explaining VSA indications or setups, basically testing my skills, I know that some of you are experts and I can only dream of getting to the level you're all at, however, I managed to create my own VSA indicator using the ThinkorSwim platform which offers free realtime charts (ThinkorSwim is absolutely amazing). The study at the moment only has indications of strength...strong signs of strength are pointed out on the chart as arrows pointing up....potential strong bars are indicated in the volume and price spread. Notice that I have created a histogram of price spread, this in my opinion will help alot as it is visual where as in the tradeguider software they just give you details about the spread. Trading is a game in my opinion, the banks and insurance companies which I think are the largest players (Governments are up there too) try to set traps for you. I thank Tom Williams everyday, I feel like he is my Jesus (Come with me and I will make you a fisher of money). When you look at a price chart all you see is money, the up bar is money the down bar is money....I will leave it there for now but comments are welcome.....peace!!!

[millerol]

My first attempt at a VSA explanation. Be gently....Please! I feel like Tom Williams is my Jesus (Come with me and I will make you a fisher of Money)

http://www.flickr.com/photos/2742971...00342/sizes/o/

[alcontado_80]

This thredis very good

thank you.

[kamase]

Here is a pic of my recent live trade with VSA method and Tick volume histogram

Accumulation below the MPM 92.20 till demand absorbed supply.