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Well, the last time I tried this approach I got some very savvy responses, so let me try ringing the same bell. I've been stuggling with VSA for a while now, and I seem to find lots of exceptions to the rules, places where VSA doesn't seem to work. Usually, it's my lack of understanding that's to blame, but I keep probing until I really understand how to apply VSA.
If you add up all the VSA signals, it looks to me as if this should have been a pretty clear bearish signal. Did VSA just fail us, or am I missing something crucial? |
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Hi, Tasuki,
I can under your frustration, having gone through it myself, and then you come up against some smart a... responses. until I met a floor trader who made it simple for me. I have stated some of it in the post to WHY? above.
First of all get rid of all this stuff about professional money etc. and why if there was supply /distribution etc to the left and still price did not go down and so on.
VSA and Wyckoff's principles are not about that at all, it is about gauging buying and selling pressures within the background context to the left.
1. Back to your chart and the narrow bar on high vol. Obviously lots of buyers and equal number of sellers, the narrow range suggests sellers were keen to hit the bids rather than sit on their offers or to raise them. If you were trading this intraday there was enough movement for the next 2 days to generate substantial profit. Now at that point a bullish dragon fly is generated indicating demand/buying pressure. Buyers be it professionals or otherwise percieve value and expect higher prices, simply flow with that.
2. However you can inject some logic here, 3 bars back, you have a wide range up bar following congestion on high vol, indicating effor to rise which then runs into supply emerging from congestion during 16-23rd July, then you have your narrow range bar again on high vol. As I said you could have easily profited from this info. but unfortunately when we first get into this
VSA/Wyckoff, we get tied up with expectations and a subsconcious demand on the market to meet those expectations i.e in this case to demonstrate a significant downside, why?
3. The fact that the market did not further than it did simply means there were buyers on the sidelines with different agenda on a higher time frame. They were willing to absorb all that selling and support the market, ie. meeting the offers rather than lowering their bids. period.
As WHY? when a sign of weakness in negated, you are now armed with invaluable information on the strength of the market. There is no question of
VSA working or not working. Those terms are more applicable to buy and sells signals generated from a set of maths based indicators where the logic is more skewed.
As Todd puts it "you are using variable A (price) and slicing and dicing it to predict variable A (price"
Having said that there are many who just employ that, have rules sets and having tested them throughly apply them with discipline and consistency.
check out a consummate trader Arthur Ullrich at
www.tradetutor.com. This is not a recommendation to use his strategies.
Only to point out that with
VSA analysis, it still is upto the trader to come up with set strategies and tactics and rulesets , test them and apply them consistently remaining flexible at all times, this is the key.
Hope this helps and does not sound too savvy,
VSA/Wyckoff is a great tool, keep at it, like a piano, it is not going to play by itself, your skills will develop in time, persistance and patience.