VSA : Crock or Not?

[mcichocki_]

	Quote:	smwinc
	Guys, this is getting a little beyond a joke. I don't want to create a long post, however I think problems come about from either misunderstanding or forgetting the core concepts types of analysis such as VSA are built on. Markets have buyers, and sellers. They move in a direction when one exceeds the other. Getting caught up on the nuances of the 'open' of a bar, etc. does not make any sense. Who cares. Apologies if I sound a little blunt, but focusing on minor, insignificant details is what software advertising tends to do, trying to make you think it's important. This is designed for retail trades, who on net go broke. Avoid thinking like that. For any valid type of analysis, often you can 'follow through' the reasoning of it, and get the same conclusions as you with another type of analysis. An example scenario: Market is falling. Trader A suddenly sees huge bids waiting down in a correlated market. He buys the market, anticipating the implied demand from the other market, will send his market up. Trader B sees that the market is about to hit XYZ moving average (insert: indicator name) and decides to buy. Trader C sees that this bar was a widespread off the close with significantly above average volume. They buy. Trader D sees that the market has hit a support level, and created a strong bullish hammer on above average volume. They buy. Trader E sees a green light on his black box trading system, and buys. End result = we all bought the market, for various reasons. Demand was there, for "whatever" reason - a candle, VSA, black box system, moving average, whatever, who cares - there was demand. The profitable trader bought it. The losing trader sold it. All you want to do is be the trader who has 'some' way to identify those situations to profit more often than not. Worthless types of analysis is generally when it can't be tied back to (real or implied) demand/supply in some way.

Very well put...that about sums it up.
It's only as complex as we want to make it.

[DbPhoenix]

POSTS #22 TO #30 of this thread have been moved from the VSA II thread to here as they were not of much relevance to the application of VSA - Mister Ed.

	Quote:	mister ed
	Bearbull - I have pulled this one paragraph out of all your recent posts as it summarises the very important point of the context, or background, against which 'signals' (for want of a better word) occur, and as you say is a point important not only to VSA, but also to Candlestick analysis, and other methods. Thanks very much for re-emphasising this important point, nice series of posts.

I like Bearbull's post as well. However, I should point out that what is or is not relevant depends in large part on what the trader is trying to accomplish, which in part is what I was trying to say to winnie. Defining a "no demand" bar is vastly easier than defining "support" and "resistance", or "demand" and "supply". Not only is it easier, it is necessary if one is going to code a signal into software. Perhaps this is why the focus of VSA is so different from the Wyckoff material on which it is based.

What so many newcomers to VSA don't understand is that a "no demand" bar means "no demand" at that time, and that the lower prices that the bar implies may occur for only a couple of bars. It does not mean that price is going to plummet 10 or 20 or 30 points in the next five minutes. Therefore, if one is interested in scalping, finding these bars may be just the thing, and VSA may be everything he's ever hoped for. However, if he's looking for something that points to larger moves, VSA may not be quite up his alley, since that larger move depends on features that are not quite so easy to define, such as "background", and from there, it's just a step or two to "feel".

Therefore, one must evaluate VSA in terms of what it is, or at least in terms of what it has become, and not expect it to be what it isn't and can't be. Bearbull has done a nice job of highlighting the difficulties that those who are looking for more than a few ticks or points are going to face, particularly those who lack the displine to stop themselves out, much less SAR, when the trade does not move in the desired direction.

[mister ed]

Thanks Db - I don't want to get into a protracted discussion about VSA and "what it is, or at least in terms of what it has become, and not expect it to be what it isn't and can't be" (not on this thread anyway) but can I ask what you think of the sort of range expectation you could have from interpreting, for example, a "no demand" (given proper context/background etc.) on various time frames of analysis.

For example, if I was using say the 5 minute bar and everything pointed to a downmove (context/background, support/resistance, "no demand" etc., all lined up nicely for me) my expectaions on the ES might be for 3,4,5, whatever points, or even a move down to whatever support I had interpreted on the 5-min bar chart. If, though, I was using an hourly bar and everything pointed to a downmove (context/background, support/resistance, "no demand" etc., all lined up nicely for me) my expectaions on the ES might be for a move of a larger magnitude, maybe 10, 12, whatever, points. In these two examples the magnitude of the profit expectations differ because of the magnitude of the timeframes differing and where you say:
"a "no demand" bar means "no demand" at that time, and that the lower prices that the bar implies may occur for only a couple of bars", then the choice of timeframe chart is going to be a determinant on profit move expectations?

So, VSA may be useful for scalping, as you say, but depending on the timeframe may be useful for larger magnitude moves also?

[DbPhoenix]

I don't want to get into a protracted discussion of what VSA is or isn't either. But it's important, for newcomers anyway, to understand where an application of VSA is appropriate and where it isn't. To point out that VSA is not necessarily appropriate to every trading application is not necessarily an attack on it.

It's easy to understand that a trader who elects to employ an approach that focuses on bars may choose an interval that provides a half-dozen bars per day rather than dozens, or hundreds. But even though he may understand that, for example, an hourly "no demand" bar is an amalgam of all the thousands of trades within it, even down to the tick, and that the "no demand" character of that bar may be more "meaningful" than a 1m "no demand" bar, and further that that bar may imply a larger move than that implied by a shorter-interval "no demand" bar, he must also carry a hell of a lot wider stop with that hourly bar, and he must be at least as specific with the hourly bar as with a shorter-interval bar regarding the conditions for determining whether and when the trade is correct or incorrect.

In order to determine whether any of this is "worth it" or not, one must have an internally consistent approach, if not a strategy, complete with a set of explicit and straight-forward rules that can be tested, both backwards and forwards. If the equity curve is not much better than flat, he must wonder if he's fundamentally incapable of interpreting the "background" behind his entries or if his approach and his rules are taking him in the wrong direction.

Therefore, yes, one can theoretically assume that the "magnitude of the profit expectations [will] differ because of the magnitude" of the bar intervals. But the gap between theory and application can be exceedingly wide.

[DbPhoenix]

	Quote:	Bearbull
	If an effort has been made to identify the right support/resistance zones , then price will move from one level to another irrespective of which timeframe chart you are reading, however if one is operating from say a 1min chart , then obviously a no demand or no supply bar can only be employed for scalping.

Well, not exactly . Every move, whether trivial or consequential, begins at the tick level. Where one locates S&R is not necessarily dependent on the bar interval, and one needn't be satisfied with tiny profits just because he's using tiny bars.

But this has all been addressed before and anyone who's interested can do a search. I only want to point out that scalping is not a necessary consequence of using small-interval bars if one is focused on movement rather than individual bars.

[mister ed]

	Quote:	DbPhoenix
	I don't want to get into a protracted discussion of what VSA is or isn't either. But it's important, for newcomers anyway, to understand where an application of VSA is appropriate and where it isn't. To point out that VSA is not necessarily appropriate to every trading application is not necessarily an attack on it.

No offense Db but much of your posting to this thread is an attack on VSA. That's your right, its a public forum, just gets tiresome for those of us that do see some value in it, thats all.

	Quote:	DbPhoenix
	It's easy to understand that a trader who elects to employ an approach that focuses on bars may choose an interval that provides a half-dozen bars per day rather than dozens, or hundreds. But even though he may understand that, for example, an hourly "no demand" bar is an amalgam of all the thousands of trades within it, even down to the tick, and that the "no demand" character of that bar may be more "meaningful" than a 1m "no demand" bar, and further that that bar may imply a larger move than that implied by a shorter-interval "no demand" bar, he must also carry a hell of a lot wider stop with that hourly bar

Re underlined - that would seem obvious.

	Quote:	DbPhoenix
	and he must be at least as specific with the hourly bar as with a shorter-interval bar regarding the conditions for determining whether and when the trade is correct or incorrect.

Yep, obviously.

	Quote:	DbPhoenix
	In order to determine whether any of this is "worth it" or not, one must have an internally consistent approach, if not a strategy, complete with a set of explicit and straight-forward rules that can be tested, both backwards and forwards. If the equity curve is not much better than flat, he must wonder if he's fundamentally incapable of interpreting the "background" behind his entries or if his approach and his rules are taking him in the wrong direction.

"Worth it" - there is the attack again. Again, not a discussion for this thread but I would be interested in seeing your "explicit and straight-forward rules that can be tested, both backwards and forwards" on the Wyckoff thread applied to the Wyckoff method - or is this criteria only applied to analysis methods you do not approve of?

	Quote:	DbPhoenix
	Therefore, yes, one can theoretically assume that the "magnitude of the profit expectations [will] differ because of the magnitude" of the bar intervals. But the gap between theory and application can be exceedingly wide.

Thanks for the answer to the question, and the dig, again.

[DbPhoenix]

	Quote:	mister ed
	No offense Db but much of your posting to this thread is an attack on VSA. That's your right, its a public forum, just gets tiresome for those of us that do see some value in it, thats all.

You asked a question. I answered it. If you've interpreted everything I've included in my answer as an attack, that's your prerogative. I should point out, however, that I posted the answer only because you asked the question.

[mister ed]

	Quote:	DbPhoenix
	You asked a question. I answered it. If you've interpreted everything I've included in my answer as an attack, that's your prerogative. I should point out, however, that I posted the answer only because you asked the question.