[VSA] Volume Spread Analysis

[jjthetrader]

Primavera, if you want the bootcamp I'd say go for it now. Rumors about company polotics don't mean much as far as the boot camp goes. Todd wants to release a different program called the foundations course and I'm sure all the polotics will hold that up for some time.

[MC]

	Quote:	Blu-Ray
	Tasuki ps. if you change your chart to a 1440 min you will get the tick delta to work on the equivelant to a daily chart.

Interesting tip...never though of it that way.
Thanks

Edit----
ZOMG...I just did this trick and WOW, that's freekin awesome.
You're a HUGE asset to this site bud.

[Primavera]

jjthetrader

Thanks for the advice about the bootcamp

Primavera

[mister ed]

	Quote:	tawe trader
	The next chart is a 5 min chart of the mkt last Thursday. I went short (in the FTSE cash mkt) at 11.55am, at the bar above the pink arrow 5 mins BEFORE the BoE interest rate announcement. I placed a very wide 30 pt stop-loss.

Tawe, thank-you very much for sharing, its much easier to post the winning the trades than the losing trades.

Ahhhhh, central bank announcements - short of a war there is no surer way of rapidly shifting the demand and supply curves.

[gassah]

Primavera,

I found the BootCamp CD very useful. It isn't just a rehash of Tom's book. It really helps define the background and when to use each of the bar setups.

nic

[tawe trader]

	Quote:
	Tawe, thanks for sharing. I don't beleive you did anything technically wrong. You've always got to be careful of the big moves around anouncements. They're stop catchers to say the least. Sorry about the loss. Did you jump back in or did the loss keep you out? cheers mate

No, I didn't jump back in, the old "anger/frustration/feeling of being unlucky" emotions had kicked in due to the fact of having my stop caught only by 1/2 pt.

	Quote:
	Tawe, thank-you very much for sharing, its much easier to post the winning the trades than the losing trades.

Yes I didn't want you all to think I was some super-duper trader with a 100% win ratio !!

[BlowFish]

	Quote:	Primavera
	BlowFish (I also address this to Sebastian) I have the Undeclared Secrets version of the book and have also noticed some errors. I certainly agree that it can be helpful to confront these errors to aid one's learning. I have not formally documented these and have put in an order for the TG version of the book. May I ask some questions: (a) does the TG version of the book include in its entirety the orignal version of the book with all errors corrected ? I am aware that it contains some additonal aspects (b) would any of you guys who have documented the errors be prepared to share them - not breaching copyright, but merely to say on page 20 chart 1 should read bar A type of thing. I would be prepared to do this myself but it would require a complete re-reading because I have not documented the typos when I found them, so if someone has already done it then it would help. However if the TG version has done it all then, personally, there is no point in me doing this (c) On another forum we have the start of rumblings of, shall we say "new ventures". Would it be wise to hang fire before purchasing boot-camp discs etc. to see further developments Primavera

(b) Sure, Im in London currently but the book currently lives in Somerset. Should be spending Xmas there if you hit me with a PM round that time I'l have a flick through. Not really qualified to answer the other two questions.

Cheers.

[BlowFish]

	Quote:	Tasuki
	The last time I presented this idea, many pages ago on this thread, my idea received a lukewarm reception to say the least. Before you all go jump down my throat, PLEASE do yourselves a favor and watch the up/down volume for a week or so and see what you think.

Hi Tasuki, Friendly debate rather than throat jumping from here! If I understand correctly what you are looking at is volume @ bid and volume @ ask. Red prints vs green prints from the tape. I looked at this extensively a while back along with market delta and footprint charts. I have just started experimenting with a constant range chart 1 tick wide with a volume @bid/ask histogram to see 'walls' build at different levels. Trevor published some of my observations on the old markedelta website so maybe it had some value. Probably still buried in the blog area.

Heres the thing, while delta & volume@bid/ask are useful tools I think there are lots of mis-apprehensions about them. (volume on upticks vs downticks gives very similar results to volume@bid/ask too).

Let me just throw out some ideas.

1) In futures markets for every print on the tape there is a buyer and a seller. This can be buying/selling to open/close so there are 4 types of participant. I am not aware of how you can differentiate between people opening or closing until we get real time open interest, that would be something! We need to remember at all times there is always a buyer and seller. Always.

2) Traders that hit the bid or the ask can be considered 'aggressive' buyers or sellers, those wiling to pay at market if you like. Stops will show up as aggressive as they convert to market orders. What these indicators measure is aggressive (at market) buyers and sellers.

3) One of the core premises of VSA is that the smart money/ (for smart read big) sells into rising markets and buy falling markets. This is the only way they can shift the size they need too. Hence weakness showing up on up bars and strength on down bars.

I think 1) 2) & 3) are probably 'facts' now a bit of conjecture. If we accept 3 then the smart money has the luxury of selling on the ask in an up move. To stop a move they aren't going to hit the bid again they are going to just keep refreshing the ask until more aggressive sellers show up. This dosen't jive well with the whole market delta volume@ask thing. Well not in the way its often presented i.e red 'selling' green 'buying'. In fact the only time this holds true is when the market is trending in a nice controlled fashion. The Smart money does not often need to buy/sell aggressively except perhaps to kic start a move.

Now I'm not saying these tools aren't useful but you have to be careful how you interpret the info. The problem they present for me is that it tends to draw me into the micro fluctuations and I tend to get 'wiggled out' by them. Thats not a problem with the tools but personal discipline!

Cheers.

[Primavera]

	Quote:	BlowFish
	(b) Sure, Im in London currently but the book currently lives in Somerset. Should be spending Xmas there if you hit me with a PM round that time I'l have a flick through. Not really qualified to answer the other two questions. Cheers.

Blowfish

Thanks - if I get sufficient time before Christmas I will try to jot down my thoughts on where the typos exist as well to compare notes.

BTW: I come from the next county - Glos

Primavera

[jperl]

I've been sitting on the sidelines watching this discussion about volume. The amount of "Volume" in this thread is a clear indication that there is considerable confusion about how to interpret volume in relation to price movement. I've read "Master the Markets". There is a lot of interesting stuff in there that needs to be better quantified. So far on this thread, I haven't seen much of that.
Perhaps we can begin somewhere by using Blowfish's comments about volume. Let's start here:

	Quote:	BlowFish
	Hi Tasuki, Friendly debate rather than throat jumping from here! If I understand correctly what you are looking at is volume @ bid and volume @ ask. Red prints vs green prints from the tape......(volume on upticks vs downticks gives very similar results to volume@bid/ask too).

This is an interesting statement. It is not what Tasuki has said. Volume at the bid/ask is NOT the same as up-tick/down-tick volume. Let's be clear about this. As Tasuki has pointed out volume of any bar on a chart can be divided into two parts, DEMAND or BUYING volume which makes price rise, and SUPPLY or SELLING volume which makes price fall. This would be the same as ask/bid volume traded if it weren't for a small but very important fact. If you've ever watched the tape, you will notice that many trades occur at the same price before there is a new up-tick or down-tick trade. So what are these trades? Are they DEMAND trades or SUPPLY trades. We need a definition. A trade that takes place at the same price as the previous trade is a DEMAND trade if and only if the previous trade was a DEMAND trade. Similarly for a SUPPLY trade. In practice what this means is that you have to look back a sufficient number of trades to determine whether the present trade is to be considered a DEMAND trade or Supply trade. Looking at whether the present trade occurs at the bid or the ask doesn't hack it.
There is then no mystery about HOW MUCH SUPPLY trades there are in a WRB that closes near its high. You don't have to wait for the next bar to figure that out. Just dividing the volume bar up into its DEMAND component and SUPPLY component will tell you immediately.
Until there is some consensus here about how to determine DEMAND/SUPPLY volume, then anything else we have to say about VSA will remain confusing.






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