[VSA] Volume Spread Analysis

[mroalan]

thanks for that Pivot,i realise about the colours on the vol.bars,what i meant was do you take any notice of buying/selling in the bars or is it just volume your concerned with? have you ever used equivolume or candle volume?

[dod]

I have a question concerning spot forex volume. With most forex data, volume isn't available. However, I believe ESignal supply Tradeguider with tick volume data, with they claim is adequate. I follow forex with a broker called FXDD. They supply volume data, but haven't responded to my emails as to what this data is made up of. On another forum, someone suggested it was tick data, but it would only be representative of FXDD clients rather than the industry as a whole.

Can anyone clarify whether the proportion of 'smart money' to 'retail money' that would be expected to prevail with 'full' volume data from the industy as a whole is likely to be approximately the same as tick volume from one broker? Or would it be wholly unrepresentative?

The reason I ask is because I'm currently trading forex (daily and weekly time frame) using price action - one or two bar patterns - with a couple of indicators to clarify likely direction and it struck me that adding VSA to the mix might help me a lot and even wean me off the indicators altogether; but I don't want to spend my time trying to 'see' relationships between volume and spread if the volume data is suspect!


Nick

[cooter]

From what I've heard the "volume" for Forex is indicative of tick data from member bank transactions in the ESignal feed.

More info: http://www.tradeguider.com/fx_factsheet.htm

[notouch]

Tick volume can increase even when no trades are going through. E.g. during the Japanese session the Yen may strengthen against the USD but weaken against the EUR so the banks will increase the bid/offer on EUR/USD to prevent arbitrage. So it looks like there's been an increase in volume even though there hasn't - it's just the banks' computers automatically doing their thing. It certainly isn't evidence of "Professional Money" intervening.

[dod]

Does this mean tick volume is not satisfactory for VSA purposes? The sort of automatic fine tuning described must go on all the time; but, doesn't this represent volume, of a sort?

My knowledge on the subject is very scanty. I guess the answer is I should look carefully at the volume data I get and draw my own conclusions as to whether it and the spread relate in the way Tom Williams describes.

[walterw]

	Quote:	notouch
	Tick volume can increase even when no trades are going through. E.g. during the Japanese session the Yen may strengthen against the USD but weaken against the EUR so the banks will increase the bid/offer on EUR/USD to prevent arbitrage. So it looks like there's been an increase in volume even though there hasn't - it's just the banks' computers automatically doing their thing. It certainly isn't evidence of "Professional Money" intervening.

ooops... on esignal at least... to be a tick there has to be a trade... I can agree that ticks could represent very diferent amount of real volume, but ticks without trades.... nop

[notouch]

I'm not sure that's right. Banks don't report trades, they just report their bid/ask quote. That's why when you chart forex you have to choose bid, ask or midpoint.

On the subject of whether tick volume can be useful, I think it can for the higher timeframes but not the lower timeframes. 3 minute tick volume would have too much noise to be useful. On the daily or hourly charts though, it should be a good indicator of activity.

[hdcafe]

In the Forex markets volume is made up of changes to the bid/ask and not actual trades. Tom Williams calls this "indicative volume". I have one of Tom's videos where he states that "indicative volume" is actually more useful for VSA than trade volume because it shows areas in price where there is increased or decreased trading activity. Because Esignal uses many different feeds it provides a broader overall look at this activity than a single data feed.

[idaxtrader]

Hello,
I'm new here to T.L. I want to thank all the particpants of this thread for their inputs. They have been invaluable.

A few months back a came across Mr. Williams first book Undeclared secerets and ever since I have been hooked on V.S.A. My first question is it necessary to read his more current book or is the original one good enough?

My second question stems from a recent trade that resulted in a stop out for me. I have included the chart to illustarte the point of how I was tricked by the volume on the ES. My question is this what are the objective ways that V.S.A. can help identify a bar as hidden supply?

In the book he stated if I'm correct that it should be determined as hidden supply if the bar closes in the middle of the range, has enormous volume, a climax typer of bar, or the next bar is down right after an important bar with spread,or the next bar is level then the following bar is down.

In the instance where I was stopped out. The next bar was level right after a breakout. But before a down bar took place there was a follow through up bar. It is apparent that I should have been very alert for hidden supply since right after the break the next bar was level. But in actual practice with the market the bar following a break is often level on good signals.

I thank everyone again for this thread and I really hope someone can shed
some light on the possible ways to determine hidden supply in a up bar.

[Z_trade]

idaxtrader,

I marked your chart to illustrate pretty simple concept. Price revisited supply area where market has spent some time on the way down. Short entry can be taken on the very next candle after narrow range low volume green /up/ candle.