[VSA] Volume Spread Analysis

[BlowFish]

Just a quick point. As PP said 'pure' VSA as described by Williams does not pay any attention to the open. Williams does look at the previous close in comparison to the current close. In fact this is the basis used to determine an up bar / down bar.

He also looks at net change (last close -> current close) but thats a fairly secondary thing and not written about anywhere. Most of the information is there with HLC bars though perhaps not in as visually accesible form as a candle. Of course the only time that it is not is when there is a gap i.e. last bar close <> this bar open. Intraday not likely to be much of a problem. When there are gaps VSA may concider a bar an upbar where a traditional candle may concider it a downbar.

The thinking is that the close is the most imortant price point as it represents the result of the struggle between the bulls and the bears for the particular interval you are looking at.

Cheers.

[Tasuki]

See attached 15 minute ES chart from today and yesterday.
Just a short question on "no demand". I seem to see it every time the market starts going up, which can't be right, so if somebody would kindly straighten me out and show me which (if any) of my putative "no demand" bars are the real McCoy, I'd be most grateful. Tx, Taz

[mroalan]

<a href="http://img232.imageshack.us/my.php?image=ftse100ct5.g if" target="_blank"><img src="http://img232.imageshack.us/img232/9920/ftse100ct5.th.gif" alt="Free Image Hosting at www.ImageShack.us" border="0"/></a>
blowfish,when you say on the vol 2xma. above i,m on a 15 min ma on the vol.are you saying use a 30 ma? tia.

[mroalan]

i,m oviously doing something wrong re charts on here!as it works elsewhere.

[walterw]

	Quote:	mroalan
	i,m oviously doing something wrong re charts on here!as it works elsewhere.

mroalan :you want to check this thread : http://www.traderslaboratory.com/for...perly-805.html cheers Walter

[mroalan]

thanks walt.

[Anonymous]

	Quote:	Tasuki
	See attached 15 minute ES chart from today and yesterday. Just a short question on "no demand". I seem to see it every time the market starts going up, which can't be right, so if somebody would kindly straighten me out and show me which (if any) of my putative "no demand" bars are the real McCoy, I'd be most grateful. Tx, Taz

Hi. Thank you for posting.

Let's start with the most basic definition of no demand:

An up-bar with a narrower range than the previous bar and volume less than the previous two volume bars.

I have pointed to three such situations.

Now, there are at least two more things to consider that the basic definition does not;

* Price: We would like to see the close in the High, middle or low of the bar. Tradeguider uses only the middle and low in its definition.

* Confirming action: Is the next bar down. This is tricky and a sticking point for some. The next bar down confirms the sign, but again, by definition the sign does not need confirmation from the next bar. TG waits for confirmation before placing a sign on the bar. I too in my signs like to see the next bar close down and have a less than or equal high.

Joel Pozen will paint any bar with volume less than two that closes up or equal (if the bar prior is up from the bar two bars back) as No Demand and will paint it at the close of the bar. Hence one gets a lot of No Demand bars that seem to be "out of place". Also one gets No Demand bars on bars that have greater ranges than the previous bar.

For me, a bar with a greater range than the previous bar needs to have a close in the High, middle, or low not just anywhere on the bar. A close on the high, in the middle, or on the low would actually make the bar "No buying pressure" a form of No Demand but involving larger ranged bars.

A better definition to use as you trade would thus at least include size of the range (narrow) and location of the price within that range ( on the high, in the middle or on the low) with volume less than two bars.

To sum it up:

A bar with a range narrower than the previous bar that closes equal or up on volume less than the previous two bars; and is closing either on the high of its range, the middle of its range or the low of its range.

[BlowFish]

	Quote:	mroalan
	<a href="http://img232.imageshack.us/my.php?image=ftse100ct5.g if" target="_blank"><img src="http://img232.imageshack.us/img232/9920/ftse100ct5.th.gif" alt="Free Image Hosting at www.ImageShack.us" border="0"/></a> blowfish,when you say on the vol 2xma. above i,m on a 15 min ma on the vol.are you saying use a 30 ma? tia.

No what I am using at the moment is a moving avergae of volume and I simply double that for a guide for ultra high volume. So if the avergae volume is 1200 contracts I will look for 2400. This is just for my programatic tinkering...nothing like just getting the 'look and feel'.

cheers.

[BlowFish]

That's a comprehensive over view of no demand PP :-)

One thing I have noticed is you may get what appears to be no demand immediately after what appears to be a seling climax (even if its only high volume and not ultra high). This happens often...very often in fact regardless of whether the volume was enough to stop the move or merely pause the move.

This is one of those subtle areas that sometimes is just not clear to me despite looking at this very issue on thousands and thousands of charts. It apears that all the particpants have done most of thier business in the climax and everyone stands back for a bar or two.

Intresting what you have to say about looking at the next bar PP. Often it will be flat or no demand or no supply. Another thing that often hapens if the pause is longer is you will get tests in both directions.

cheers.

[Anonymous]

There is a particular type of No Demand that I did not mention before and would like to say a few things on it now.

Check out the attached chart. Notice the No Demand near the middle of the chart. This is an exceptional type of No Demand bar because it is also a Doji. With a Doji I am not concerned with a narrow range. Nor does the close have to be in the high, middle or low.

For candle traders, a Doji is a bar that represents indecision. This goes well with what VSA teaches us. Although it is more lack of interest then indecision-a subtle difference.

Bill Williams talks about certain extreme bars. These bars, as it turns out, are Dojis with closes in the high or low of the range. He states that 95% of the time a market changes direction 1 to 3 bars later after such a bar. As VSAers, we put the missing piece together: volume.

Again, VSA does not technically look at the open. Yet, No Demand bars that are also Dojis are usually very strong signs of weakness. This is one reason I like to look at the open. The other being WRBs.

The astute among you will note that this bar actually closes LOWER than the previous bar. However, it is a buying bar (positional relationship) and thus a No Demand bar.