[VSA] Volume Spread Analysis

[Anonymous]

	Quote:	habi
	Hi PP Why you don't mention the candle after the squat as an effort to rise? The close was outside of the WRB's s/r zone with higher volume then the previous four bars. In addition, the boddy of this candle acted then itself as s/r zone, followed by another effort to rise bar after the second "no result from an effort to fall". In an overall view, after the first effort to fall candle, I see more effort to rise then effort to fall.

Your definition of an "effort" bar differs from mine. I do believe we come to the same conclusion: more strength than weakness. Remember, No result from effort to fall/Negative Action can be as strong a sign of strength as an effort to rise bar with good rusults.

	Quote:	insideday
	Hi PivotProfile, interesting read. I am not familiar with metastock, so i have a question. Does C>ref(C,+1) look one bar in the future? If yes then your NoDemand:=If(H>ref(H,-1) and L>=ref(L,-1) and (H-L)<=ref((H-L),-1) and V<ref(V,-1) and V<ref(V,-2) and C>ref(C,+1) and H>=ref(H,+1),1,0); should look in tradestation like condition1= H[1]>H[2] and L[1]>=L[2] and Range[1]<= Range[2] and V[1]<V[2] and V[2]<V[3] and C[1]>C and H[1]>=H; if condition1 then plot1(1);

Yes it does look one bar into the future. See next post..........

[Anonymous]

ANOTOMY OF A TRADE SET-UP :

Let's take a look at a nice trade set-up here. Actual profit was around 20 pips, but that is really not the issue. THE ISSUE IS HOW WE VIEW SUPPLY/DEMAND DYNAMICS IN REALTIME & HOW WE TRADE WITH "SIGNS" THAT USE FUTURE BARS (CONFIRMATION BARS).

First turn your attention to the chart on the left. This is a 15 min chart. The first thing to note is an area that is not labeled. In the Middle of the chart is an Effort to rise bar. However, price does not make a higher high and in fact trades lower: No result from an effort to rise/Negative action. This is the first clue of a change in the market.

To be sure, momentum does take the market higher.

Now let's jump over to the right hand chart, the 5 min. #1 is a Wide Spread bar up bar with ultra high volume that closes off its high and the next bar is down. Supply entered the market here.

Note also that this is a WRB and creates a Support/Resistance zone. This is key. We now have a High volume bar that is a WRB. We would love to see a low volume sign within the body of this bar. (we don't get it).

Price does indeed begin to fall from this point as Supply entered the market.

#1a. After the initial down fall we see an Effort to Rise. Please note that effort bars do not need confirmation. Thus at 2:55 at the close of the bar we know we have just seen an effort to rise bar. No reason to get long. Nothing on the 15 would merit it. The next bar(s) do not make a higher high. We are thus starting to see No Result on the very Next bar as it does not make a higher high.

#2 1/2 we jump back over to the 15 min char. We get an up bar with a narrow range an volume less than the previous two bars.THIS IS THE BASE DEFINITION OF NO DEMAND. This bar closes at 3:00. Now, for confirmation, we will need to wait until the close of the 3:15 bar.

My software will place the sign on the bar at the close of its period and keep it there as long as the criteria remain met. Thus at the close at 3:00 a red dot actually appears. It would disappear if the next bar makes a higher high and not return. It would also disappear if the current price is equal to or greater than the close of the previous bar. But if the current price changes, the dot would come back.

But let's assume the dot does not show up in the first place. We know we have just seen the base definition of No Demand.

At 3:05, we see a bar that closes equal to the Effort to Rise bar. This is NO RESULT FROM AN EFFORT TO RISE/NEGATIVE ACTION. We would actually like to see this price lower than the low, but the bar prior does trade lower than the effort bar. Simply, we are not seeing support at the low of the effort bar.

In sum:

We have a base definition of No Demand on the 15. We have seen supply enter on a wide spread bar with ultra high volume and we now have no result from an effort to rise: GET SHORT on 5 min.

#5 This bar confirms the No Demand bar. At its close the x appears and the dot is there for good. So, if we assume only appears at the end of the next bar, then it would appear now at the same time the x appears. BUT WE ARE ALREADY SHORT BECAUSE WE KNOW THE BAR TO BE NO DEMAND.

Yes the "sign" may come "after the fact" as the detractors say, but since we know how to read the chart, we are already in the trade.

EDIT: almost forgot to mention that the effort to rise bar was within the body of the WRB (hmmm, have I mentioned that before?).

[Tasuki]

Brilliant analysis, PP. Sorry to backtrack a few posts, but in your post on p. 28 (permalink #278), you show a chart with the words "Squat (test)". What the heck is a "Squat"? Is it the the same as a "test", or is Squat a subset of tests, or are tests a subset of Squats or what? Thanks, Taz

[Anonymous]

	Quote:	Tasuki
	Brilliant analysis, PP. Sorry to backtrack a few posts, but in your post on p. 28 (permalink #278), you show a chart with the words "Squat (test)". What the heck is a "Squat"? Is it the the same as a "test", or is Squat a subset of tests, or are tests a subset of Squats or what? Thanks, Taz

ON SQUATS:

"A squat is the strongest potential money maker of the four Profitunity windows. Virtually all moves end with a squat as the high/low bar plus or minus one bar of the same time period........

The squat is the last battle of the bears and the bulls, with lots of buying and selling but little price movement (NARROW RANGE). There is almost an equal division between the number and enthusiasm of both bear and bulls. A real war is taking place and the equivalent of hand to hand combat is going on in the pits..............", Bill Williams, TRADING CHAOS, p.93.

Bill Williams' technical definition of a squat bar is a bar with greater volume than the previous bar and decreasing MFI (Market Facilitation Index). The short hand definition is, volume greater than the previous bar and a SMALL range than previous bar. As I do not use mathematical formulas, it is the short-hand definition that I look at.

Tom Williams says that the range of a bar tells us the sentiment of the market makers, the ones who can see both sides of the market.

For Volume Spread Analysis the story above is off while the bar itself is of note. VSA would say that the volume is the retail trader rushing into the market. The spread is narrow because as the retail rushes in to buy, for example, there is a substantial amount of Supply from the professional to a meet that demand. Because the market makers see resting orders to sell from the smart money, they have a different perceived value of the stock/index/currency. This perception of value is such that they are willing to keep the spread narrow as they see expect prices to fall. If they, the market makers, were in fact bullish, they would increase the spread, not let retail traders come in and get "good fills".

Simply put, as volume increases the range of the bar should increase as well. If the range is decreasing, something most be going on underneath. What is going on underneath is either Supply swamping Demand or Demand swamping Supply. This often happens at Market tops or bottoms (like Bill said).

We are yet again at situation where we see two different methods coming to the same conclusion. Tom never mentions squat bars, but he talks about narrow spread bars on high volume (p.77 for one-when discussing market tops.)

A squat and a test are not related, but could be the same bar. A test that has a narrower range than the previous bar and has higher volume is by the short hand definition a squat. An UpThrust might also be a squat. Note that at potential turning points as defined by VSA: Tests, UpThrusts, we have the potential for a squat. Which as stated above often come at plus or minus one bar from said turn.

To be sure, not all squats are turning points and not all turning points have a squat. Generally speaking, the higher the volume the more likely the squat will be a market turning point.

[Tasuki]

PP,
Thanks for the info on squats--enlightening!
Taz

[shreem]

Hello To All, this thread is really great. PivotProfiler posts are very enlightening. Also, thank to thos posts of all others.

I think that using VSA concepts coupled with WRB and long shadow analysis is really a great combination.

If some people wants to see more about VSA, go and look at a thread at http://www.moneytec.com/forums/f46/l...e-price-21166/ by KPcurrency on VSA which started "Learning to speak the language of ...

It surprise me that no one is posting anymore on this thread.

Are there people here on this forum still using VSA in their analysis?

A great trading day to all

Sincerly

Shreem

[Tasuki]

shreem, Thanks for the link to MoneyTec. Funny how it looks like a clone of Traders Lab. It also looks as if KP on MoneyTec is our old friend PP on TradersLab. Also seems like some of the other posters are the same between boards. Not sure why they'd do that--create two nearly identical bulletin boards. Have you found any advantages or disadvantages between them? In any event, to answer your question, yes there certainly are folks on this forum (and that one too, I'm sure) who use VSA in their analyses. We seem to go thru "spurts" of posting, and then folks get tired and take a break.

[shreem]

Hello Tasuki, thank for the reply. Yes, you are right, KPcurency and PivotProfiler are the same person. He first started his thread on VSA on moneytec and as there was not too much interaction there and he discovered the quality of trader over here, his has began posting here on VSA.

As for me, I have found that VSA and WRB and long shadow analysis are so great that I have read both thread here and moneytec 2 times in full lenght and I have put on a word document all the important concepts of VSA and WRB that PivotProfiler (KPcurrency) has written.

I really find that his analysis coupled with his charts are simply brillant and extremely useful in my learning curve on these great concepts. Coupling that with my learning of MP, these are certainely a good mix to succeed in this business.

Eventhough, some posts overlap on both forums, I suggest you or anybody interested to also take the time to read through his thread on Moneytec on VSA as there is really a "pot of Gold" for understanding VSA at works

So, Dear Tasuki, a very good read according to me

BTW, PivotProfiler, if you are reading this, thank you very much again for your great posts on VSA and thank for all others contributing:bow down:

Wishing all a great journey of numerous pips or ticks

Shreem

[Anonymous]

	Quote:	Tasuki
	........ In any event, to answer your question, yes there certainly are folks on this forum (and that one too, I'm sure) who use VSA in their analyses. We seem to go thru "spurts" of posting, and then folks get tired and take a break.

For me, there have been two main reasons for not posting:

1. Up until the last few days, I could not consistantly get onto (find) the site. I was routinely told the site could not be found. This problem does appear to be taken care of. Thanks SoulTrader.

2. As I am not the tread starter, I feel no need to keep the thread going. I do not want to be the only person posting. The more interaction among the community the more willingness I have to post.

I am willing to share my ideas, but they may not always be correct. So I too relish the opportunity to see another trader's point of view on a subject near and dear to my heart.

I have enjoyed the charts from Tasuki and look forward to seeing more.

Shreem, if you post it....... they will come.

[shreem]

Hello PivotProfiler, very much happy to see you back. I will certainely post some charts in the future as my understanding and practice of VSA application increase. I am new to it but really found this concept very very interesting and going well with my mentality.

Have also put a reply to Tasuki on your thead on Moneytec on VSA.

For the time being, as I am new to it, I am doing a lot of screen timing to see how the chart unfold in the eye of VSA analysis with the pivot Profile and what I see so far is really incredible how it is accurate if one is patient to wait for the proper setup.

Plan on making my firs live trade with VSA next week or so and will post my thinking on this thread when I will do it.

Wishing a great day to all

Sincerly

Shreem