[VSA] Volume Spread Analysis

[Anonymous]

Okay, Let the learning and sharing of ideas begin.


1. Volume is activity. Hence tick volume can be used where actual contract volume is not available.

2. Two ways of looking at volume:
* relative volume: volume in relation to the previous bar or bars.
* actual volume: the amount (size) of volume an individual bar represents.

3. Strength comes in on down-bars and weakness comes in on up-bars.

4. Markets do not like high volume up bars with wide spreads? Why because there is a possibility of Professional Selling into such a bar.

5. Professional Money deals in large amounts and thus sells into up bars so as not to be hurt by their own selling. The converse would also be true.

6. 85% of a volume histogram represents Smart Money activity.

7. Smart Money is active on all time frames. Various time frames are used to hide their actions from those that can read a chart and each other.

[notouch]

Morning doji stars are something to look for. In a down trend this would be a long down candlestick followed by a doji which would signify a reversal. This would be confirmed by an up candlestick. Presumably other reversal candlesticks like hammers work just as well.

The issue which most interests me is what timeframe is ideal? I know "all timeframes" is the usual response but which timeframes are ideal? Looking at today's action the 1 minute charts would lead to false "signals" but the 5 minute charts would get you in very late. One solution may be to use the 1 minute for entries but only stay in the trade if confirmed by the 5 minute.

[Anonymous]

	Quote:	notouch
	Morning doji stars are something to look for. In a down trend this would be a long down candlestick followed by a doji which would signify a reversal. This would be confirmed by an up candlestick. Presumably other reversal candlesticks like hammers work just as well.

VSA does not look at the open. There are two and three bar patterns like candle patterns, but not candle patterns themselves. Although they MAY be a candle pattern, they are not looked at in that light.

Since we do not technically look at the open, we do not know or care about a Doji. By definition, a Doji has an open equal to the close but we don't look at the open so we can't "see" a Doji. If you use TG software or look at their charts, you will notice that there are no open notches on the bars.

Personally, I do like to see the open on some bars. If fact, a NO DEMAND bar that closes in the middle and has an open in the middle is a powerful sign. This is a Doji, but VSA is concerned with the range, the closing price and the volume.

	Quote:	notouch
	The issue which most interests me is what timeframe is ideal? I know "all timeframes" is the usual response but which timeframes are ideal? Looking at today's action the 1 minute charts would lead to false "signals" but the 5 minute charts would get you in very late. One solution may be to use the 1 minute for entries but only stay in the trade if confirmed by the 5 minute.

All time frames .

1 minute has a lot of noise on it. It also depends on how many time frames you want to look at. If only trading off of one chart, then a 1 minute might be too "fast". Joel trades off of a single 3 min chart. Todd likes to use multiple charts. One problem with multiple charts is it becomes harder to see the signs of Professional Demand/Support. This is where the software does have an advantage over those who choose to learn the method alone.

I am not a fan of the software and would not recommend it. But if you want to trade off a 1 minute chart, you do need to look at least one more time frame. Just realize it gets difficult to keep all the various bars with supply and demand straight.

[Wookey]

notouch,

I think you know the answer. there is no ideal timeframe. I wish their software analysed pure ticks not bars. There is nothing special in 1 min close price.
About entries, You should not think that all reddish signs represent short entries and greenish - long entries. Some of them are "soft" signals like "we would not go long at this time". And also they recomend looking at other indicators like Relative Volume Indicator, their trend indicators and so on.
Look at the chart attached, it's EURUSD 120 min. I think if you want to catch all swings, you should skim for several timeframes. Short term trades - 1min to 20 min, Mid-term - 30 min to 240 min and so on.
If you are interested I can post some more charts. Just let me know.

P.S. Personally I would rather have indicators for TradeStation or eSignal than stand-alone software. I use Drummond Geometry and Market Profile to trade, and using another tool for confirmation/entries is not very convenient.

[Anonymous]

It should be said that candle can be used. TG offers them because many traders like them. I used to like them myself. But bars are easier to see especially at first.

Tom Williams (father of VSA) uses bars
Todd Krueger (TG and leading VSA expert) uses bars
Gavin Holmes (TG) uses bars
Sabastin Manby (Tom's friend and VSA expert) uses bars. Read his article on the T2W forum.
Joel Pozen (Formerly of TG, Student of Richard Ney, and one of the best chart readers, second only to Tom Williams) uses bars. Check out his site at Tradingmentor.com

If one uses candles, one need to remember that the close is more important than the open. Hence while a candle may close in the middle and have an equal open, what matters first is the middle close. The fact that the bar is a Doji is secondary.

As far as mutliple time frames. The best approach may be to find certain support/resistance levels on various higher time frames, but trade off of just one lower time frame chart.

[Wookey]

	Quote:	PivotProfiler
	As far as mutliple time frames. The best approach may be to find certain support/resistance levels on various higher time frames, but trade off of just one lower time frame chart.

Yes, this is exactly as I do, use Drummon's levels from daily and weekly and use MP to see on lower TF's if levels are holding or breaking. But MP doesn't always catch it, but this VSA thing looks like can really help. Eh, If only I could join them in one platform.

[notouch]

I mentioned the morning doji star just because it was mentioned by Gavin Holmes (I think) during the seminar. I'm personally sceptical about focusing on bar closes. A 1 minute bar with a low close followed by a 1 minute bar with a high close would just be a single bar with a high close on a 2 minute chart. The rule is "strength appears on down bars" so in that situation the 1 minute chart is showing strength but the 2 minute chart isn't. I think you'd have to look at the market you want to trade and choose the best time frame to fit your trading style and then just stick with it. Looking at several different time frames may just lead to indecision.

Wookey, I'd definitely be interested in seeing more of your charts.

[walterw]

I "still" dont understand where is the line that divides the interpretation of fading this down bars with volume (showing strength) and having this down bars with volume installing a downtrend like today... in that case they far from showing strength they where preanouncing a big down move... please vsa experts tell me how would we establish the diference.... and where would be the ideal timing to enter either two trades....thanks Walter.

[Wookey]

More charts from TradeGuider.

Attached:
1. Euro Future Daily
2. Microsoft Daily
3. Mini Dow Jones 180 min
4. Mini Dow Jones 1 min

If you have a request for certain symbol and tf just let me know.

[Anonymous]

Wookey

Could you please put up a 5 min Euro spot chart from Today? I want to try something. Thanks