[VSA] Volume Spread Analysis

[ranj]

Hi Why?,

I'll take a crack at it
The 2nd to last bar does not appear as a test bar. A test bar should close off the lows. Also the test bar should test something. Lastly according to Master the Market, a test needs a confirmation on the next bar to be a true test. If I was looking to trade this chart. I would wait for the test of the gap area or the Wide Range Body from the 5th.

Hope that helps
Rajiv

[Anonymous]

	Quote:	WHY?
	Would the second to the last bar be a test? And if it is why didn’t price go up on the last bar (next bar)?

No. Test bars close in the middle or upper portion of the bar. Ideally they close on the high, with the next bar closing with a higher close and not a lower low.

With volume less than the two previous bars, we do have a "no supply" bar. Personally, I do not consider it as such because the next bar trades lower.

That really doesn't matter. What is important is to see that this down bar during an up trend comes on little volume. That is enough to tell you that at least at that point, the market doesn't really want to go down.

The next bar, btw, does look as if it would be a test but it would need to be confirmed on the bar after that.

	Quote:	WHY?
	Finally, what do you see happening on the bar yet to come??

I have no idea. The future is unknown and unknowable.

I surrender to the market and try to trade the IS, not the SHOULD BE.


******Let's back up and look at the last four(4) bars.:
1. we have a gap up than a WRB on Ultra High volume. As there is a small top to the left, this could be absorption volume/pushing thru supply. Or the Ultra High volume could be mean supply is swamping demand. We need to look at the next bar.

2. This bar has a narrower range, close up, and volume is less than the previous two bars. This is No Demand. While the bar is up, the fact that the bar narrows and the volume drops off, tells us that there must of been some Supply in that fist bar.

3. This bar closes down on low volume (volume less than the previous two bars). So it now appears that there the Smart money is not interested in lower prices despite the supply that entered on the first bar. This bar is bullish in that it shows no Professional intent to push prices down and may signal that the supply that entered was swamped by greater demand.

4. If this bar is a confirmed test, then price should head up. This would indeed tell us that the supply that entered on the WRB was swamped by demand.

Where does that leave us? Like the man said, I would wait to see something happen within the body of the WRB (like No Supply or Test). Or I would like to see the Gap tested and act as support.*************

[WHY?]

	Quote:	ranj
	Hi Why?, I'll take a crack at it The 2nd to last bar does not appear as a test bar. A test bar should close off the lows. Also the test bar should test something. Lastly according to Master the Market, a test needs a confirmation on the next bar to be a true test. If I was looking to trade this chart. I would wait for the test of the gap area or the Wide Range Body from the 5th. Hope that helps Rajiv

Thanks Rajiv for your comments. I thought it might be testing to see if there is any supply but you say it needs to close off the low? I wonder why it must close up? What would the close signify?

You mean you would wait until a bar went down into that gap created on the 5th? Why? Not sure I understand how that would prove or confirm the second to the last bar in the chart???

I dont use candlesticks. They are confusing to me so if you could explain with just regular bar charts. I have Tom Williams book but I still don't understand all he talks about. Frankly it gets a bit confusing to me. I want to learn this way of looking at the markets but see I have a long way to go.

Any help or comments will be appreciated!

WHY?

[WHY?]

	Quote:	PivotProfiler
	I have no idea. The future is unknown and unknowable. I surrender to the market and try to trade the IS, not the SHOULD BE. ***********

I am not sure how to take this statement??? What is the use of VSA if it can't help me place a trade? Why would I place a trade if I have no idea what can happen to it?

[WHY?]

	Quote:
	No. Test bars close in the middle or upper portion of the bar. Ideally they close on the high, with the next bar closing with a higher close and not a lower low.

What does closing in the middle or higher signify when a test is being made?

	Quote:
	That really doesn't matter. What is important is to see that this down bar during an up trend comes on little volume. That is enough to tell you that at least at that point, the market doesn't really want to go down.

Would that then mean no supply or smart money is supporting it to keep price from falling? But if they were, wouldn't it have more volume??

	Quote:
	The next bar, btw, does look as if it would be a test but it would need to be confirmed on the bar after that.

So, are you saying that I should wait to see if the next bar confirms that the last bar is a test before I do anything? Ok, lets say it does confirm. Would I then be right in saying the market is strong, and take a long position?? I am not trading this stock so don't worry about giving me bad advice..etc Just trying to understand "when" i would take a position in it hypothetically, so i can begin to see how VSA works.

	Quote:
	Let's back up and look at the last four(4) bars.: 1. we have a gap up than a WRB on Ultra High volume. As there is a small top to the left, this could be absorption volume/pushing thru supply. Or the Ultra High volume could be mean supply is swamping demand. We need to look at the next bar.

I looked back 3 years there was no top to the left of the WRB. Does that mean the WRB would not be absorption volume, pushing thru supply? I am right on that? Would that just mean it was demand?

	Quote:
	2. This bar has a narrower range, close up, and volume is less than the previous two bars. This is No Demand. While the bar is up, the fact that the bar narrows and the volume drops off, tells us that there must of been some Supply in that fist bar.

That makes sense to me except why would there be some supply in the WRB?? That part I don't get. Couldn't it be pure demand?

	Quote:
	3. This bar closes down on low volume (volume less than the previous two bars). So it now appears that there the Smart money is not interested in lower prices despite the supply that entered on the first bar. This bar is bullish in that it shows no Professional intent to push prices down and may signal that the supply that entered was swamped by greater demand.

Would I then be correct in saying that IF smart money were interested in pushing the price down that the range on the bar after the WRB not only would have closed low, but would have also been a WRB itself??

	Quote:
	4. If this bar is a confirmed test, then price should head up. This would indeed tell us that the supply that entered on the WRB was swamped by demand.

And that it would be an opportunity to take a long position?? When would I take that position? When a new bar completes and proves that the last bar in the chart is a valid test?? These are daily bars so would that mean I wouldnt take a long position until 2 trading sessions from the end of the last bar?.

[Anonymous]

	Quote:	WHY?
	I am not sure how to take this statement??? What is the use of VSA if it can't help me place a trade?

It can, but If you're looking for a crystal ball, you need something more than Volume Spread Analysis (or any method/indicator) can give you. Learn to trade the NOW, the future will take care of itself.

	Quote:	WHY?
	Why would I place a trade if I have no idea what can happen to it?

You do: Profit , Loss, or Break even

[BlowFish]

	Quote:	WHY?
	I am not sure how to take this statement??? What is the use of VSA if it can't help me place a trade? Why would I place a trade if I have no idea what can happen to it?

Trying to 'predict' the market leads to a whole load of problems (not least of which are psychological ones). Sadly I speak form experience here. By all means anticipate a direction to enter, use a squiggly line, discretion, VSA, or even a coin if you prefer, it really doesn't matter so much. This is absolutely the least important part of the equation. Why do people (me included) spend a disproportionately large amount of effort on it. better exits will almost certainly improve your trading more than better entries!

One thing that is key however is monitoring what is happening now and determining whether what you anticipated is actually occurring. Of course then you need to attend to business needs based on your observations of now, do you close, reverse or let it ride? VSA is a pretty decent monitoring tool. Actually It would be interesting to see if any one makes extensive use of VSA to exit? I have to say there is nothing so satisfying as covering a short into a selling climax with the rest and even reversing long. Of course not so fun when you then see signs of no demand and price takes another leg down :-)

Cheers.

[Turning Point]

Hi, I am new to VSA and the forum. I have a question. I would like to buy the Boot Camp CD of VSA. I do have the book master the market. I would like to know is it necessary to buy the cd or will the book be enough. Can any one with VSA knowledge advise.Thanks.