[VSA] Volume Spread Analysis

[RAVIN]

	Quote:	WHY?
	Where is the 2 minute chart?

Guess it did not upload , will try again. I prefer to micromanage the trade on smaller time frames.
It is find on Hind Sight analysis to come to general conclusions regarding buying and selling pressure and possible entries, exits etc, but realtime the decision has to be made on single trigger bars after the signal which defines your particular setup and is consistent with your tactics to implement a particular strategy. Otherwise all we end up is endless discussion on WRB, doji, dragonfly, small range bars, price, vol, professionals, smart money etc. You have 100 of pages in threads on other websites, hardly any realtime trades

[RAVIN]

	Quote:	WHY?
	I made the above quote. Here on this chart is what happened. How does the market appear now after this last bar. What is it telling us for the next session? This last bar is an up bar, closed high, below average range, low to average volume. What does that mean? Be glad for some input. It doesn't matter of we are wrong or right lets just try to figure it out. What is the market saying to us?

Best to drop the idea of being right or wrong? It gets linked up with forecasting and ego which has absolutely no place in realtime trading.

Keep it simple, get away from all this talk about professional and smart money as if they were a single entity. These folks operate on all different time frames with their own agenda just like you have natinal , regional, city, area wholesalers and various levels of retailers on our streets.. Trying to figure out what each of these groups is up to will drive one round the bend.

1. When the market is rising and there is sudden invrease in vol. it indicates resistance to higher prices. There is nothing like selling vol or buying vol. in a single bar. Vol is number of contracts exchanges, ie. buyers = sellers. Better to think in terms of demand/supply or buying and selling pressure. If sellers are falling over each other to hit the bids rather than sit on their offers, this suggests selling pressure and resistance and vice versa(buyers are meeting the offers rather than lowering their bids providing support). Now whether or not this selling pressure is enough to keep driving the prices down will depend upon potential buyers, which effectively is an unknown , until they play their hands.

2. Tom williams keeps emphasizing this, that there is nothing written in concrete when you read VSA principles in live market, a sign of weakness or strength can be immediately negated and one has to remain totally flexible.

3. Now coming back to your chart, If I was trading this instrument intraday, I would have the floor pivots market out of that narrow range inside day.
Watch where the price opens near the high, moves to the pivot and rejects that, the most likely outcome is the break to the upside. Can observe the price action at the pivot and take a trade expecting resistance around 118.
That will be the target.
4. Now time to observe what happens there, if it forms a sideways range, mark the high/low of that and take the breakout from there. If price drops back towards the High of the inside day with vol, it will go to the pivot and to the low of that day.
5. ofcourse if the price opens below the pivot, you can play it in the opposite way, expecting support around 105 and so on.

So effectively intraday you have a choice of quite a few ways to take advantage of various strategies, ie. breakout, reversals.

Anyway this is how I would do it, and it is time tested methodology.

[Tasuki]

Hello "Why", sorry for the confusion---the bar with the vertical line through it us the one in question.

Also, I put the chart in bars, as requested. See attachment.

[RAVIN]

	Quote:	Tasuki
	Well, the last time I tried this approach I got some very savvy responses, so let me try ringing the same bell. I've been stuggling with VSA for a while now, and I seem to find lots of exceptions to the rules, places where VSA doesn't seem to work. Usually, it's my lack of understanding that's to blame, but I keep probing until I really understand how to apply VSA. If you add up all the VSA signals, it looks to me as if this should have been a pretty clear bearish signal. Did VSA just fail us, or am I missing something crucial?

Hi, Tasuki,
I can under your frustration, having gone through it myself, and then you come up against some smart a... responses. until I met a floor trader who made it simple for me. I have stated some of it in the post to WHY? above.

First of all get rid of all this stuff about professional money etc. and why if there was supply /distribution etc to the left and still price did not go down and so on. VSA and Wyckoff's principles are not about that at all, it is about gauging buying and selling pressures within the background context to the left.
1. Back to your chart and the narrow bar on high vol. Obviously lots of buyers and equal number of sellers, the narrow range suggests sellers were keen to hit the bids rather than sit on their offers or to raise them. If you were trading this intraday there was enough movement for the next 2 days to generate substantial profit. Now at that point a bullish dragon fly is generated indicating demand/buying pressure. Buyers be it professionals or otherwise percieve value and expect higher prices, simply flow with that.

2. However you can inject some logic here, 3 bars back, you have a wide range up bar following congestion on high vol, indicating effor to rise which then runs into supply emerging from congestion during 16-23rd July, then you have your narrow range bar again on high vol. As I said you could have easily profited from this info. but unfortunately when we first get into this VSA/Wyckoff, we get tied up with expectations and a subsconcious demand on the market to meet those expectations i.e in this case to demonstrate a significant downside, why?

3. The fact that the market did not further than it did simply means there were buyers on the sidelines with different agenda on a higher time frame. They were willing to absorb all that selling and support the market, ie. meeting the offers rather than lowering their bids. period.

As WHY? when a sign of weakness in negated, you are now armed with invaluable information on the strength of the market. There is no question of VSA working or not working. Those terms are more applicable to buy and sells signals generated from a set of maths based indicators where the logic is more skewed.
As Todd puts it "you are using variable A (price) and slicing and dicing it to predict variable A (price"

Having said that there are many who just employ that, have rules sets and having tested them throughly apply them with discipline and consistency.
check out a consummate trader Arthur Ullrich at www.tradetutor.com. This is not a recommendation to use his strategies.

Only to point out that with VSA analysis, it still is upto the trader to come up with set strategies and tactics and rulesets , test them and apply them consistently remaining flexible at all times, this is the key.
Hope this helps and does not sound too savvy,
VSA/Wyckoff is a great tool, keep at it, like a piano, it is not going to play by itself, your skills will develop in time, persistance and patience.

[RAVIN]

Tasuki,
When I put up charts latter regards to post 503, you will get more insight into what I am talking about regarding the need to be flexible and the sound logic behind VSA

[ranj]

	Quote:	WHY?
	I made the above quote. Here on this chart is what happened. How does the market appear now after this last bar. What is it telling us for the next session? This last bar is an up bar, closed high, below average range, low to average volume. What does that mean? Be glad for some input. It doesn't matter of we are wrong or right lets just try to figure it out. What is the market saying to us?

Hi Why?

This bar does not tell me much in terms of is it time to take action. When I see a bar like this in relation to the prior day's action, I just wait for more bars to paint.

Rajiv

[RAVIN]

TASUKI,
Check out soultrader's video:
http://www.traderslaboratory.com/for...-and-1278.html

You had that invaluable info. on weakness on that NR bar with high vol, armed with that you could adopt similar trading as illustrated in the video and profit from it.
Now yes there was considerable weakness, selling pressure but two bars later, demand has emerged which is able to meet all that selling. Once again you have gleaned more info. on the market , this time showing signs of strength, with significant upside. Flexibility, not to get tied up with all this pros. and smart a.... activities.

[TinGull]

Just a chart I happened across.... Big volume coming in on an uptrend line with a gap down closing near the highs...



I'd be watching for a gap up on Monday with this one for another leg up.

[TinGull]

HA! OOPS! Forgot to update my data....

[WHY?]

	Quote:
	Best to drop the idea of being right or wrong? It gets linked up with forecasting and ego which has absolutely no place in realtime trading. Keep it simple, get away from all this talk about professional and smart money as if they were a single entity. These folks operate on all different time frames with their own agenda just like you have natinal , regional, city, area wholesalers and various levels of retailers on our streets.. Trying to figure out what each of these groups is up to will drive one round the bend.

I couldnt agree more. Except that anticipating correctly does matter to the pocket book! But for our purpose here right or wrong doesn't matter at all. We are learning. The term smart money gets tossed around alot. Like you say it is impossible to know who they all are. They only leave signs they been there.

	Quote:
	1. When the market is rising and there is sudden invrease in vol. it indicates resistance to higher prices. There is nothing like selling vol or buying vol. in a single bar. Vol is number of contracts exchanges, ie. buyers = sellers. Better to think in terms of demand/supply or buying and selling pressure. If sellers are falling over each other to hit the bids rather than sit on their offers, this suggests selling pressure and resistance and vice versa(buyers are meeting the offers rather than lowering their bids providing support). Now whether or not this selling pressure is enough to keep driving the prices down will depend upon potential buyers, which effectively is an unknown , until they play their hands.

Ravin I think you hit the nail on the head. Buying and selling pressures are what we need to be thinking about. However, I thought that is what VSA did or helps us do???? It helps us to spot the signs of buying selling/pressure. Am I wrong there? we don't have the benefit of seeing all the orders come in. Nor do we know where all the stops are at. A specialist on a stock "sees" much more than we are priviledged to see. He may see a large buy order sitting on the books. However, that order is getting executed in small sizes to keep the price down. He has the benefit of seeing where the buying pressure is and can position himself accordingly to trade himself. On the other hand we are trying to discover where the buying/selling pressures are. VSA is one tool in our toolbox to help us accomplish that task.

	Quote:
	2. Tom williams keeps emphasizing this, that there is nothing written in concrete when you read VSA principles in live market, a sign of weakness or strength can be immediately negated and one has to remain totally flexible.

I suppose that is why he says if a market appears to be strong but doesn't act strong then it is really weak.

Thanks for the analysis of the chart. I will have to think through what you are saying.