[VSA] Volume Spread Analysis

[RAVIN]

	Quote:	WHY?
	The 30 minute chart indicates weakness. No demand. Next to last bar.

Thanks WHY?, Ranj,Tingull. It was a lesson in flexibility rather than being right or wrong on my decision to go short or whether VSA readings are right or wrong.

1. This is one of my setups and when I see all elements coming together, I have to take action , when the trade pans out, it generates more profit than when it does not pan out. However even the latter case it leaves you armed with knowledge of probable market direction in the opposite way.

2. WHY? was spot on regarding Tom's comments. I have placed a 5min chart with VSA indicators. Immediately following the sign of weakness, we had sign of strength. Normally I do not switch on these VSA signals. Notice also that the prices were able to crawl up on relatively low vol. one could look at this as no desire to sell rather than no demand.

3. The 30min chart WHY? actually tells a slightly different story of an Effort to rise , and absorption of supply from a push through the tops on the left rather than a buying climax and this info. would provide you more confidence to taking a long trade immediately after you have gone short.

4. Next day we had a similar setup which indeed was productive in the right direction. There was a range formation at R1 (5min chart), breakdownof that range, target was bottom of the white bozo to the left, and a further opportunity to enter on demand .

Anyway enough of all this for now, have to prepare for tomorrow for more realtime effort.

[RAVIN]

Next Day Trades, it is all about playing probabities

[WHY?]

Would I be a real pain to this thread to ask that when you post a chart you also post the same chart as a simple bar chart with open, high, low, close and volume?? That is what I use and candlesticks make it confusing to me. If this could be done without being too big of a hinderance I would greatly appreciate it.

Thanks!

[smoothdrive]

Hello,

I recently found some postings from a KPCURRENCY at elitetrader relative to the VSA methods as created from a Mr. Tom Williams, who expanded on the Wyckoff methods.

Well, it caught my attention because I’m currently following some of the teachings of a Mr. John F. Hill, of Futures Truth, in his book “The Ultimate Trading Guide�. Mr. Hill is a big follower of Wyckoff and has created a number of mecanical rules of the Wyckoff methods.

So, if I may I’ll hurry along with a little background and ask a question or two in the hope that someone or perhaps numerous folks will respond.

I’m a long time user of point and figure charts for my retirement accounts. P&F has served me well and I will continue to use it for my longer term investing. However, P&F is not too good for trading in the shorter time frame from say 1 to 30 plus days.

I am now studying end of day charts via TC2000 and doing my backtesting with TC Companion. The process is very enjoyable and I have not yet made a single trade (haven’t found anything that great yet). For backtesting, I’m following the methods of Chuck Le Beau via his book and DVD titled Trading Systems.

Questions:

1. Does VSA provide you with an edge, you wound not otherwise have?
2. Have you found some of the VSA rules to be true more than 55% of time?
3. Are any of you system traders, and do you include the VSA methods in your methods with success?
4. Or, anything else you might want to add.

I work full time and must do my analysis in the evenings and weekends. Honestly, I don’t want to pay the dues to learn something that really is no better than a coin flip. Also, there is very little discussion about VSA in the trading world, and that gives my pause to ask questions before doing the necessary homework.

Thanks in advance for any input.

Gary Fox

[TinGull]

Hi Gary,

Some good points you bring up to be concerned with regarding any "indicator". To me, VSA has given me a depth of knowledge I never had before. I can see better what is happening inside a bar and knowing that I must wait for confirmation of what I'm seeing is good for me, since I used to just jump in real quick without thinking much.

Is it better than 55% of the time? If applied correctly I think it is. I've learned that VSA theories shouldn't be applied just any old time, but at times where price needs to make a decision. If you're trending and all of the sudden see a high volume up bar that closes near the lows should you short immediately? If there's no overhead resistance right there, I wouldn't. If its trending up and all of the sudden you see that same signal at a known resistance point, then it's a much higher odds opportunity to try and catch that top.

I'm no system trader, so I can't answer that one.

Best of luck, and give this thread a read through. You'll probably find that you've been seeing many of the same things that VSA gives you, but VSA can put it into a more concrete foundation for great trading.

[ranj]

	Quote:	smoothdrive
	Hello, I recently found some postings from a KPCURRENCY at elitetrader relative to the VSA methods as created from a Mr. Tom Williams, who expanded on the Wyckoff methods. Well, it caught my attention because I’m currently following some of the teachings of a Mr. John F. Hill, of Futures Truth, in his book “The Ultimate Trading Guide�. Mr. Hill is a big follower of Wyckoff and has created a number of mecanical rules of the Wyckoff methods. So, if I may I’ll hurry along with a little background and ask a question or two in the hope that someone or perhaps numerous folks will respond. I’m a long time user of point and figure charts for my retirement accounts. P&F has served me well and I will continue to use it for my longer term investing. However, P&F is not too good for trading in the shorter time frame from say 1 to 30 plus days. I am now studying end of day charts via TC2000 and doing my backtesting with TC Companion. The process is very enjoyable and I have not yet made a single trade (haven’t found anything that great yet). For backtesting, I’m following the methods of Chuck Le Beau via his book and DVD titled Trading Systems. Questions: 1. Does VSA provide you with an edge, you wound not otherwise have? 2. Have you found some of the VSA rules to be true more than 55% of time? 3. Are any of you system traders, and do you include the VSA methods in your methods with success? 4. Or, anything else you might want to add. I work full time and must do my analysis in the evenings and weekends. Honestly, I don’t want to pay the dues to learn something that really is no better than a coin flip. Also, there is very little discussion about VSA in the trading world, and that gives my pause to ask questions before doing the necessary homework. Thanks in advance for any input. Gary Fox

1) yes
2) Don't know, haven't test them. Wyckoff's methods are a way of understanding the market, not simple buy and sell here based on a single bar.
3) not a system trader
4) I swing trade end of day. I use VSA principles as my rules to enter trades. and I would not trade anyother way. But you have to do what is right for you.

Rajiv


Rajiv

[smoothdrive]

Hello TinGull and Rajiv,

Thank you very much for your input.

As you may know, P&F charts do not consider volume at all in their construction and interpretation, so volume analysis is very new to me -- and very exciting. Additionally, last January when I first decided to study end of day OHLC charts for the purpose of creating shorter term swing trading methodologies, one of the first swing traders I read about was Dave Landry, and he also does not use volume. So, all my studies and back tests to date have been pattern based with no volume analysis. I must admit that I’m excited about the prospect of learning more about the relationship between price and volume. I’m also thankful to KPCURRENCY for referencing VSA at elitetrader. I intend to send him a private message at ET and thank him.

Btw, Hill provides a good Wyckoff overview of the overall market. I currently maintain 3 bar pivot based swing charts on all the major indexes, and the swing charts have greatly helped me to see congestion (accumulation or distribution) and run ups and run-downs (trends). These swing charts are constructed using Mr. Hill’s rules of construction.

Rajiv, it’s nice to see someone who admits to end of day swing trading. I hope to do that some day and perhaps I can steal a little from you. At the elitetrader site, very few members admit to trading in this manner. Do you trade pullbacks, breakouts, everything? (I must admit that I’m partial to pullbacks at this time, but open to learning anything that works.) I know this is not the proper forum to discuss swing trading, but perhaps you would consider allowing me to converse with you via pm’s or e-mail in the future about EOD swing trading.

Lastly men, I just downloaded the e-book (it’s free – why not?). Have any of you (or anyone else) memorialized some of the more important rules. Yes, of course I will read the book – multiple times – but early rules help to see the big picture.

Any study suggestions? Additional books or training tapes/dvd’s to get etc?

Thanks again,

Gary Fox

[habi]

Tasuki

If you compare the INDU-Chart with a YM or DIA-Chart, you see the volume spike just on the INDU-Chart. In my opinion, a YM or Diamond Chart gives you better volume informations than the Index Chart.

[RAVIN]

	Quote:	WHY?
	Would I be a real pain to this thread to ask that when you post a chart you also post the same chart as a simple bar chart with open, high, low, close and volume?? That is what I use and candlesticks make it confusing to me. If this could be done without being too big of a hinderance I would greatly appreciate it. Thanks!

Don't you just love it, the market is trying to communicate to you whole day, we have to understand/interpret it, and the best tool so far : VSA
but like any other indicator it is a tool, with hard work, discipline and patience we have to develop the skills to apply it.
Those who find faults and blame the indicators suffer from the classic TMT syndrome (Tradesman blaming their Tools) where as all the while, no attempt has been made to construct , stragtegies, tactics, rules for entry and trademanagement followed up with thorough testing and then consistent and diciplined application of their own strategy.

SmoothDrive: There is nothing true or untrue about VSA, it the language of the market. Develop the skill to read it, construct strategies etc. For Tom Williams, it would work over 90% of the time, for others who seek buy and sell signals, probably 5%, I think you get the drift. That applies to any indicator.

The setups I have been talking about for the past 4days.
When they pan out, boy do they pan out:

[RAVIN]

The principles of VSA is truly the language through which we can understand what the market is trying to communicate.

Similar Setup of weakness on YM