[VSA] Volume Spread Analysis

[Anonymous]

Nice Bullish White Hammer pattern.

Note that the white hammer line is inside the range of the Ultra Wide Spread Ultra High Volume candle.

When we take a look at the WRB, we see a down candle that has an ultra wide spread and closes on its low. There would appear to be heavy selling pressure in this bar. BUT THE NEXT BAR IS UP. If that bar was true selling, then the next bar would not be up.

In fact, if one looks at what price did after that bar it moved up. Clearly, the Professional demand created an upward drift in price. Simply, that WRB must of been a shift/change in the Supply/Demand dynamics of the market.

Now note the large dark Candle just prior to the shaded area. This candle closes on its low , closes lower than the previous bar and has volume less than the previous two bars. This is No Selling pressure. The close on the low fools the retail trader into seeing weakness. The lack of volume, however, is the real clue.

Price does move down a bit and create the bullish hammer pattern. Note that the hammer line itself is a VSA shakeout/test bar.

This is the "ideal" set-up. We see strength come in using our primary methods (VSA and WRB) and then we get a buy signal via our secondary method (Japanese candlestick patterns).

[Anonymous]

	Quote:	sds
	Hello PP, Nice post and analysis. But I did not understand, the statement which I have marked in the Bold. Could you explain, how did you arrive at this point that there is supply in the market? sds.

Hi sds.

That particular bar is a form of a test. But note the volume. it is very high for a test. If there were no sellers then volume should be lower. Now this is confirmed as price moves down. So we have a failed test, which shows weakness(supply).

[walterw]

Hi Pivot : a question about your yellow lines on the volume histogram, are they a simple grid or are they bracketed levels or stand dev of x vol period average etc... ? thanks Walter, by the way, each and other presentation are more clear.... cheers Walter.

[Anonymous]

Hi Walterw,

No. They are just there for "show". I put them there for a little color. In VSA the actual number is less important than the relative amount.

This brings up the color of the bars. Blue means the bar is greater than the previous bar and red means the bar is less than the previous bar.

Note this is superior to the traditional red for down close and blue (green) for up close. Why? Well we know that supply comes in on up bars and demand shows up on down bars, but this is the exact opposite of what the traditional color scheme implies.

Sometimes you will notice a black ave on the chart. This is a 30 mov ave (simple) of volume.

If you wanted to be more like tradeguider, you could place a 3 stand deviations of the moving average on the chart. Any bar that was above that level would be ultra high. However, you will find that over time one can get a feel for the amount of volume just by looking at the bars.

[Tasuki]

Interesting discussion, folks. What I'd like to see is a compendium of VSA setups, with a dozen or so examples of each, to show how the same setup might look with different scenarios. I've only been studying VSA for a little while, and Tradeguider says it has over 400 signals, but they seem to come down to a common few, really:
1) tests (successful and unsuccessful)
2) shakeouts
3) no demand
4) stopping volume
5) pushing through supply
6) upthrust
7) selling/buying climax
8) climactic action
9) support/weakness coming in
10) trap up/down move
11) no result after strong effort
12) selling/buying pressure
13) bottom reversal
14) end of a rising market

Well, that's all I can find. Probably missed some. The key, IMHO, is to get these patterns in your head, watch them as they unfold in different situations. A few, like stopping volume, are so obvious they reach out of the computer screen and slap you in the face. I'm slowly starting to see a few others, like no demand, upthrusts and shakeouts, but they take time to see them as they unfold. In my experience, Tradeguider (and the rest of you who have posted charts here) are missing half the volume information. For my money, I really need to see upvolume vs downvolume. With Tradestation, you can easily put those two on one subgraph. I've got mine set up with thin green line for upvolume, to which I overlay a big fat red bar for downvolume. The amount of added information you get this way is amazing.

[Anonymous]

	Quote:	Tasuki
	........Tradeguider says it has over 400 signals, but they seem to come down to a common few, really: 1) tests (successful and unsuccessful) 2) shakeouts 3) no demand 4) stopping volume 5) pushing through supply 6) upthrust 7) selling/buying climax 8) climactic action 9) support/weakness coming in 10) trap up/down move 11) no result after strong effort 12) selling/buying pressure 13) bottom reversal 14) end of a rising market

I do not have Tradeguider, nor do I recommend it. Everything can be learned in the book and the bootcamp. And TG will no longer support the growth of those who do not buy the software. In other words, all they care about is selling software. THEY ARE NOT CHAMPIONS OF VSA. They are no different than eACSTrend or any other product huckster out there.

To be sure , the method is valid but the method is being lost in a desire to market a partial black box software package. Sorry, just had to vent. As of last weekend, TG will no longer be doing customer only learning sessions for customers who do not own the software. So, they will take your $100.00 (book) or your $500.00 (bootcamp) but then they want nothing to do with helping you grow your VSA knowledge.

As far as the 400 indicators go, this is a little misleading on their part. What they do is have, for example, 10 different dialog boxes associated with No Demand. That is, 1 of 10 different boxes can come up with a No Demand signal. The differences are very subtle and understanding that the signal is No Demand is actually all that is needed. However, the software reads nuances in the price action to determine which of the various No Demand signs is displayed.

To be sure, there is nothing wrong with that. However to say that one cannot learn VSA on his own because of the number of indicators involved is a little felonious. As you have shown, it breaks down to far fewer than they would have you believe.

P.S. Again forgive me for venting. I feel betrayed by the new TG focus and tell Gavin and Todd this all the time. If they are not willing to be champions of VSA first, then I will be.

[Anonymous]

	Quote:	Tasuki
	.......In my experience, Tradeguider (and the rest of you who have posted charts here) are missing half the volume information. For my money, I really need to see upvolume vs downvolume. With Tradestation, you can easily put those two on one subgraph. I've got mine set up with thin green line for upvolume, to which I overlay a big fat red bar for downvolume. The amount of added information you get this way is amazing.

Be careful of this. Take a look at the chart from my prior post. That large down bar on heavy volume would be associated with Selling , or negative, volume by traditional volume indicators.

But we know that there is BUYING in there. Strength comes in on weakness (down bars) and Weakness comes in on strength (up bars). Just step back and look at what price did after that large volume spike. The overall drift of prices changed to the upside. Clearly, there must of been some buying in that bar therefore.

Now if you are referring to bid/ask or volume on all stocks on an up tick or such, that is not necessary. Think about this, If all stock of the ES are ticking up on heavy volume, who is on the other side doing the selling?

Selling climaxes will have heavy "selling volume", but it is the hidden Professional demand (buying) that puts the floor in the market.

[Tasuki]

Sorry, PP, did I sound like I was a shill for Tradeguider? Didn't mean to if I did. I'm not sure if they really will drop the book buyers from their customer seminars. You may know more than me, but I've heard several of Todd's webinars, and he's started off every one of them threatening to dump the book and bootcamp buyers. So far, it's just been alot of hot air. We'll see.

I posted my initial comments in the hope that we could maybe look at the VSA somewhat systematically, analyzing which signals work best, and in which contexts ("backgrounds").

I'm new to Traders Lab, so I'm not sure I'll get this posting right, but I'm going to try to post a chart I prepared during my free Tradeguider trial which shows a basic test followed by a shakeout. This is a pattern that seemed to work well.

[Tasuki]

Hmm, something wrong, my chart didn't post.

[Anonymous]

Hi Tasuki. I was not directing my comments at you. Sorry if you felt that I did. I just know that Todd and Gavin read my posts and I was talking to them.

Last weekend Todd finally admitted that Gavin is more of an indicator trader. This is something he would not admit prior to then. Yes it is true that Gavin is less experienced in VSA. So why does HE do all the public events and Todd do only the events for software customers?

I was shocked when Todd showed up at the event held here by TL. That was great. Check out the comments and you will see that others noticed the difference in abilities between Gavin and Todd. Its just a shame that they no longer want to help educate ALL CUSTOMERS.

Anyway, I do not want to TG bash. I believe in VSA and want to both share and learn from others. We can figure this out, with or without them.