[VSA] Volume Spread Analysis

[TinGull]

Its a line showing the support of the WRB

[mister ed]

	Quote:	BlowFish
	As an aside I think an area where VSA shines is monitoring what is going on in the now. My paradigm was always anticipate and then monitor. Is it happening yes/no. VSA is a pretty decent monitoring tool. I have shifted recently to simply looking for continuation/change.

BlowFish - if you have time could you elaborate on what you mean by "looking for continuation/change" please? And how VSA is useful for this? Thanks

[jjthetrader]

Would you guys mind helping me out on this chart. One thing I'm still getting tripped up on is the background.
Have a look at this chart of the DOW mini (15 min chart), would one of you be able to point out the elusive (to me anyway) background?
I know Ravin's familiar with the YM, any pointers?
Thanks!

[zdo]

Just got the new member ‘post or perish’ msg when I came up this time. So, here’s a post - that includes a short self -introduction.
While looking at price and volume threads on T2W, followed a reference to TL Forum and here I am. My user names are ZDO on T2W, obx on TS forum, (and I forgot it on ET) - should you need to check the intention and tone of my legacy posting.

Have only found time to look at a few pages but, so far, TL is a breath of fresh air. Going forward, as I plow through all 83 pages on this thread will I find herein any digests of the principles of VSA ? Any special pages on this thread to get the big picture? Also, is the book complete? ie does the Tom Williams book disclose all the patterns used in the software? Many thanks.

zdo

[Anonymous]

Wow. This thread moves at the speed of light. LOL

I love it.

ZDO: The book is complete. However, the software has roughly 2oo signs of strength and weakness. Many are slight various of a theme. For example, there may be 10 different No Demand signs. All that really means is there are 10 different dialog boxes associated with the No Demands, yet the definition of No Demand remains constant throughout the 10 different signs.

Also Tom and Todd worked on the software together and not the book. Which means Todd added a few ideas to the software that are based on VSA principles but not specifically articulated in the book. (Early on it is rumored that Tom felt that the software had too many "signs").

In sum, the book is complete and the foundation from which you should begin your VSA journey.

[Anonymous]

	Quote:	Soultrader
	Do you have a rule of thumb where when a market makes a new low, you prefer to wait for a potential test in the next x bars? Like sometimes a test will come on the second bar after the new low or 3-5 bars afterwards by making a new low by 1-3 ticks before reversing. Although most traders do not want to catch tops or bottoms, a good entry is absolutely key with the Nikkei due to the large tick size. Do VSA traders here wait until price breaks the high of the test bar?

I am not concerned with picking tops and bottoms; I let them pick themselves.

There is no "time limit" on when a Test can occur. What is more important, at least for me, is that the Test come within the body of a significant WRB. That is, within the range of a high volume candle. Sometimes you will see stopping volume (Ultra High Volume closing on or near the high on a wide spread candle), then you get a No Demand as price begins to move up. Now if price moves down an gives a Test, you really have something. The No demand indicated that the Professional money was not yet ready to take prices higher. They needed to see if there was any supply left in the market. Supply is resistance to higher prices. Hence, they Test the market. This entire process could take many bars or as few as three (Stopping volume, No Demand, Test). So there really is not set amount of bars one needs to wait for a Test.

As far as waiting for the next bar goes, one really does need to wait. A Test is really not a Test if the next bar or bar after that does not make a HIGHER close than the Test bar. One can use "multiple timeframe tricks" to get better entries. For example, if a 10 min chart shows a bar that appears to be a Test: volume less than previous two bars, close on the high, close down from previous bar and is within the range of a high volume bar, one could go up a timeframe or two looking for clues that demand has entered the market and the path of least resistance is likely up.

There was an example of this in reverse given by Todd himself. He saw a bar with volume less than the previous two, closing on its low and closing higher than the previous bar on a narrower spread: No Demand. However, the next bar had not completed (it was on a daily chart), but he used the knowledge of this bar to set up his bias for the next day. He looked to go short on signs of weakness on the 30 and 5 min charts. But now we are getting into trading technique.

Generally it is advised to wait for the next bar to confirm. If the NIKKEI is different because of tick size, I would at least suggest using a multiple timeframe approach.

[tawe trader]

	Quote:
	Where I find VSA very worthwhile is in a situation where a lot of indicators fail, ie an intraday trading range. If the mkt is bouncing around without any major news you can quite successfully pick tops and bottoms.

Due to the very important remark PivotProfiler made - "I am not concerned with picking tops and bottoms; I let them pick themselves"


I need to re-write the above.........if the mkt is bouncing around without any major news (or in a trendless environment) you can quite successfully trade the turns based on VSA techniques.

Thanks for the reminder PP.
Darren

[TinGull]

	Quote:	jjthetrader
	Would you guys mind helping me out on this chart. One thing I'm still getting tripped up on is the background. Have a look at this chart of the DOW mini (15 min chart), would one of you be able to point out the elusive (to me anyway) background? I know Ravin's familiar with the YM, any pointers? Thanks!

I don't know if this is the answer you're looking for...but weakness is apparent there with the lower hi's and lower lo's.



Often I think people can get tripped up in looking for smaller signs of overall weakness, when you've got obvious weakness in the form of a down trend. In that scenario, I'd be shorting all the no demand bars on rallies until that doesn't work anymore.

[jjthetrader]

Thanks Tin,

I didn't know what kind of answer I was looking for either but I think you answered it.

I was just seeing hidden potential buying with a positive test but then the market turned and headed downwards. This applied vice versa as well with selling so I assumed I had the wrong background information.

I was just wondering where to look really. I may be looking too far back or too close.

But you made a good point, in a downtrend look to short signs of weakness.

[TinGull]

Just a note on the chart i had posted in here a few days ago...SOLF...shorted on a doji "no demand" at resistance and today things are going very well. Nice gap down and currently is 14.6% lower from the close yesterday, and nearly 20% lower from my original entry.