[VSA] Volume Spread Analysis Part II

[Sledge]

	Quote:	thrunner
	Forex volume data are also 'tick' based data in that it is not something reported by an exchange and therefore only reflects a small subset of the total volume. It is like taking a poll in your own neighborhood which may not accurately reflect the national or international poll.

I have had this discussion before and it is basically, up to the trader to determine whether he/she feels it is valid or not. The principle is as follows:
1. Since Spot FX is NOT centrally Located, tick data will come from your broker and will be based on the contracts THEY carry.
2. My usage of the Tick Volume as per each platform- Each broker is carrying a small percentage of the TOTAL overall contracts being traded at any given time in the market.
3. It is my firm belief after looking at various brokers and platforms tick based volume that the actual # on the volume bar is less significant as the OVERALL relativity of the said bars SIZE in relationship to the preceeding bars on the "left of the chart"
4. So in a sense on a 1 hr bar my broker may have 3,879 as Volume- Your broker may have 4,856. If we compare the relative volume with the background- we are still able to make trading decisions via VSA.
5. I do believe that tick volume of any nature in Forex (because it is the best we are able to attain) is useful as long as we are looking at it in relative terms based on where you trade.

Sledge

[forsearch]

	Quote:	Sledge
	Each platform from your broker should have a volume indicator attached. The MT4 has a pathetic "on-chart" volume (If you go to right click on chart, properties and radio button "volume,) and it also has the nice "tick" volume you see on my charts under the "indicators" tab. But I have used plenty of platforms and all give you access to volume- be sure you are getting TICK volume though- that is the key to success in Forex!

So it's not traded volume, but just the tick movement of each bar on the chart, correct?

[DbPhoenix]

	Quote:	thrunner
	Forex volume data are also 'tick' based data in that it is not something reported by an exchange and therefore only reflects a small subset of the total volume. It is like taking a poll in your own neighborhood which may not accurately reflect the national or international poll.

That's true. But, even if one were able to obtain universal tick volume, it would indicate only the "busy-ness" of the trading, not share or contract volume. Whether one finds it useful or not depends on whether or not he's tossing virgins into the volcano.

[Sledge]

	Quote:	forsearch
	So it's not traded volume, but just the tick movement of each bar on the chart, correct?

Well it is traded volume- volume = activity
High Volume means pro $ is in on the bar (and the herd will be there as well)

So say you are at a market top- you see a high volume bar- with a narrow spread. It is an indication that there are herd demanding higher prices and professional money offloading all the longs to them as fast as they can. But the pro $ is bearish. So on that bar that looks "little" the volume is very high, because their was a transferring of ownership going on.

That bit of information will tell you quite a bit about what is coming next in the trend.
Sledge

[forsearch]

	Quote:	Sledge
	Well it is traded volume- volume = activity High Volume means pro $ is in on the bar (and the herd will be there as well) Sledge

OK.

So it's not really volume then. Just price movements on the chart.

Good to know you agree.

-fs

[dandxg]

	Quote:	Sledge
	I have had this discussion before and it is basically, up to the trader to determine whether he/she feels it is valid or not. The principle is as follows: 1. Since Spot FX is NOT centrally Located, tick data will come from your broker and will be based on the contracts THEY carry. 2. My usage of the Tick Volume as per each platform- Each broker is carrying a small percentage of the TOTAL overall contracts being traded at any given time in the market. 3. It is my firm belief after looking at various brokers and platforms tick based volume that the actual # on the volume bar is less significant as the OVERALL relativity of the said bars SIZE in relationship to the preceeding bars on the "left of the chart" 4. So in a sense on a 1 hr bar my broker may have 3,879 as Volume- Your broker may have 4,856. If we compare the relative volume with the background- we are still able to make trading decisions via VSA. 5. I do believe that tick volume of any nature in Forex (because it is the best we are able to attain) is useful as long as we are looking at it in relative terms based on where you trade. Sledge

Sledge consider getting the GTIS feed from Esignal. They aggregate tick volume from a number of broker dealers and ECN's. It's $100 per month I believe but would easily pay for itself if you trade enough. I have never traded forex, but ppl. that do, that I have chatted with, said it's pretty much the gold standard if you are going to trade forex. Now with that said Esignal has had some issues recently in fast moving markets with data lag on ES and CME in general so take that for what's it worth.

[Sledge]

Dan-
Excellent- great to know, well I have been in discussions for a broker move soon to an ECN anyways. This would require me to get my own charting and datafeed- and Esignal is on the list to consider.
Thanks.
Sledge

[dandxg]

Sledge- I just sent you a PM. I don't want this thread getting off track.

[Sledge]

	Quote:	Sledge
	Ok VSA'ers-- I have a riddle for all of you. Posted below are (2) charts a GBP/USD 1 Hr and a GBP/USD 4 hr. On the 1 hour chart you see a nice WALL of resistance around 1.9705. Indicative of a market rise is coming. On the 4 Hour chart you see an upthrust after a nice start to the downward move. Which is indicative of further decline. So if you were to take a trade looking at these charts. Would you go long? Or would you go short? Looking forward to how everyone reads and analyzes this to come to a conclusion! Attachment 5959 Attachment 5960

Still no takers on this? Wow, I'm stunned really. Thought it would be a great discussion at a live edge of a market. I decided to use the 1 hour timeframe and take a quick long at 1.9717
Closed out after the test followed by upthrust formation at 1.9745.
Quick and dirty for a 28 pip grab.
Sledge

[jjthetrader]

	Quote:	Sledge
	Still no takers on this? Wow, I'm stunned really. Thought it would be a great discussion at a live edge of a market. I decided to use the 1 hour timeframe and take a quick long at 1.9717 Closed out after the test followed by upthrust formation at 1.9745. Quick and dirty for a 28 pip grab. Sledge

Hey Sledge, maybe no takers because it doesn't fit anybody's personal style for long or short at the moment of your chart. From where it was sitting I wouldn't take any postition. I'd have to see how it acted in real-time.

FX is funny to. Do we really want to include bars from the Asian session and call them no demand or no supply just because Asians weren't interested in Cable? If I were trading cable then I'd be interested in what London and NY are interested in. Tradeguider doesn't teach it that way but it's just something I'd give more weight to.

How about you post a chart and tell us what you would do. I think that would get more feedback.

cheers mate