[VSA] Volume Spread Analysis Part II

[BlowFish]

Good post Gary - it seems clear (to me at least) that people that lean heavily on VSA (or completely for that matter, I know a couple of 'purists') don't really look at individual bars. Well they do, but build a kind of composite picture from them of who is currently in control. Sebastians videos illustrate this quite well. This is probably why some people find it 'difficult'.

[mister ed]

	Quote:	BlowFish
	build a kind of composite picture from them of who is currently in control. Sebastians videos illustrate this quite well. This is probably why some people find it 'difficult'.

Nice one BlowFish - "composite picture" is a good way of putting it.

[Gary]

	Quote:	BlowFish
	Good post Gary - it seems clear (to me at least) that people that lean heavily on VSA (or completely for that matter, I know a couple of 'purists') don't really look at individual bars. Well they do, but build a kind of composite picture from them of who is currently in control. Sebastians videos illustrate this quite well. This is probably why some people find it 'difficult'.

Its really important to think this way. When Tom and Sebastian discuss this, they always emphasize the background. The individual bars are important, but not until you have the strength or weakness come in. If you don't have strength or weakness in the background, then you are making low probability trades. I see that in some of these posts - "well, here's a no demand and it didn't work." Of course it won't work if you have strength in the background. The background trumps the individual bars, but the individual bars that are consistent with the background are what you want to think about when making trades. It really is pretty logical stuff.

[bertg]

	Quote:	Gary
	The second was a long trade on the 3 minute chart. I took a test after strength appeared in the background. The spread on the test was maybe a bit wide, but it worked out OK. The trade was closed a couple of ticks below resistance because it was getting late and with the big move down, the resistance traders would be shorting there.

Gary,

Can you tell me how/where you saw strength (post 1129 in this thread, and I also posted your chart again)? I would have been afraid to go long in a downtrend.

I am also glad you learned a lot from the VSA lectures and got your money back already.

Thank you,
Bert

[Sledge]

	Quote:	Gary
	Its really important to think this way. When Tom and Sebastian discuss this, they always emphasize the background. The individual bars are important, but not until you have the strength or weakness come in. If you don't have strength or weakness in the background, then you are making low probability trades. I see that in some of these posts - "well, here's a no demand and it didn't work." Of course it won't work if you have strength in the background. The background trumps the individual bars, but the individual bars that are consistent with the background are what you want to think about when making trades. It really is pretty logical stuff.

This is an excellent point. You must always "look left to trade right!" If you see a "no demand" bar with Strength in the background (Strong Downward move-) well the market just isn't ready to move upward YET, so look for more signs of testing and drawing out of floating supply. When you are aware that further testing will occur, it is much easier to "time your entries" instead of riding the testing/shakeout period.

Sledge

[Bearbull]

	Quote:	Gary
	BearBull, You must be exhausted half way thru the day trading like that. Perhaps it's not VSA that frys you, but your emotional trading? I don't think any method would work when a trader is like an emotional pinball machine, bouncing up and down getting high or down on each and every bar. I've been working with VSA for about 3 years and have found it to suit me best. But if you all just want to trash it then I won't waste my time.

You have completely the import of my posts, they were meant for newcomers to VSA, not to dissuade them from studying the various VSA principles but apply them in proper context and also try to make effort to study the original source: Wyckoff.

When I first studied candlestick charting back in 1993, I went through the same epiphany, saw those doji, engulfing bars etc on hindsight charts at the right locations prior to large price moves up or down, ofcourse those that were present at other locations remained blurred.
Same happens with VSA for many folks, you have obviously overcome the obstacle, so good luck to you.

As for the posts and emotional trading, have Tom's book as of 1998, do you still think I trade bar by bar as illustrated in the charts and also that after having acquired sound understanding of Wyckoff.
It was meant to bring to the attention of any newcomers like winnie.
Once again there is no intention to bash VSA, however your defensive response is more of emotional nature than my trading as it blocked the real message of the posts both mine or others who understand VSA and Wyckoff inside out
once again best of luck to you

Hasta La Vista

[Gary]

	Quote:	bertg
	Gary, Can you tell me how/where you saw strength (post 1129 in this thread, and I also posted your chart again)? I would have been afraid to go long in a downtrend.

Bert,
Sure. I put up two five minute charts that might help to see it clearer, but you can see it on the 3 minute too. The first shows the down trend with tendlines. As you said, we were in a pretty good trend down. But they all have to end somewhere, don't they. At the bottom, it got very oversold. It went through the original support line and then thru another parallel support line.

The second chart shows the detail. On the bar marked B it is way oversold. The volume spikes and the close is in the middle. Buying came in there. On the next bar, it dipped lower than B and then closes right near its high and almost at the high of B. This confirmed the buying and strength on B. It is also a bottom reversal. Because the volume wasn't excessive on the second bar, supply was not swamping here, and it could go up. I waited for a test to confirm and this was seen on the 3 minute chart, as I posted earlier.

Just to be clear on why this was strength. Look 11 bars back from B (sorry, didn't label this one). It's another down bar on even higher volume, oversold, close in the middle. Was this buying? I think so, but look at the next bar. Look at how low it went and look at the close. Whatever buying was on the previous bar failed on this bar. Next bar was no demand and it comes off again. If you compare the B and the bar to follow with these two bars, you can see strength vs continued weakness.

[Sledge]

Alright all- I'm going to place my stones on the stump and attempt to spark some discussion that has seemed to elude VSA in training seminars and MTM in detail. I feel there is quite a bit of highly skilled VSA traders in this thread and I'd like to get feedback on trading styles in regards to:

ENTRY POINTS

I suppose this applies mostly to currencies as it is a 24 hour market and we all have to sleep SOMETIME. But my own personal information goes something like this on these examples:

The overall long term trend is UP and I'm looking to go long on these particular examples. I know that the NY session has peaked and the market has started to cap (at least for today) That evening you will no doubt see some markdown, or shakeout action to flick off the weak and scare the would be bulls. But say your account can't handle riding a storm out? Say you are a new trader and when the testing occours and the accent begins again- you are 40 winks into the night. The IDEAL entry will come sometime in the London Session, but you'll be sawing logs and not be able to capitalize on it- you won't be there to see the price action unfold. When you wake up, the testing is over, the London Boys are tidying up the loose ends before NY opens and gets its hands dirty with it. They hit the market hard and if on perfect entry, you would have snagged say 100 pips+ on the trade!

So, other than placing a Buy Stop order at some "random location" and hoping you are correct. Can I open a line of discussion on where most folks intend to place thier "Long" Order on these charts.

Charts Mr. Sledge You say: Well of course. I'll make this random and only let you know this is a 1 Hr Chart. You should have enough background information to make decisions. I'll post the "Answer" charts after we get rolling.

This has always been a subject that as a VSA fly on the wall, seems to be overlooked or sort of "won't talk about" Which is fine- that is why all of you are here and may have insight of your own- with your own trading style, and Money Management.

Here are a few charts to get your juices flowing- Take the charts and save them- mark them up, this is your "live edge" of the chart- so what would you do with it?:
entry1.jpg

entry2.jpg

Sledge

[winnie]

It is my pleasure to say thank you to all you. It is really helpful.

[mister ed]

	Quote:	Sledge
	I suppose this applies mostly to currencies as it is a 24 hour market and we all have to sleep SOMETIME. Sledge

OK Sledge, you are trading FX ... answer this simple multiple choice question:

Sleep is for:
(a) pussies
(b) weekends

No waiting - the answer is b. PM on its way to you to suggest how to move from a to b

OK - I seem to remember you posting something similar a little while back and there wasn't many takers then either.

So, background is you want to be long and the market is about to move into the Asian timezone, where men are men and the women are ... will stop there

This is my take on it:

The first chart, 1:
The best approach is to be awake when the price dips towards the line marked 1, about half-way between where it is now and the line marked 1 - this would be ideal as you could assess what's going on rather than just leaving a buy order. If not awake, though, buy just below the half-way point between where it is now and the the line marked 1, with stop below 2. Line 1 marks (approximately) the 'breakout' from the high volume congestion area at the base of the downswing.





The second chart:
Same comments re being awake is best.
Again, background is you want to be buying as the thing is in an uptrend? OK - this, to me, is not as clear as the first example - the stop is below the line marked, but the entry is .... well its probably right about now, maybe get in on a dip below the low of the latest bar to form, but if you want to be long the entry is very close to now. If you really want to be safe the stop would be below the low of the low of this chart, and you could use the blue horizontal as the entry - obvious the risk is not getting set here and I prefer my first entry point instead.