[VSA] Volume Spread Analysis Part II

[winnie]

Dear Sir,
Could you point out where you see this ?
"
At A, there was good stopping volume over three bars.Note how the lows refused to go lower - a shortening of the thrusts on increased volume ("bag holding") "
thanks

[Sledge]

Winnie-
My ONLY hesitation to take that trade is that was that the second test bar was of HIGHER volume than the previous test. If that second Test bar was LOWER in volume, I think you would have had a good ride upward.

*Remember that if a market is testing you want to see LOWER AND LOWER test bars. This shows they are removing the supply and testing said supply. With a HIGH volume test like that- it WILL have to Re-test that area again before it can make a northward move.*

Be VERY Hesitant of taking a trade on a test-bar with higher volume than the last test bar. I personally don't see that as "Stopping volume" To me stopping volume would come more likely at the FIRST test. Stopping volume shows the brakes on the downward move are being applied by the pro's, and being applied HARD, you then expect to see after the stopping volume: re-testing. And as I said- you want to see testing with lower volume than:
A. The Stopping Volume bar
B. A first test

It may be tested 2 or 3 or 4 times. Before the supply has been removed.
Aaron

[winnie]

Dear Sledge,
Thank for your advice. Would you tell me which one is the test bar ? Would you point it out to make it more clear ?
Anyway your advice is very helpful.
Thanks

[Sledge]

	Quote:	winnie
	Dear Sledge, Thank for your advice. Would you tell me which one is the test bar ? Would you point it out to make it more clear ? Anyway your advice is very helpful. Thanks

Winnie-
Ok Here we be:
The Bar PRIOR to Bar "0" Shows indecision and the stopping Volume
Bar 0: You see a test of supply (Note its volume to compare vs. bar 5)
Bar 1: You see a positive reaction to the test of supply of Bar 0
Bar 5: This is the bar I was discussing- Notice that it is indeed a test but the Volume is MUCH higher than Bar 0.

As I do not trade this mkt, I have no idea how it turned out- looking at this from a blind perspective and applying just the VSA method to the chart:

For me personally, I would not have taken a long position on this particular bar (Bar 5) because its volume was so high compared to the last test of the same general area. But my trading style may differ tremendously vs. your own.
Aaron

[winnie]

Thing very clear ! Thanks

[Eiger]

Good VSA indications and trading this Am on the ES 5-minute chart:

1 - No Demand after weakness off the open
2 - Stopping Volume over two bars
3 - Test
4 - Top Reversal
5 - No Demand
6 - No Demand after lower high
7 - Stopping volume
8 - Spring

Eiger

[winnie]

thanks for sharing things with us.It is clear ! However I would like to know where I could learn the terms like : stop volume, Top Reversal ...... I do not understand what it mean and how to find it out.

Thanks for your time, it is really very helpful.

[winnie]

Dear sir ,
In addition , would you use 5 minute chart for entry and stop ? I feel there is a lot of noise in 5 minutes chart before, but after looking at your chart and your explains, it seems to be very clear .

Thanks

[Eiger]

	Quote:	winnie
	I would like to know where I could learn the terms like : stop volume, Top Reversal ......

These are VSA terms that you can learn from Tom Williams's book: The Undeclared Secrets that Drive the Stock Market. I am told that the book Master the Markets put out by Trade Guider is very similar, though i have never read that. There are also some educational materials available from TradeGuider that are helpful, particualrly their "Chart Reading Boot Camp" CD.

The 5-minute chart can sometimes be noisey. Noisey days are usually related to money flow. On low volume days when there isn't much activity, it can get sloppy. When there is decent activity like today, the 5-minute chart is pretty orderly and readable.

[Eiger]

And here is the rest of the day:

9 - Test
10 - No Demand
11 - Top Revesral
12 - Stopping volume
13 - No Demand
14 - Stopping volume & Spring
15 - Test
16 - Hidden Test
17 - Test followed by a Bottom Reversal
18 - Another Test followed by another Bottom Reversal.

Very logical, very straightforward. So many good opportunities hard not to do well today. This is what I like about VSA.

Eiger