[VSA] Volume Spread Analysis Part II

[heretodaygone...]

	Quote:	zeon
	But suppose I did take the long entry... how could I determine my target? Surely the next R would be wishful thinking? You never know ofcourse, but if you say S and R are your targets, do you mean only when you are trading with the longer term trend, are regardless of that? Because in going against the trend I've experienced on several occasions that price does follow the path towards the next S/R level but usually fails to reach it and then reverses before breaking down in the other direction.

Here's some targets, and you don't even have to remember what was s/r was back in January or earlier.

[zeon]

	Quote:	heretodaygone...
	Here's some targets, and you don't even have to remember what was s/r was back in January or earlier.

We just reached resistance from prior in the day... I guess it wasn't wishful thinking after all. Sure wish I'd taken the long though

[DbPhoenix]

	Quote:	heretodaygone...
	Here's some targets, and you don't even have to remember what was s/r was back in January or earlier.

Actually, I posted the targets for today using yesterday's action in the RT thread:

http://www.traderslaboratory.com/for...55-post94.html

Turned out that they were pretty much exact.

[Eiger]

	Quote:	zeon
	If that was the selling climax, then it looks like we just had a re-test on lower volume. But the nasdaq made lower low while the ES just stopped at about exactly the same level. This is my problem, realizing this is a re-test in real time... I can only do so after price starts to move up, so I'm always chasing price. I noticed price trying to go lower... a downbar. The next upbar closed off the highs, so no buying yet. However the next bar volume comes in big time and there she goes! Other than (a) taking a gamble that price won't break through or (b) waiting for price to rise and chasing price with a worse entry, how can you pin-point the exact entry?

This was a Spring of a Selling Climax. The exact entry was on the close of the 12:55 bar on the 5-min chart at 1287.50. Risk was modest. Reward was very good.

Springs are an excellent, high probability trade. Every one that sets up properly is a no-brainer. There are diffierent variations and they are thoroghly discussed in Unit 3 of the Wyckoff Course.

You need to look at volume. This is the main indicator, along with the spread and close of the price bar.

You have a Selling Climax in the immediate backround, and the market responded to the climax with a vigorous rally. Wyckoff said explicitly, once you see a Selling Climax, the market is now assumed to be bullish. The reaction back down to the SC area was on generally narrow spreads and receding volume, confirming that supply is now gone from the market. The penetration was minimal and the close on the Spring bar and the bar after couldn't stay under the SC. Also, as you noticed (but not necessary to see this as a choice Spring set-up) there was non-confirmation with the Naz for lower prices. You can't ask for a much more perfect set-up.

There was also a Spring at 10:50 this AM. This failed. Here's a very good excercise: find as many differences between these two springs as you can. Once you have a sense of what you are you are looking for in these two springs, look for other springs on other days (there are plenty of them). Put each one you find into one of two catagories: Springs that Succeed and Springs that Fail. Do this with as many springs as you can find and you will soon own this trade. And, forget about candlesticks with this trade; they are immaterial and a distraction.

Eiger

[heretodaygone...]

	Quote:	DbPhoenix
	Actually, I posted the targets for today using yesterday's action in the RT thread: http://www.traderslaboratory.com/for...55-post94.html Turned out that they were pretty much exact.

Not a contest db, but so did I with a real time call. More than one way of seeing the same thing I guess. No worries, I have no book to sell.

[DbPhoenix]

	Quote:	heretodaygone...
	Not a contest db, but so did I with a real time call. More than one way of seeing the same thing I guess. No worries, I have no book to sell.

I agree, no contest. And I previously acknowledged your other post. I made the post above only because of the reference to my finding S/R based on activity in January.

Good trading to you.

[DbPhoenix]

	Quote:	Eiger
	This was a Spring of a Selling Climax. The exact entry was on the close of the 12:55 bar on the 5-min chart at 1287.50. Risk was modest. Reward was very good.

One must also include the element of news when separating movements after retests as successes and non-successes. It's not possible to reach valid conclusions without including all the pertinent elements.

[Eiger]

	Quote:	DbPhoenix
	One must also include the element of news when separating movements after retests as successes and non-successes. It's not possible to reach valid conclusions without including all the pertinent elements.

Not sure what you mean by that. Other than to know when reports are due, I don't pay any attention to the news. It is not necessary to trade springs. I would never know what the news means to the market anyway.

[DbPhoenix]

	Quote:	Eiger
	Not sure what you mean by that. Other than to know when reports are due, I don't pay any attention to the news. It is not necessary to trade springs. I would never know what the news means to the market anyway.

That the success or non-success of the trade may have to do with news. Whether one pays any attention to the news or is even aware of it is immaterial.

One of the more common errors made when backtesting, either manually or by computer, is not to include events. Doing so can result in unpleasant surprises when trading setups in RT.

[DbPhoenix]

	Quote:	zeon
	We just reached resistance from prior in the day... I guess it wasn't wishful thinking after all. Sure wish I'd taken the long though

If you're having trouble recognizing selling climaxes and retests in RT, first make sure that you've located S&R correctly. Then watch the TICK or TICKQ. Today, for example, the TICKQ was -648 at the "selling climax" and only -156 at the "retest". Seeing this divergence between two different measures of selling pressure may give you the confidence you need to take the trade.