[VSA] Volume Spread Analysis Part II

[Bearbull]

	Quote:	Eiger
	Back to the markets. The last two days have been constructive in the S&Ps. As we were discussing a few days ago in the Naz, it looks like a Spring is occuring at a critical point in the market. Of course, we can just fall down lower from here But, for fun, here is a possible scenario we can watch out for. If this has been a Spring, then the next step to anticipate is a test. This either comes in the next day or so, or after a Jump Across the (minor) Creek, and then a test. Following that, if successfull, a Jump Across the (major) Creek. If that occurs, then we can anticipate the all-critical Back Up to the Edge of the Creek or last Point of Support, and so on. Again, this is simply one of many possible scenarios that the market may take. Right now, the news is pretty bad, so the timing seems right. The key to following this is to take it one principle at a time and let the next principle confirm. So, the potential Spring needs to be confirmed by a Test. A JAC needs confirmation by a test (BUEC), etc. It will be fun to see how it all unfolds. Good trading! Eiger

Looks like Gary Fuller & Co at ltg are also of similar opinion
[media]http://www.ltg-trading.com/20080318.pdf[/media]

[Bearbull]

Here is the relevant chart, the commentary is in their archives

[BlowFish]

	Quote:	DbPhoenix
	On the other hand, however many points one "wants to make" have nothing to do with the number of points that are available, which is a chief reason why so many traders cut their profits short. --snip--

This thread is moving to quickly but I'd like to come back to this discussion about time, flow and focus. Its very important.

First lets acknowledge that we can only take what the market gives. However that does not preclude deciding what we 'want' from it and looking in the right place for those opportunities i.e. suitable instrument and "timeframe" (time frame <> bar size here). This is one of the most fundamental choices a trader must make, its not an easy choice but its something we have complete control over (provided we can control ourselves). I think traders are less likely to cut short if they pick appropriate size 'swings' to focus on.

For example lets say trader X has decided to trade the ES (so he can trade 100 cars at a clip ) He doesn't want to be a slave to the screen nor does he want to leave positions on un-attended. Lets also say he doesn't really want to risk more than a couple of points to make about 4-6 (or perhaps more if offered). This he determines on a variety of criteria, including R:R, account size and a bunch of personal stuff. It is a guideline only, he will determine precise R:R for each trade based on price action.

Example trader X now has a set of parameters that will determine his 'focus' time wise. Actually in a strangely circular way he has picked parameters that he thinks will expose him to the market for lengths of time his weak bladder can cope with .

After pouring over 100's of charts of the last 6 months ES using a variety of bar types and sizes he determines that on the whole a 60 minute chart provides clear S/R levels suitably spaced for the opportunities he is looking for. He also decides to use a 20k volume chart so he can see the overnight session nice and clearly. Of course at the beginning of the day he marks up his hourly with lines taken from overnight, daily, weekly and even monthly charts and will pay special attention to these areas and even use them as a directional filter, however as they don't provide enough trading opportunities for his particular R:R and exposure parameters he will take trades from S/R from an hourly chart.

Next step for trader X is to determine the tools to use for monitoring the 'flow' around these levels. He is concerned if they are a) too fine he might get caught by a 'minor reaction' to a level/zone that subsequently breaks or b) too coarse he will give up trade location for the luxury of confirmation.

[DbPhoenix]

	Quote:	zeon
	As the topic of discussion in the last couple of posts has shifted a bit, I feel it's appropriate to ask a relevant question here. Db, I've taken your suggestion for using tick charts and looked at price the last couple of days with Sierra Charts. You said I'd be "perpetually perplexed" if I kept focusing on bars instead of price flow. I've tried doing this now but at at 5 second or 1 minute chart I've found it incredible hard to notice anything that jumps out from the rest. I've payed close attention to see where price reacts and I've written down when high volume suddenly comes in and price seems to hit something and suddenly reverses, like a hot stove where you put your hand on. But a lot of these times, I was wrong and the 'reversal' only happened for a couple of minutes. I've found it very difficult to analyze which volume peaks are important and which ones not, despite focusing only on those that are in the vicinity of important S/R levels. If I compare to my 5-minute bar interval, I usually have a couple of volume peaks that are clearly distinguishable from the rest. But on a 1-min bar interval, there are loads and if I were to trade off those, I'd be getting a lot of false signals...

This thread is about VSA, not about How I Trade, and your post is even more off-topic than my response to Rodney. Remember that we got here due to a point that I made to Eiger regarding the strength that he missed due to the bar interval he chose. So the arc did begin in VSA-land, even though it took an off-ramp somewhere along the way.

So please address all this in my Blog. For now, I will point out again that it all depends on support and resistance. These are the same regardless of the bar interval chosen. There may be "loads" of signals of one sort or another, but if they don't occur at support and resistance, i.e., those levels which "big money" themselves have created, then just ignore them.

[erierambler]

	Quote:	brownsfan019
	Ok, I have to ask (time to stir the pot) - as a lurker of this thread and reading some great things (esp DB) I have one question to ask... Is anyone here actually using this in real-time and making money? I see a lot of 'after the fact' analysis, which is fine for learning, but I'm really curious if anyone outside of DB can do this when it counts - real-time and real money... Just curious, not meant to piss anyone off.

Obviously if you have to ask , you haven't done any work on this . It's not for everybody. I'm surprised there is not more interested. Good trading.
erie

[DbPhoenix]

	Quote:	erierambler
	Obviously if you have to ask , you haven't done any work on this . It's not for everybody. I'm surprised there is not more interested. Good trading. erie

Though I haven't read the first thread (sorry), it appears that the locus of interest is the software rather than VSA itself. Even so, VSA appears to be much more interested in bars than in flow, which is perhaps what distinguishes it most from Wyckoff's emphasis. So I'm not surprised that there's not more interest. It is, after all, off-topic.

[Sledge]

	Quote:	brownsfan019
	Is anyone here actually using this in real-time and making money? I see a lot of 'after the fact' analysis, which is fine for learning, but I'm really curious if anyone outside of DB can do this when it counts - real-time and real money...

brownsfan019:

I just can't imagine anyone that possesses such a grasp on this subject (as MANY folks in this thread do) that would be able to make such detailed and informative posts on the subject matter- but sit at home and not actually use the theories and system they have perfected. Call it a hunch.

I personally, as with any other human being by nature will get in, let ride and post results after-if I post any at all. I'm not some "Market Master" and feel it arrogant to jump in and say "I'm in- going to NAIL 150 pips- Whoo, put it in the bank." I read at an early point in my trading somewhere that the beauty of trading is that it is not absolute, you can roll with the punches. If you are short and see a pullback transpiring, but it did not hit your intended target? You are able to close out, wait for the pullback to be finished and attempt a short again- if you want too, the market may tell you otherwise and you may be happy with where you took your profit and got out. You can let a trade linger for days, minutes or hours- depending on you and your style. The beauty is that every system is personal, someone with a 100K account can pull off things and ride longer than someone with a $1K account.

If you are watching for a set-up- are you really heading over here to post about the set-up or are you going to pull the trigger on your trade, and then talk about it after you are "in?" Look at any of the "broker" sites out there- one is particularly comical to me. I won't name any names but it rhymes with BailyFX. The "experts" make their calls public after they have already rode the majority of the move (in their own accounts)- and then toss their "followers" the scraps- all the while preaching a far greater top or bottom of the move than EVER transpires.
The noobs who read it think the broker is actually "helping them" when in essence they are just herding the sheep into whatever pen they want. About 2 weeks ago I saw them post a message that was absolute it said:

BUY NOW at "XYZ price"
Target was 1000 pips above their "BUY IT NOW" price.

Results of this wonderful advice: The market dropped like a rock for over 100 pips (which would have taken the advice takers to the cleaners) and then spiked the next day. Sad part was- the rally never made it even close to their "target" the rally fell short by 400 pips.

Long story short, most everyone watches their trades first and their posting boards second. I can see why people don't post their set-ups here before they get in. Makes perfect sense to moi'

Sledge

[brownsfan019]

	Quote:	erierambler
	Obviously if you have to ask , you haven't done any work on this . It's not for everybody. I'm surprised there is not more interested. Good trading. erie

I have done ZERO work on this. Not interested too either.

As my post said, I was curious if any are actually making money with these ideas here. So far, not many saying they are. I realize it's the internet and an anonymous message board, but to me, as an outsider just peaking in, it seems like many of these ideas look great after the fact. I'm just curious how many can see the springs or whatever in REAL TIME. You know, when it actually counts...

[DbPhoenix]

	Quote:	brownsfan019
	I have done ZERO work on this. Not interested too either. As my post said, I was curious if any are actually making money with these ideas here. So far, not many saying they are. I realize it's the internet and an anonymous message board, but to me, as an outsider just peaking in, it seems like many of these ideas look great after the fact. I'm just curious how many can see the springs or whatever in REAL TIME. You know, when it actually counts...

What interests me is the pre-planning, not the "call". Eiger, for example, makes a tentative effort in this direction in his last post, regarding the supposed "spring". However, it's not "just for fun". Or shouldn't be. This is the business of trading. One has to look not only at one possible scenario but all possible scenarios AND decide in advance what he will do in the event of each. It would also be helpful to read what principles are illustrated by each scenario. This is how one learns the principles. Or one can wait (and I'm not referring to anyone in particular) until it's all over and say Ah! Here's what I did based on one of the possible scenarios (which I didn't happen to address at the time). The last is common amongst those who sell services of one sort or another.

Incidentally, from a Wyckoff viewpoint, one would have gone long two days ago.