[VSA] Volume Spread Analysis Part II

[CandleWhisperer]

	Quote:	zeon
	CW, nice analysis since price goes eventually in the right direction, but for the same setup I could find numerous posts where price eventually continues on the way down. ...I can put up some charts if you like.

Please do. I hope to show the same with my next post.

	Quote:	zeon
	...You're stating 'demand must have entered'. But if I'd count the times I'd seen an up-bar on low volume after a WRB down bar on high volume... This happens all the time, perhaps scalpers are trying to pick some points going against the trend there. And if you want to call it demand, for sure. It doesn't mean that price will reverse because there is demand. Usually this 'demand' leads to a temporary change in the buying and selling flow. But I can't imagine anyone wanting to go long there, unless he's talking a gamble. Sorry, just my 2c

If you mean going long on the very next bar/candle after the large WRB then you are correct. Note that I did not call that a possible entry point. No trying to pick the absolute bottom here.

	Quote:	zeon
	.... It doesn't mean that price will reverse because there is demand. Usually this 'demand' leads to a temporary change in the buying and selling flow.

That's what a WRB is: a possible change in the supply/demand flow. It creates an area or zone where the dynamics of buying and selling change. Of course, not all WRBs are created equal. Here we had a high volume WRB and it happened to be the largest of the last 5 dark WRBs. In that way it was a volatility spike.

Again, look at the total picture. Price acts differently after the WRB and more importantly within the Range of the Body of the WRB. Looking to get long or short within this range is thus beneficial. Weather one gets long or short has to do with what the BBs did on that WRB.

[dandxg]

	Quote:	CandleWhisperer
	Okay, it's time we have a VSA chart. I don't care if this is after the fact or not. There are 2 charts below. The first chart has some interesting things that set up what comes on the second chart. This was not a trade made but an interesting learning opportunity none the less. A: Large dark WRB on high volume. Down bars on high volume usually mean selling. But look at the next bar, it is up. if all the volume was selling this next bar could not be up. Demand therefore must of entered. Note that the next bar is not labeled. Check out the volume. Less than the previous two bars. With an equal close and not making a higher high, this does not represent a good place to go long. And if one was looking to go short, this is not good example of no demand. Again because the close is equal and the high is equal. Most importantly, because we have just seen strength in the form of the WRB. B: Now we see a wide spread candle that closes down from the previous bar, but closes above the middle of its range on high volume. Note how price moved down and hit the Support/Resistance line formed by the WRB and then moved up. There is price rejection in this Long Shadow. So we ask what has price done on the volume? Well it closed down but in the upper portions of its range. More demand must of entered on the bar. Simply, this bar is strength. C: First entry signal. Close on the high on a bar with volume less than the previous two bars and a narrow range into previously high volume territory. This is a test. We are within the range of the large WRB and testing in a logical place. Right after the influx of demand as shown by the long shadow/close in the upper range. D: Another dark WRB on high volume. Yet the volume is not as high as the first one. Again, the very next bar is up. Demand must of entered on the WRB for the next bar to be up. E: No supply. Check out the range of this bar and the volume. The BBs definitely were not involved in this bar. This is a down bar, and VSA teaches that strength comes in on down bars. As a bonus, we have moved back into the S/R zone. Note that we are above the midpoint of the body of the WRB. Support within support. F: Either of these two bars have volume less than the previous two bars and are no supply. See how they are being supported a the low of the white WRB. 3 or 4 possible places to take advantage of a change in supply/demand. See chart 2 for what happened next.

Nice to see you back PP Your contributions were missed.

[CandleWhisperer]

	Quote:	dandxg
	Nice to see you back PP Your contributions were missed.

From my third post on this thread:

"JJ:

I managed to save a few screen shots from PP from other sites and this one. I have been studying his posts diligently. I have gone so far as to set up my charts exactly like his/hers. Are you saying he or she was not a real trader? I would hate to be trying to emulate a keyboard jockey."

But thanks for the comparison. I spend a lot of time reading his or her posts.

[NAVEEVIa]

Newbee here
i am studying the methodology in original VSA thread & applying to my trading.
Heres a trade i took for a measly profit
Saw a No demand inside WRB, confirmed & went short( Note the ND bar did not make higher high & was an inside bar not buying bar i.e higher low & higher high, so i maybe wrong in first place)
After the ND got confirmed went short & exited on circeld bar( thought it was test), volume was high on test but tawe trader mentioned in previous thread that for Futures test can have a higher volume.

Now my question is how should one trail stops based on VSA.
Some ideas given earlier were
a. Trail based on WRBs
b. look for VSA signals, e.g. if short look for No supply etc & move stops
c. If strength/weakness does not appear within n bars then exit

whats do u guys think on this
Good Trading
Naveen

[jjthetrader]

	Quote:	NAVEEVIa
	Newbee here i am studying the methodology in original VSA thread & applying to my trading. Heres a trade i took for a measly profit Saw a No demand inside WRB, confirmed & went short( Note the ND bar did not make higher high & was an inside bar not buying bar i.e higher low & higher high, so i maybe wrong in first place) After the ND got confirmed went short & exited on circeld bar( thought it was test), volume was high on test but tawe trader mentioned in previous thread that for Futures test can have a higher volume. Now my question is how should one trail stops based on VSA. Some ideas given earlier were a. Trail based on WRBs b. look for VSA signals, e.g. if short look for No supply etc & move stops c. If strength/weakness does not appear within n bars then exit whats do u guys think on this Good Trading Naveen

Naveen, great trade. Profit is never measly even if it's 1 tick. I liked your trade. You waited for the technical bounce to show exhaustion and shorted it. Personally I think your exit was good. That bar did have the makings of a reversal. There was no follow through but you didn't know that at the time so it was a good call. Better to take your position off the table and re-enter if necessary.

Tawe Trader is right that a futures 'test' can have high volume. But as you can see there wasn't much to test to the left. It was testing the low of the range but most instances of real tests are testing high volume areas for supply. This one just seemed to be a bit of demand on support. S&R traders could have had their orders there.

As far as trailing stops, this isn't really a VSA thing. It's a personal money management thing where you do what you feel comforitable with. VSA lays out the opportunities to trade then it's up to you wo work out your own style within that strength or weakness.

As far as exits are concerned, it's good VSA reading skills to exit into the next high volume bar. Like I said, you can always re-enter. Personally though my exits are small preset profit targets, 1-3 ES points depending on the level of strength or weakness in the background.

Nice trading, thanks for posting.

[Sledge]

	Quote:	NAVEEVIa
	Newbee here i am studying the methodology in original VSA thread & applying to my trading. Heres a trade i took for a measly profit.

Naveen-
One of the keys to trading is to "bank money" in which you surely did! Good for you. You didn't let a positive trade potentially turn into a losing trade! Once you get more comfortable with yourself and your ability, you'll be more confident in letting it ride longer.

Remember- the broker and B.S. world has filled your mind with the idea that unless you hit homeruns everytime you trade- you are no good. Block that out now. Take the base hits like you did and as you learn, the home runs will come soon enough!

Please continue posting your charts and your analysis, everyone can learn from them and the folks who reside here- will be more than happy to help you learn too!
Sledge

[dandxg]

	Quote:	CandleWhisperer
	From my third post on this thread: "JJ: I managed to save a few screen shots from PP from other sites and this one. I have been studying his posts diligently. I have gone so far as to set up my charts exactly like his/hers. Are you saying he or she was not a real trader? I would hate to be trying to emulate a keyboard jockey." But thanks for the comparison. I spend a lot of time reading his or her posts.

Too funny, thanks for correcting me.

[Eiger]

My take on today, FWIW. This is the 10-minute ES Chart:

A – An up bar closing midrange on an increase in volume. This looked like supply, but the market had just broken above the Globex high and the next bar is up.

B – Fairly wide spread up bar closing midrange. Volume has receded. This again looks like supply may be entering the market, but the next bar disconfirms this.

C – Test on volume less than the previous two bars. Tom Williams points out that a Test following weakness indicates strength, and that is what occurs here. Next bar rallies higher.

D – Another up bar closing midrange. Volume is lighter on this push up. Again, it could be supply coming in, but we know better by now

E – Test on volume less than the previous two bars. Expect another rally.

F – This is a No Demand bar, but given the strength of the market, it is a “polar bear in Hawaii” and can be discounted. Next bar rallies higher with a proportionate increase in volume confirming the No Demand should be ignored.

G – UpThrust closing on the low and back within the range of D on a sudden increase in volume. Supply and weakness begin to enter here. Reverse Trend Lines are drawn from D & G, with a parallel from the low after E.

H – Down bar on low volume indicates a Test. Despite the weakness at G, another rally can be anticipated.

I – On the rally, I is No Demand, so like F, it is discounted.

J – An UpThrust closing on its low on significantly increased volume. Market is in an overbought position. This is supply.

K – No Demand where we would expect it – after supply at an overbought level.

L – I am not sure what you call this bar, but it is a definite change in behavior. This is the first time since the open that the market has fallen on a substantial increase in volume. In his book, Tom Williams says that bearish volume increases on down bars and decreases on up bars. The rally following L shows decreased volume on up bars. Also, Tom Williams says that increased volume and wide spread as you approach a support line, signals that it will be broken, which eventually happens here.

M – No Demand where it should be.

N – Market falls to N where some demand comes back in at N indicated by the midrange close on heavy volume, as well as the bar before (down bar on significant volume), and then slips down to O on heavy volume. It looks to me as if there was buying at the end of the day in the area of N & O (down bars on heavy volume).

[jjthetrader]

So glad to see this thread is back to VSA. Nice work guys.
Great contribution Eiger. This is the type of thing I like to see.

[Sledge]

OK VSA'ers. I'm stumped in this one. It was a wacky and weird day for the GBP/USD with almost a zero sum game today. Ugly bars abound and no "fluid" movement.

Any thoughts on these bars/charts? One is an hourly chart. The other is a daily so that you can get a "feel" for the current state of the market!

Thanks!
Sledge
1hr_gbp.jpg

daily_gbp.jpg