[VSA] Volume Spread Analysis Part II

[zeon]

	Quote:	heretodaygone...
	It would seem that you have formed some opinions on the above. I for one would be interested in hearing about them.

Not sure what you mean by that, but I posted two charts to illustrate what I meant to say. I don't really have much "fixed opinions", I'm trying to improve my trading, so I'm open to suggestions... most of the things I'm posting are conclusions based on experience from lots of observations.

[zeon]

	Quote:	CandleWhisperer
	Here's what I see. 1: We get an ultra high volume bar that closes down but close in the upper portion of its range. This creates a Long Lower shadow. The close in the upper portion of the range on high volume tells us that demand entered. If there had been selling on this bar, the close should not be in the upper portion of the bar. So we have a down bar that closes in its upper portion on ultra high volume: Strength (demand enters). Now we also have a S/R zone via a Long Shadow. this is our entry zone. 2: Next bar is down with volume less than the previous two bars. This is no supply. Personally, I would not enter here as the entire bar is not within the range of the Long Shadow. However, we now have more evidence that the supply/demand dynamic has changed. 3: Now we get the key bar. This is a test. Note that the volume is very low. Especially when compared to the first bar (1). Also note that we in the range of that long shadow where we first saw all the volume. This time there is none. The BBs have tested, or checked, for more sellers and have not found any. If there is no supply, the market is free to rise. Long at F is very nice. You may not be the first in the door, but the money is made in the middle. Not for nothing but there is also not heat at F. An entry at B (1) could be cause a loss on the next candle.

What strikes me in a lot of these posts, is that pin-pointing the entry always seems fairly easy, but determining the target is hardly ever discussed. Perhaps you could tell us also a bit about where or when you would exit your long trade? Or what signals you'd be looking for to exit that trade? Thanks in advance.

[Eiger]

	Quote:	brownsfan019
	I guess I'm that voice that won't go away ... have yet to see ANY advantage that VSA provides that your standard candlestick analysis does not... Oh boy... here comes the hate mail now...

Your last two posts are designed to generate controversey and take us off topic. Please don't anymore.

Eiger

[BlowFish]

	Quote:	Tresor
	Hello Everyone, I am new to this Forum. The VSA looks prety amazing. I was wondering if there is a signal or indicator for this available for either TradeStation or MultiCharts. Regards

I think BlueRay converted some metastock code that was originally done by PivotProfiler. You'll probably find it in the indicators section.

Cheers.

[Sledge]

	Quote:	Sledge
	Looks as if overall we are at the end of "Stage 1" and all parties are jockying for their positions. Some are buying on the low hoping for a rally, some are gathering on the high for the downward drop. It may take a few more days for all of this to pan out with more sideways movement before we get to proceed with "Stage 2"

Update on this post I made talking about the slight pullback from Stage 1 and going into stage 2. This AM it appears that the Stage 2 may be gathering steam. The BOE didn't have good news for the cable and it lost about 200 pips. Look at the beautiful upthrust and downward movement on the 1 hr chart. Even with that drop an hour ago, you see a very poor ability to rise out of it. I'm Short 1.9952 Target TBD.
We shall see.

gbp_delete.jpg

[jjthetrader]

	Quote:	zeon
	What strikes me in a lot of these posts, is that pin-pointing the entry always seems fairly easy, but determining the target is hardly ever discussed. Perhaps you could tell us also a bit about where or when you would exit your long trade? Or what signals you'd be looking for to exit that trade? Thanks in advance.

Zeon, this is a personal thing. VSA doesn't actually teach you how to TRADE. If you're long on a sign of strength then you could exit on the first sign of weakness. You could also have a preset profit target of a couple points.
Or maybe you would just trail your stop and let the market exit for you.
Honestly this is something you'll have to figure out on your own.
What's your tolerance? Can you hold for 5 minutes, 30min, and hour?
Determine what your personality can take and then build from there.

I agree with Eiger about BrownsFan posting stuff like that. It's not an argument over who's way is better or who came up with it. Controversy and candles only derail the thread.

[BlowFish]

	Quote:	brownsfan019
	I honestly do not care what it's called - hammer, doji, spinning top (actually would probably be a spinning top more than a doji ) Point is, great trade there.

Exactly. Understanding price action is the key. Is it not every bit as clear when portrayed as a bar? High/Ultra high volume that closed way up off the bottom. The close is what is key, Williams compares it with the previous close and the high/low of the bar, candle guys with the open no big difference intraday.

	Quote:	brownsfan019
	And it was easy - high volume bullish candle signal. I see all this stuff in this thread making trading so much more difficult than it needs to be IMO. There's one post asking if this was a trade and then another that says it was textbook... Well, if it was 'textbook' shouldn't it be obvious? I mean, there are some patterns that require discretion regardless of the trading method, but to call something 'textbook' would indicate to me it should be incredibly obvious.

Agree about overly complicating things. Candles have the illusion of simplicity imho. People, especially those new to the business, spend way too much time and energy on 'learning candles' when learning the underlying price action and what it represents is key. As I have said before there are often half a dozen candle formations that portray the same thing. Hows that easy? Also if you read Nihabashi Mark (who seems to know what he's talking about) he goes into great depth about how all hammers (or whatever) are not created equal and how many subtle variatons exist.

It's round about then that they either decide 'candles don't work' or think 'uh oh candles are training wheel but I want to learn to ride' and start the real voyage of discovery and try and understand the actual ebb and flow off the market. Later they also discover that the context is just as important as the pattern. One good thing that comes from candle study is that it often gets people into understanding the market rather than looking for better indicators.

	Quote:	brownsfan019
	Not sure what was so unreliable about a spinner that produced +8 for me... I don't know, for me, that's reliable enough. It moved approx. 13.5 pts from the close, so if that's not reliable enough, then yes, candles are not good for someone that must get more. It works for me as +8 is a nice trade.

Nice trade! However I would say that whether it went +2 +4 or +16 was not a function of the spinner or the entry signal at all for that matter. Did you use a candle pattern to get out? I remember last time I was in the room you where shooting for simple +2's glad to see you have found a way to hold for longer anyway. I guess you where risking about +4 assuming your stop was under the hammer/spining top/Doji thing. Also where you happy to take 3 points of 'heat' before it went your way? FWIW I thought eiger's exit was decent for a quick trade, targeting the previous swing high and indeed there was a reaction there which could have easily gone into sideways action.

	Quote:	brownsfan019
	My point was simple - to take something that took at least 3-4 pages of this thread to dissect that literally took about 1 minute analysis in the candlestick world. Result was the same - a long that worked well - but it did not require question after question to get there.

Well actually it does do you trade all spinning top/doji/daddy long leggs/Alabama slammers/whatever? (If they have 'high' volume of course). Are you suggesting that as a complete and viable method of determining entries? I'd like to hear the 1 minute analysis you go through (in the candle thread of course). I think you are overselling here, if only it where that easy. I would bet you are evaluating loads of information about what's happening without even being aware you are doing it.

	Quote:	brownsfan019
	I guess I'm that voice that won't go away in this thread b/c I see so much effort being exerted here for the EXACT same thing that us candle traders are doing, yet it's as plain as day. In other words, I have yet to see ANY advantage that VSA provides that your standard candlestick analysis does not... Oh boy... here comes the hate mail now...

That's fine, each to their own. I'm still not sure why you label yourself a candle trader to be honest seems you are more a PA guy. I don't want to be provocative but it also appears you change slant fairly regularly. (though I know the basis remains the same). Guess that makes you versatile. Coming onto this thread to knock VSA is kinda out of order imho (even though you always do it in a courteous way). A better approach would be 'selling' your approach on the candle thread. To be honest I have not engaged much there as it seems completely discretionary which ones to take and which to pass. Much the same as VSA really


Cheers,
Nick.

P.S. Hope you take this in the spirit it was meant, always quite enjoyed locking horns with you in a friendly sorta way hehe

[zeon]

	Quote:	jjthetrader
	Zeon, this is a personal thing. VSA doesn't actually teach you how to TRADE. If you're long on a sign of strength then you could exit on the first sign of weakness. You could also have a preset profit target of a couple points. Or maybe you would just trail your stop and let the market exit for you. Honestly this is something you'll have to figure out on your own. What's your tolerance? Can you hold for 5 minutes, 30min, and hour? Determine what your personality can take and then build from there.

Thanks, but what I meant to say was that VSA seems to focus a lot on entries and not on exits. Although in my experience they are as important as entries, if not more important. You can have a perfect entry but if you don't know how to manage the trade it can still turn out into a loss. Exiting on 'the first sign of weakness' usually means you're exiting too early.

I was curious about how other traders manage their position. This is just a suggestion, but perhaps those who post these excellent analyses regularly, also add some information about what happened AFTER the entry, and how what kind of signals they would consider valid to take profits.

Having predetermined profit targets is something I stopped believing in. The market is too dynamic for something like that to work imho.

[Eiger]