[VSA] Volume Spread Analysis Part II

[BlowFish]

If price smokes through, just as if it smokes through any other line, it tells you something pretty important. Now if you get a climatic bar that pokes the pivot then closes back up followed by no supply a test etc etc you have a different story.

I favour the traditional pivot (h+l+c)/3 mainly as it's the one the world and his brother watches so there is an element of the self fulfilling. There is some inherent logic if you think about what that calculation actually represents. Hint: (H+L)/2 is yesterdays midpoint (somewhere else stuff often happens).

[Eiger]

	Quote:	dandxg
	Eiger, thanks so much for posting that info on S/R. I have been working on coming up with a method of just trading VSA/PV when it comes into a "relevant" area of S/R. If you don't mind sharing do you place more weight on high and lows for a given time frame or the number of times an area has hit a certain area. For example, past price action could take out a trading zone by a few ticks and then fall back into the previous zone. Would you place more weight on that new high or the zone with many hits? Hopefully, my question makes sense. I would post a chart, but I am on relative's computer for a few days.

Hi Dan,
I place the most emphasis on the daily highs and lows. The market will trade around these areas quite a bit. I don't really think too much about how many times price has hit a specific level in terms of weighting it more or less important (though obvious, major congestion areas are unlikely to be penetrated on the first try). Instead, I focus more on the tape action as price comes into one of these areas. I do not try to get the high or low tick if i am looking to sell resistance or buy support. I am more interested in taking a trade with confirmation than getting the very best price, so I am happy to wait for that confirmation. Usually, if I am focused on getting the very best price, i am ignoring something else that is important, and I always seem to pay a price for that.

What I do think about is when price breaks through a given level. Support and resistance are opposition. When price breaks through the opposition, the odds are very good that it will continue in the direction of the break through. I am then looking for weak rallies or reactions to take a trade in the direction of the break through. Those are high odds trades. And, if the market gods are favoring me that day, price will come back to test the opposition area .

Wyckoff originally talked about this using the analogy of dams. He said that engineers don't build dams right next to one another. So when the dam breaks, there isn't another dam right behind it to hold back the water. Same with price. Once it breaks through the opposition, you can anticipate continuation.

Eiger

[jjthetrader]

	Quote:	dandxg
	Sledge, for the longest time, about a year I used floor pivots for the ES and ER and they worked, but too often price just smoked through them without a pause.

This is true dandxg.......sometimes. The thing with the ES is there was a time when it would never respect them and then six months later it starts bouncing right off them. It's the nature of the evolving beast and as such you always want to put price and volume ahead of anything. You can't just play John Carter's 'pivot plays' willy nilly.
I like to have them up there to see if they're going to be respected as this gives you a bit of an indication of sentiment.


Sledge, I don't have any good answers for for when to start your pivots session. Some say 12-12, others 2:30 EST. I think Mark fisher has some info on this in regard to FX. BUT Eiger uses true pivots which are highs and lows so I would suggest having a look at Eigers method first.

[jjthetrader]

	Quote:	Eiger
	Hi Dan, Wyckoff originally talked about this using the analogy of dams. He said that engineers don't build dams right next to one another. So when the dam breaks, there isn't another dam right behind it to hold back the water. Same with price. Once it breaks through the opposition, you can anticipate continuation. Eiger

Nice analogy! You had another good analogy earlier about an athlete. I think all these are great when forming an image of the flow of the market and of the workings, inner workings, of a trader.

[Seb Manby]

Dow is showing weakness after the FED cut rates, this shows that the Specialist's took the opportunity to distribute stock they had bought from the public at the lows at around 11800 level, rarely at a loss to themselves of course.

Point A, up bar with the high lower than the previous high, and look at the volume! remember that markets do not like high volume on upbars, unless tested immediately.

Point B, there is a test and all looks rosy and looking strong at this point.

C, A down bar after a test, this is weakness, well this bar says it all, I can now look forward to lower prices, look for a 'No demand' into the 12600 level to confirm the downtrend. And don't forget to post your short trades for all to study.

Regards S

[dandxg]

[quote=jjthetrader;32921]This is true dandxg.......sometimes. The thing with the ES is there was a time when it would never respect them and then six months later it starts bouncing right off them.

You are making my point. They don't work consistently IMO

It's the nature of the evolving beast and as such you always want to put price and volume ahead of anything.

Right that's obvious.

You can't just play John Carter's 'pivot plays' willy nilly.

Why are you making assumptions about the way I trade? I have never take any education lesson from John or Hubert FYI.

I like to have them up there to see if they're going to be respected as this gives you a bit of an indication of sentiment.

Great good for you.

[brownsfan019]

	Quote:	CandleWhisperer
	First, I would put Mark's white hammer pattern (Found on elitetrader) up against any of yours or Steve Nison's. The text book/internet patterns are not reliable.

OK, go ahead and prove your theory here with actual facts. I'd like to see your statistical research which shows that Mark's pattern is superior to those found from Nison's work or my candle area on this forum.

You said it, now show me PROOF.

	Quote:
	Second, unreliable does not mean on trade can't make 8 pts. It means for every 8pt trade there are 10 2pt losses. Not very reliable in my book.

Again, I will await to see your evidence of this random info you've posted. You've provided a random statistic here that is based on what exactly? I'd love to see how you can prove that for every 8 pt trade I take that I then take 10 two point losses.

You see son, it's hard to stay in business (yes, I run a business not a hobby) if you win for +8 and then lose -10 day in and day out. Kinda hard to turn a buck that way...

	Quote:
	You still have not shown any understanding of the Price Action. Why?

Not sure what you mean - I run the candlestick section right here on TL that has more info in it than most here will ever grasp. Instead of throwing rocks, please enlighten us there CW. I have yet to see a thread or area on the forum that YOU have made that details how to explain PA. Maybe I missed it, so feel free to show me those threads. In case you can't find mine, they are right here.

	Quote:
	As far as "text book" VSA, we are not all on the same level. Surely a newer trader will miss an idealized set up. Even a seasoned trader misses things every now and then. If you want to go this route, you can't say with certainty that was a hammer or a doji or a spinning top. And I bet if you put a poll on the candle thread you would get many different responses. By you definition, very little is text book where candles are concerned...........

You missed my point completely. Whatever you want to call that candle is IRRELEVANT. The name of that thing MEANS ABSOLUTELY NOTHING.

But I can tell that I am talking to a very inexperienced trader. For you to focus on what exactly that doji is called just shows how new to this you are. The name of that bullish candle, aka price action, MEANS NOTHING.

Until you understand that, it's hard for us to have a discussion.

--------

side note - is it me or is this forum just full of newbies all of a sudden? Did James take out some ads on Google or something?

[brownsfan019]

	Quote:	CandleWhisperer
	Very good question. Thanks for it. I am afraid you will find my answer wanting however. If you had asked my this as little as two weeks ago, I would of said I don't believe in price targets. I like to trail my stop and let the market take me out of a trade. That is what I would of said then , today it is a bit different. Since I am a client of a particular site, I do not want to say anything about targets. I will give a hint: it is in a least 2 threads in this forum. Even with that, I still like to simply trail my stop. I move my stop up based on the appearance of WRBs. This method is detailed by Mark in the WRB thread I believe. By the way, Tom Williams says markets will trend further than one expects them too. So all the more reason to not expect and simply allow the market to do what it wants to do.

Actually CW, this post from you explains everything. Since your methods are changing weekly or daily and you need to pay someone to show you how to trade, that's all I need to know.

It's PAINFULLY OBVIOUS that you are brand new to this. It's ok, you have a lot of learning ahead of you, including how to 'read price action'.

A few here understand when I write that the name of the candle means nothing. To you, this is a deal breaker as evidenced by your reply to me suggesting I open a poll to decide what that candle was called. A very amateur call. An experienced trader will look and say - wow, bullish on high volume, consider going long. That's it. Doesn't matter if you call it a doji, hammer, spinner, lasagna, crocodile hunter, blue moon special, terminator, cannon ball alley or my personal favorite - a reason to go long.

[CandleWhisperer]

Note to self: use the words for example else your words will be taken literally. the 10 pts loss is AN EXAMPLE. Do you not understand subtext?

[CandleWhisperer]

	Quote:	brownsfan019
	Actually CW, this post from you explains everything. Since your methods are changing weekly or daily and you need to pay someone to show you how to trade, that's all I need to know. It's PAINFULLY OBVIOUS that you are brand new to this. It's ok, you have a lot of learning ahead of you, including how to 'read price action'. A few here understand when I write that the name of the candle means nothing. To you, this is a deal breaker as evidenced by your reply to me suggesting I open a poll to decide what that candle was called. A very amateur call. An experienced trader will look and say - wow, bullish on high volume, consider going long. That's it. Doesn't matter if you call it a doji, hammer, spinner, lasagna, crocodile hunter, blue moon special, terminator, cannon ball alley or my personal favorite - a reason to go long.

Funny for one with so much experience you seem to show up on every thread. Why doesn't mr. candle man stay in candle corner, if they're so great? And you're so smart?