[VSA] Volume Spread Analysis Part II

[DbPhoenix]

	Quote:	Bearbull
	How about previous support , now acting as resistance. Now note the price action via say 2min or 1min chart at that level. Read post 927 and 942 by Dbphoenix for more info.on context.

You two are asking good questions, but I'm not sure that this is VSA. Nic (gassah) and I are thinking of opening up a Wyckoff thread in order to keep all of this from getting tangled. Yes, it's all about price action, but addressing several approaches simultaneously can be unnecessarily confusing.

[zeon]

	Quote:	DbPhoenix
	While you're pouring over all of this, you must also consider what you'd be doing if you were or had been short, as you should have been. Is all of this enough to cover the short? Or would you be holding on for the next level of potential support?

After a bit of self-reflection I've come to the conclusion that I prefer to exit on the first warning signal. Even though this might not be the end of the move, I'd definitely want to lighten my position. For example today - presuming I would be short - I would have taken off some contracts when price reached 1825. Later, when it failed to make a lower low AND broke the downtrendline, I would've exited my whole position.

Then there's also the third option, exiting completely and reversing... but I don't think I'm quite ready for that yet.

[DbPhoenix]

	Quote:	zeon
	After a bit of self-reflection I've come to the conclusion that I prefer to exit on the first warning signal. Even though this might not be the end of the move, I'd definitely want to lighten my position. For example today - presuming I would be short - I would have taken off some contracts when price reached 1825. Later, when it failed to make a lower low AND broke the downtrendline, I would've exited my whole position. Then there's also the third option, exiting completely and reversing... but I don't think I'm quite ready for that yet.

Although there's another option. Rather than cashing in some of your position at a predetermined target (the market doesn't care where you entered or what your target is), let the market tell you where to lighten up, i.e., however you've defined a reversal signal. This enables you to keep some in reserve in case the market decides to breach support and continue its declne.

[zeon]

	Quote:	DbPhoenix
	Although there's another option. Rather than cashing in some of your position at a predetermined target (the market doesn't care where you entered or what your target is), let the market tell you where to lighten up, i.e., however you've defined a reversal signal. This enables you to keep some in reserve in case the market decides to breach support and continue its declne.

It looks like we just went below that 1825 support. I'm not sure if I understand the option you suggest correctly. Are you saying it would be smart to leave some reserve open, like in today's situation, despite (a) the failure to make a lower low (b) the trendline breach and (c) the reversal signal? Looks to me like you'd have to let price travel back to your entry point for at least 10 points.

[DbPhoenix]

	Quote:	zeon
	It looks like we just went below that 1825 support. I'm not sure if I understand the option you suggest correctly. Are you saying it would be smart to leave some reserve open, like in today's situation, despite (a) the failure to make a lower low (b) the trendline breach and (c) the reversal signal? Looks to me like you'd have to let price travel back to your entry point for at least 10 points.

There are many options for managing a trade, and the choice of options one makes depends on how well he understands what's in front of him, what he wants for himself, how much he's willing to risk, and how many contracts/shares he's trading.

If, for example, one is trading one contract, he should trade it as if he were trading four, taking the profits on that one contract wherever he'd be taking those profits, then trading the other three on paper, exiting each at a predetermined signal. If he tries to make the most out of that one contract, he will end up taking profits very quickly, if there are any, or letting the one contract come back all the way to breakeven just because he was hoping it would travel all the way to the next support or resistance level and it reversed instead.

This approach requires a certain emotional maturity. If one can't view this as training for bigger rewards down the road and patiently keep his eye on the prize, he will very likely end up on a treadmill instead.

[zeon]

	Quote:	DbPhoenix
	If one can't view this as training for bigger rewards down the road and patiently keep his eye on the prize, he will very likely end up on a treadmill instead.

Ehm, forgive me for asking, but I was under the impression you yourself found it safer to lighten your position 'at the midpoint of extremes'. And I believe in the PDF files and in a couple of posts you said that when there's a reversal signal you exit. It looks to me as if you're contradicting yourself now (or it could be me making the wrong assumption/interpretation).

There's always the possiblity for re-entry, not? Why wait to see if support breaks in a downmove, if you have to sit through a 50% retracement? I don't know how much that has to do with emotional maturity really...

It seems that there's a small line between hope and patience. But it seems like wishful thinking if you're waiting for a break of support after a reversal signal took place. Why not exit your position - like today - when there's a reversal signal and consider re-entering later?

[DbPhoenix]

	Quote:	zeon
	Ehm, forgive me for asking, but I was under the impression you yourself found it safer to lighten your position 'at the midpoint of extremes'. And I believe in the PDF files and in a couple of posts you said that when there's a reversal signal you exit. It looks to me as if you're contradicting yourself now (or it could be me making the wrong assumption/interpretation).

Guess what? You and I aren't the same people. Why would you follow in my tracks and manage your trades exactly the way I do?

You can't trade correctly until you decide what you want.

[zeon]

	Quote:	DbPhoenix
	Guess what? You and I aren't the same people. Why would you follow in my tracks and manage your trades exactly the way I do?

Because it seems like a good idea to follow advice from a more experienced and profitable trader.

	Quote:	DbPhoenix
	You can't trade correctly until you decide what you want.

My primary concern is making a good entry and then squeezing as much out of it as possible. Trading from S to R and vice versa seems the logical way to do that. I don't want to go back to taking 15-20 trades per day. On the other hand, in trending days price might break that support or several levels but I don't know why I should care if there was a reversal signal and I took it, than I followed the plan. For example if today the trendline wasn't broken then I could've just stayed it with some contracts after lightening my position at support.

Look at where the market closed? I think - in hindsight - exiting for the reasons I stated was a good thing to do at that time with the information available in the chart. Shorting at the break of 1825 would be the re-entry I mentioned, but that one wouldn't have turned out nice

[DbPhoenix]

	Quote:	zeon
	Because it seems like a good idea to follow advice from a more experienced and profitable trader.

And if any such trader tries to tell you what you ought to want, wave goodbye and head for the nearest exit.