Candlesticks and Volume

[brownsfan019]

After watching the webinar from Joel and reading a few of these VSA threads, I thought I'd get a candlestick and volume thread going.

Now, I should start by saying this - my use of volume is about as basic as it comes. We are not talking about a huge in-depth analysis as seen in the VSA thread.

I will try to get some screenshots up in a bit, but the basic premise is simple - using candlesticks as the PRIMARY trade reasoning and then take the trade if volume CONFIRMS (as a 2ndary) that trade idea. In other words, instead of just taking any random hammer, take a hammer that has much higher volume than seen elsewhere.

The results should be less trades (vs. just taking a candle pattern), but that's ok if it weeds out some losers. We can discuss and open up to any timeframe as well.

It's kinda funny how your trading career can go sometimes - when I first got into trading, I was heavily into volume reading. So much so that it paralyzed my decision making. So I slowly used it less and less. After listening to Joel, a few things clicked and it's interesting how after years of experience, things can look differently. Again, the idea is simple - candle pattern + good volume = good setup. You'll soon find out that my definition of 'good' volume may be different than the VSA'ers, hence the reason for a separate thread. I did not want to get into a theoretical debate about whether the volume in question is acceptable or not.

[brownsfan019]

Here's a setup from today on the 1 minute, ES chart:



So far, that called the high of the day. While that is neat in hindsight, no way can you go into a trade expecting to pick off the HOD and LOD each and every time.

[brownsfan019]

Here's an interesting one from today:




Now the high volume is actually on the red hammer type thing but that trade would require a fairly wide stop. The very next candle - a spinning top that is also a harami type setup provided an incredible risk/reward. In essence, the need to 'borrow' the volume from the previous candle was needed here. I THINK that is a VSA thing where the red candle has the major volume and the 2nd one shows no interest to continue the down move, so can get long here.

[brownsfan019]

Now, before anyone runs out and commits trading suicide by blindly following something, here's 2 losers that I had today as well:







BOTH of these failed as far as I am concerned. I only showed you what I was looking to initiate the trade, but both did in fact get stopped out later.

[brownsfan019]

Here's a "patience trade" that is really testing my patience currently. I am currently in this position:




This is a "patience trade" for me b/c it is requiring patience to give this room to work. Not my forte. I was trying to get long on the hammer, but that did not fill so remaining short for now. Volume looks to be in the direction of the short, so we'll see.

[jjthetrader]

I look forward to the growth of this thread. I like to see how others incorporate VSA into what they feel comfortable with.
Thanks for starting it.
Do you actually trade off a 1 min chart?
One thing to note is that the strength/weakness that you see appearing on your x-min chart will only exist for x amount of minutes there after. This tripped me up for a while.

[brownsfan019]

	Quote:	jjthetrader
	I look forward to the growth of this thread. I like to see how others incorporate VSA into what they feel comfortable with. Thanks for starting it. Do you actually trade off a 1 min chart?

Yes - I think I said above that this was a trade that I was currently in. That was true.

The 1 minute with a volume histogram is kinda fun actually. Very easy to see spikes and can get some prime entries as well with my candlesticks.

[brownsfan019]

	Quote:	jjthetrader
	One thing to note is that the strength/weakness that you see appearing on your x-min chart will only exist for x amount of minutes there after. This tripped me up for a while.

Please elaborate on this comment.
Thanks!

[jjthetrader]

	Quote:	brownsfan019
	Please elaborate on this comment. Thanks!

Let's say you've got a 15 min chart and you have weakness appear. You are likely to have that weakness hanging around for at least 15min. It was Tom Williams himself that spoke about it. It doesn't mean it will only be 15 min, it just means you are likely to have it there for 15 min. This is also why he says "when you see a bar like this (weak up bar) on the 3 min go short right away". Of course this could also be the high of the day and continue down the rest of the day but you're likely to get at least 3 min or whatever it is.

In Tom's bootcamp in the Forex section is where I'm referencing from.

[404]

Great thread BF. I love your candlestick analysis. Lets keep this thread going.