VSA : Crock or Not?

[mister ed]

This thread has come about to enable discussion on the philosophy of VSA away from the VSA threads, which are venues more for application of VSA.

Those wanting to question the usefulness of VSA ideas/concepts have done so in the VSA threads, but the questioning has beome so persistent and no resolution appears in sight that this thread has been created to enable that disucssion to continue.

[forsearch]

Is VSA distinct from MP or part of it?

-fs

[mcichocki_]

	Quote:	forsearch
	Is VSA distinct from MP or part of it? -fs

Totally distinct though then could be mixed just like any other styles used for the markets.

[mister ed]

Hi forsearch - have you checked out the MP posts on this website? There is heaps of info there on MP and I think once you have read started reading those the differences between MP and VSA will be much clearer?

[forsearch]

	Quote:	mcichocki_
	Totally distinct though then could be mixed just like any other styles used for the markets.

OK, but, I'm also trying to understand the nuances of VSA that would lead the candlestick boys to trash your methodology.

Not that the nuances of candlesticks aren't subtle enough as it is, given that something may have been "lost in translation" by Nison, et al, from the original Japanese implementation.

Candlestick analysis with reference to the corresponding volume bar is what VSA is all about; traditional candlestick trading eschews any reading of volume, correct?

-fs

[Ricks Inn]

	Quote:	forsearch
	Candlestick analysis with reference to the corresponding volume bar is what VSA is all about; traditional candlestick trading eschews any reading of volume, correct? -fs

One small point, but important in Tom Williams' VSA, is that the OPEN value on any bar is not utilized (of course the OPEN defines one end of the body - if any - of a candle). Even the latest TradeGuider software rev. soft-pedals the alphanumeric display of the OPEN value.

[smwinc]

Guys, this is getting a little beyond a joke.

I don't want to create a long post, however I think problems come about from either misunderstanding or forgetting the core concepts types of analysis such as VSA are built on.

Markets have buyers, and sellers. They move in a direction when one exceeds the other.

Getting caught up on the nuances of the 'open' of a bar, etc. does not make any sense. Who cares.

Apologies if I sound a little blunt, but focusing on minor, insignificant details is what software advertising tends to do, trying to make you think it's important. This is designed for retail trades, who on net go broke. Avoid thinking like that.

For any valid type of analysis, often you can 'follow through' the reasoning of it, and get the same conclusions as you with another type of analysis.

An example scenario:

Market is falling.

Trader A suddenly sees huge bids waiting down in a correlated market. He buys the market, anticipating the implied demand from the other market, will send his market up.

Trader B sees that the market is about to hit XYZ moving average (insert: indicator name) and decides to buy.

Trader C sees that this bar was a widespread off the close with significantly above average volume. They buy.

Trader D sees that the market has hit a support level, and created a strong bullish hammer on above average volume. They buy.

Trader E sees a green light on his black box trading system, and buys.

End result = we all bought the market, for various reasons. Demand was there, for "whatever" reason - a candle, VSA, black box system, moving average, whatever, who cares - there was demand. The profitable trader bought it. The losing trader sold it.

All you want to do is be the trader who has 'some' way to identify those situations to profit more often than not.

Worthless types of analysis is generally when it can't be tied back to (real or implied) demand/supply in some way.

[idaxtrader]

"Well, he said, the customers are bound to lose their money anyhow, no matter what they buy, or how or where or when. When they lose their money I lose the customers. Well, I might as well get as much of their money as I can and then look for a new crop." (38)


This is a total joke. Why are most traders such asses? VSA is not a crock. VSA is one way of forming a framework to understand price action. Its really just one mans interpretation and modification of Wyckoff's work. Is VSA any better than Wyckoff? Of course its not. Is VSA any better than Candlestick analysis or simple bar chart pattern recognition? Of course its not. Is technical analysis any better than fundamental analysis? Of course its not. Each is simply a framework that may allow you build an edge. Its seems most people are totally lost. They are still in search for the grail. Get on the right path and become a expert in just one method. If you want to read book that deals almost exclusively with that concept read Brett Steenbargers Enhancing Trader Performance and maybe you will finally get it.

[BlowFish]

If you read Toms original book (tbh the free master the markets ebook is not that different so it would do) you will at least be able to debate the subject from a position of knowledge rather than ignorance. Reading a few posts in a forum might be enough for you to say 'VSA is not for me' but it hardly puts you in a position to argue its veracity or efficacy. I would never dream of criticizing peoples precious candles for example without doing similar work (I have all of Nissons and Bigalows books, I have done Nissons seminars and met the 'great man' on numerous occasions, always decent discussions about what he publishes) to do any less would be half arsed.

Anyway back to VSA....its simply a tool, a method of looking at the market its not a trading system or even a book about how to use the tools to trade. The basic premises are blindingly simple (perhaps more in another post). On top of those are built 10 or so 'principles' that are essentially divided into signs of strength (SoS) and signs of weakness (SoW). Again pretty simple, certainly when compared to .... errm lets say candles to be provocative

I personally think that there is a great deal of veracity to the basic premise and even the principles. It is firmly grounded in price action but adds volume to the mix in a structured way. Thats not to say there are not pitfalls to be wary of but show me an approach that has none and I am all over it. Yay we found the grail. (maybe more on pitfalls later if anyone is interested?)

Another issue is Tradeguider. I wouldn't go as far as saying they are shills but there objective is not to buy strength it is to sell weakness. They are a one trick pony. In there effort to market there inventory they are gonna make it look as attractive as possible. As I said elsewhere I am waiting for the Gavin, Tom, Sebastian and Mike action figures. They are already working on the movie tie in (DVD only). Of course the real VSA 'message' is likely to get at best, a wee bit obscured, and at worst corrupted. I should mention that I mean no disrespect to Sebastian (don't want to jeopardise our friendship). He can certainly read a chart and even though he is not affiliated to tradeguider he lends some credibility.

One thing Tradeguider has done is raise the awareness of VSA. Thats a double edged sword of course. I do remember when the book was first published the only person to really talk about it with was Tom. I wonder how many he sold in the first year, not so many I would guess. A bit later on there was a scam in the UK perpetuated by a guy calling himself the chief wizard. (or something like that). Cut a long story short he had a hacked version of VSA and Toms book was on the reading list (though he claimed to have uncovered the hidden secrets within)! Whilst that did not give as much exposure as trade guider from that moment once in a blue moon you would come across someone that had at least heard of VSA.

So definitely not crock, though I could certainly highlight a couple of places where there may be issues. Having said that it would be more interesting to see if the naysayers do the work for themselves. I suspect not as I don't think their motive has ever been to establish the efficacy of VSA.

Plenty more if anyone is really interested in debating the benefits (or not) of VSA.

[BlowFish]

	Quote:	forsearch
	OK, but, I'm also trying to understand the nuances of VSA that would lead the candlestick boys to trash your methodology. Not that the nuances of candlesticks aren't subtle enough as it is, given that something may have been "lost in translation" by Nison, et al, from the original Japanese implementation. Candlestick analysis with reference to the corresponding volume bar is what VSA is all about; traditional candlestick trading eschews any reading of volume, correct? -fs

Problem with candles is they actually put the emphasis on the pattern. The smart guys soon realise (took me a whole bunch of time so maybe I am not as smart as I think I am) that this dogma can actually obscure what the price action (PA) is telling you. VSA is prone to the same malaise except the SoS & SoW (see previous post) are much closer to the PA.

Incidentally, I am pretty sure Nisson is not a trader. His business model is similar to Tradeguiders though his focus is more on advisories and seminars.