Balanced Areas

[traderxman]

Came across this site

Emini Day Trader - Market Profile, Volume and Proprietary Software to Day Trade the Emini S&P

this guy shows the colored volume bars indicating price rejection and also acceptance...looks like he takes a couple of higher volume bars. (i.e. you will note the bars color changes with higher volume) then creates a balanced area...then looks to trigger at the middle of balance. He has charts to decipher..

BTW I have no affiliation and may have more details to share if anyone may be interested. Not looking to get this guy courses sold by NO means. I already have it, at least b4 he came out with this software to draw the middle.

Any comments on this concept with anyone?

[Anonymous]

Mats: market auction trading system.

I was into this prior to finding Volume Spread Analysis.

Actually the fact that there were so many times when the market would have higher volume bars and then change direction lead me to re-evaluate the method. Instead of just moving down to the balance line and then turning up, the market would continue lower, for example. It neglects the fact that weakness comes in on strong bars and strength comes in on weak bars.

I liked the Market Profile elements underlying it. Plus the fact that there are no indicators.

I do think that is has some value. He does use Squat Bars, or Volume Churn Bars. I think some other elements maybe valid. Would love to hear more about it.

Do you use this method? Did you take the course, or just "decode" it?

[traderxman]

Yup its MATS alright...

squat bars, jump bars, HHV & HV bars...whole new volume numbers to input for each day etc etc.

Balanced Area MAtrix...BAM for short

It is EXACTLY like you mentioned about the inconsistent useage of volume along the lines of market reversals.

I have spent a fair penny and my time looking into volume...cisco futures and LDB data...I honestly have to say that perhaps I may have missed something as Dave Johnston from MATS is convinced it is the best thing since sliced bread, however I digress

I am currently using geometry (my take from Drummond Geometry)

SoulTrader has placed together a terrific environment. Keeping the salivating vendors at bay with alot of his and some others input on various edges.

I am liking this place alot.

[Anonymous]

This thread got me thinking about MATS. I really like that is uses no technical indicators. Moreover, I like that its concepts are rooted in Market Auction Theory .

At one point I was working with this method (not the real one, but my attempt to decode it from what is on the site and what Dave Johnson told me) and did find some value. The problem was many times at tops and bottoms it would be wrong. This lead me to VSA. It does a good job of determining tops and bottoms-the result of imbalances of supply and demand.

Since both methods do have volume at their core, I have been thinking if it is possible to combine the two. Still looking at it but Here is what I have so far.

A Balance Area is formed when there are two or more paintbars in a row. On the first non-paintbar, after the Balance Area is established. Note there are 3 Balance Areas on this chart. The middle one is a HV Balance Area.

This Balance Area is interesting. Note that the first bar is wide spread up bar on High volume that closes in the middle of its range. VSA tells us that a bar like that must contain Selling (supply). The next bar is key. This bar closes below the previous bar . Therefore, the first bar could not of been all buying. If it were buying , then why is the next bar (this one) down?

So while the Balance Area is created basically by the range of one bar, we know it is a selling Balance Area. Check out the small "c" on the second bar. This is a Volume Churn, or squat bar. We have volume higher than the previous bar and an equal or lesser range. Buyers have stepped in on this bar and are keeping prices supported. Market Makers, who can see both sides of the market, are keeping the range narrow as they can see Buy orders on their books and thus expect higher prices.

Note that we now see an area where the bulls and the bears are indeed "fighting" for control of the market. Mats would place an order one tick below the midpoint to go short a Selling Balance Area. However, I like the idea of waiting to see either a NO Demand bar (x's above a bar) or a Volume Churn bar. We could also look for Up thrusts preferably inside the Balance Area.

There is a squat and a No Demand bar that could be used to enter at the first selling Balance Area on the chart. The close of the squat is inside the BA which is ideal. The No Demand is just outside but within reason. Of course, if you short on the squat, then the No Demand is only there to give you some confidence and not trade entry.

Hopefully, Traderxman will find the time to share some of what he knows. I do think it is worth pursuing.

[Trader_JG]

Where is a good place to start learning about VSA?
I am currently taking the cisco short course but after some reading on TL I am starting to think that it might be a waste as I could have received the same info from Mind Over Markets.

How accurate would you say VSA is at finding tops/bottoms?

Thanks,
Jonathan

[TinGull]

Yes PivotProfiler, I'm getting kinda interested in this VSA stuff you're writing about. Any place you recommend to learn a bit more of the basics of it?

Thanks!

[Trader_JG]

I have heard about Wycoff (sp?) volume analysis. Is his stuff any good and is is considered VSA?

[Anonymous]

I truly believe that by combining Volume Spread Analysis with Market Profile/Auction Market Theory one can create a powerful way to view, understand and trade the markets.

All markets are governed by the laws of Supply and Demand. Specifically, the imbalances of supply and demand brought about by Professional (or Smart Money) traders.

The place to begin is with the book, Master the Markets by Tom Williams. Currently it is only available at Tradeguider.com. They have told me that they are looking for a publisher for wide spread (no pun intended) distribution. Personally, I do not like the tradeguider software and that is ultimately what they are about. However they do offer a lot of free information on VSA.

Tom Williams took the Wyckoff (concepts) course and expanded on the concepts. Wyckoff looks at price and volume. Tom looks at volume, spread (range of bar) and closing price.

Friday morning 0815 EST they are running a public demo. Go to the web site and click on enter site, if you are interested. Tomorrow (3/9) will be interesting as it is a big "news day". Professional money uses news driven events to manipulate the market. There should be ample opportunities to see them in action. Of course, many of you will be trading the event yourselves, but if not check it out.

On the site there are a number of webinars that can be viewed for free. There are also some webinars on the CBOT site.

[walterw]

	Quote:	PivotProfiler
	This thread got me thinking about MATS. I really like that is uses no technical indicators. Moreover, I like that its concepts are rooted in Market Auction Theory . At one point I was working with this method (not the real one, but my attempt to decode it from what is on the site and what Dave Johnson told me) and did find some value. The problem was many times at tops and bottoms it would be wrong. This lead me to VSA. It does a good job of determining tops and bottoms-the result of imbalances of supply and demand. Since both methods do have volume at their core, I have been thinking if it is possible to combine the two. Still looking at it but Here is what I have so far. A Balance Area is formed when there are two or more paintbars in a row. On the first non-paintbar, after the Balance Area is established. Note there are 3 Balance Areas on this chart. The middle one is a HV Balance Area. This Balance Area is interesting. Note that the first bar is wide spread up bar on High volume that closes in the middle of its range. VSA tells us that a bar like that must contain Selling (supply). The next bar is key. This bar closes below the previous bar . Therefore, the first bar could not of been all buying. If it were buying , then why is the next bar (this one) down? So while the Balance Area is created basically by the range of one bar, we know it is a selling Balance Area. Check out the small "c" on the second bar. This is a Volume Churn, or squat bar. We have volume higher than the previous bar and an equal or lesser range. Buyers have stepped in on this bar and are keeping prices supported. Market Makers, who can see both sides of the market, are keeping the range narrow as they can see Buy orders on their books and thus expect higher prices. Note that we now see an area where the bulls and the bears are indeed "fighting" for control of the market. Mats would place an order one tick below the midpoint to go short a Selling Balance Area. However, I like the idea of waiting to see either a NO Demand bar (x's above a bar) or a Volume Churn bar. We could also look for Up thrusts preferably inside the Balance Area. There is a squat and a No Demand bar that could be used to enter at the first selling Balance Area on the chart. The close of the squat is inside the BA which is ideal. The No Demand is just outside but within reason. Of course, if you short on the squat, then the No Demand is only there to give you some confidence and not trade entry. Hopefully, Traderxman will find the time to share some of what he knows. I do think it is worth pursuing.

Pivot : are does paintbars on TS ?

[Anonymous]

	Quote:	Trader_JG
	Where is a good place to start learning about VSA? I am currently taking the cisco short course but after some reading on TL I am starting to think that it might be a waste as I could have received the same info from Mind Over Markets. How accurate would you say VSA is at finding tops/bottoms? Thanks, Jonathan

Just a quick post.

While this is not the best time of day/night to trade, we often can see good set ups.

Here we force Professional Money to show itself at the POC.

Note that we get a red paintbar. This bar closes on its low with higher volume. The low close tells us that this is a weak bar. The next bar, however, is narrow and has greater volume with an equal close. A close that is also in the middle of the range. There is demand (buying) in this bar.

Two bars later, we see a narrow bar that closes on its lows on volume less than the previous two bar- NO SUPPLY. Perfect place to get long. Tom Williams really likes this type of set-up.

Two more bars later, we see a bar that closes lower than the previous bar, closes on or near its high, makes a lower low, and has volume less than the prior two bars-THIS IS A TEST.

The Smart Money is testing for supply. If you missed the first entry, here's another chance to get on board.

Catching tops and bottoms is nice, but getting into a trade knowing you're on the same side as the Smart Money is better.