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John Baron

VSA (Volume Spread Analysis) vs LRA (Locked-in Range Analysis)

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Let's compare two cause-effect methods of analysis which help us to make our FOREX trading strategy more profitable:

Volume Spread Analysis (abbr. VSA) seeks to establish the cause of price movements, and from the cause, predict the future direction of prices. The ‘cause’ is quite simply the imbalance between supply and demand in the market, which is created by the activity of separate professional operators called "Smart Money".

Locked-in Range Analysis (abbr. LRA) seeks to determine the direction of the prevailing volume of open positions which will allow to join the further profitable price changes for all united market makers called "centralized automated market-making system".

For example, both methods use the chart and volume to analyze, but have different basis:

VSA: Activity of separate professional operators (Smart Money)

LRA: Logic of price changes in the futures markets (where a liquidity is provided by Market Makers)

LRA_vs_VSA.png

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How can you identify where the smart money is ? By analysing the big passive orders waiting in the order book and the average market contracts executed ? block of 25 contracts or more according to the asset ?

I guess this solution is very expensive, right ?

Tell us more.

 

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What market do you trade?

Because VSA is better used in Stocks and I use the analysis like LRA for a long time.

And using cause-effect methods of analysis like LRA does not require the use of the order book. We need to search Locked-in Ranges where current Open Positions are locked in loss and it is profitable for the market maker to quote prices above or below the range depending on the sentiment.;)

 

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Did you realise a video explaining cleary VSA & LRA ?

I do not really understand why Open positions are locked in loss ? Do you refer to positions that are in loss but not closed ?

When a trader use the volume profile such as it is configured here: 


Visible bars + Dominant Bid-Ask Volumes..
VP_Dominant_Ask-Bid.png

If the dominance is showed to be red, it means that the Ask if mostly sollicited by the price action, right ?

Shall we interpret the Ask dominance such as being:

1 - aggressive orders that cross the spread to hit the Ask side
2 - limit orders that have executed at differents price levels
3 - 'Buy Stop' orders that are 'Stops' of sellers that have been triggered,


which means that these buyers did loose money and that it is now a potential zone for sellers to be aggressive...
 

Using Sierrachart Volumes Profiles does not allow to visualise the nature of orders, especially who are behind.

I am curious but perplexe.

VP_Dominant_Ask-Bid.png

YMM8_230418_233trades_Strategy_Volume-Spike.png

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Posted (edited)
On 15.05.2018 at 11:42 PM, magicT said:

I do not really understand why Open positions are locked in loss ?

Cause it is the basis of a market?) Market-makers give you a liquidity and don't want to lose their money))

Edited by John Baron

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Hello John

 

1 > I would to understand if the market makers do see all the pending, the market positions and the stops on the futures markets ?

   In this case, they can move the price easily to catch these stops all day long, right ? (especially on thin order book like CL or YM)

2 > Do you have a dedicated server on Discord or telegram ? A lot of traders are on these platforms and it is much comfortable and dynamic, especially Discord.

3 > I do use Sierrachart and would be interested for a trial of these tools and signals: https://mboxwave.com/three-stooges-signal & https://mboxwave.com/spring-upthrusts-signal

If I am not wrong, it is your website ? If you have real live trading sessions using these tools to measure how good they can be, just tell me.

 

Thanks.

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