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Eiger

Pure VSA

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Thanks Eiger,

Yes I have heard Tom mention the War analogy in respect of trading off 1min charts.

 

Personally don't have problems with stops etc. It is just that there is so much stuff on trading of tick charts or 5sec or 10sec charts which apparently will show up the exact turn and thus afford a close stop (low risk), so easy for anybody new to this business to get enticed to, however it is clear that one is prepared to accept higher level of risk but at least have the confidence via the analysis you just outlined, then it is worth pursuing this route.

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...Yes I have heard Tom mention the War analogy in respect of trading off 1min charts.

 

Personally don't have problems with stops etc. It is just that there is so much stuff on trading of tick charts or 5sec or 10sec charts which apparently will show up the exact turn and thus afford a close stop (low risk), so easy for anybody new to this business to get enticed to, however it is clear that one is prepared to accept higher level of risk but at least have the confidence via the analysis you just outlined, then it is worth pursuing this route.

 

Many people do trade off the smaller time frames like you mention. I don't know how well they do or what the methods may be. I have no axe to grind against those methods - I am sure they are fine. They just aren't VSA. VSA was not designed for the "micro" time frames.

 

Here's a 1-minute chart of the Friday AM session in the S&P emini. At A, there appears to be a Buying Climax -- heavy volume, wide spreads with near vertical rise, the next bar is down. At B, there is an UpThrust and 3 bars later at C, a No Demand. If you took that trade, you are immediately underwater, despite what appear to be valid signals.

 

A little later at D, there is a 2-bar top reversal followed by a No Demand at E. You can see that volume had continued to dry up from the apparent BC as the market attempted to rally, so you figure there is weakness in the background and this is ready to fall. It does go lower, but it wasn't very rewarding. If you look closely, there are other VSA indications that I didn't highlight but give the same results.

 

This is what Tom means about being picked off like a soldier in the trenches. The 1-minute chart just doesn't work well with VSA.

 

Again, I have nothing against using the 1-minute or 10-second micro charts. I am sure there are times when they pick the turns wonderfully. But with VSA, they tend to give too many false impressions.

 

Eiger

5aa70eaf3e7af_Feb6091-min.thumb.png.c43c3f42d9ff355e471c9cfb2f9a4769.png

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interested use of complicated jargon to identify simply concepts.... for example...

 

 

no demand --- a low volume pullback

 

upthrust --- price rejection

 

 

still looking forward to your real time analysis.....

 

These are VSA terms used in a VSA thread. If you have known anything about VSA, you would not call the terms complicated. There is a thread specifically for people like you to post your feelings about VSA. Kindly post your comments there and let this thread stay on topic as your post is not adding value to the goal of this thread. Thank you.

crock-or-not

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These are VSA terms used in a VSA thread. If you have known anything about VSA, you would not call the terms complicated. There is a thread specifically for people like you to post your feelings about VSA. Kindly post your comments there and let this thread stay on topic as your post is not adding value to the goal of this thread. Thank you.

crock-or-not

 

interesting emotional reaction.....

 

i was simply stating the obvious... no need to use complicated jargon to discuss technical analysis 101....

 

please keep your emotion reactions to yourself...

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Can anyone please share their experiences taking a short position following an 'End of a Rising Market' bar.

 

Assuming nothing to the left ....

Do you enter immediately or wait for further weakness (e.g., Upthrust, No Demand)?

Try and confirm by shifting TimeFrames ... and if so which TimeFrames do you use ... and what are you looking for?

 

How successful has this strategy been?

How often do you see an 'End of a Rising Market' bar appear?

What sort of win/lose rate do you get?

What have you learnt?

 

Thanks,

sleepy :)

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Can anyone please share their experiences taking a short position following an 'End of a Rising Market' bar ...

 

 

They are quite rare on the intraday time frame. I can't remember the last time I saw one. For some reason (and I don't know why it is), Bag Holding - the mirror of EORM - is more common intraday. You may see them occur more in EOD stocks.

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hi,

 

in post 10, the bar I doesnt have volume less than the 2 previous bar. Only the bar before...

 

Good question. Technically, you are correct. Nevertheless, this is an up bar on very narrow spread, close off the highs on relatively low volume after a sign of weakness at H. The rule of thumb for both No Demands and Tests is volume less than the previous two bars. With experience, you will see that when indications are very close as in I, they can be read in the same way.

 

Hope this is helpful,

 

Eiger

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For a very long time, I found trend days difficult to trade. Mainly, I think it was a mindset that just gets grooved when many days in the S&Ps are best traded as countertrend / reversion to the mean-type days.

 

Watching the swings as they develop and identifying them as making higher highs (HH) & higher lows (HL) or lower highs (LH) & lower lows (LL) can be a big help. Once a trend starts, you can look for certain classic VSA indications for confirmation and entry triggers. Thursday provided a good example to the downside.

 

A little after 11:30 EST there was a good downtrend in place with a LH and LLs. Once a downtrend gets going, the background is weakness (always, always know the background first). You can then start to look for confirmation and triggers. One of my favorite triggers in a downtrend is the Hidden UpThrust (HUT).

 

In a regular UT on the trading time frame, there has to be an old top (resistance) in the background against which the UT rallies above, then closes below. A HUT will not have the old top in the background on the trading time frame, but will on a smaller time frame. Thus, it is a bit more difficult to see on the trading time fame, but with careful observation, it is easily detected.

 

There are a nice series of HUTs on the attached chart. Each of these occurred in a weak rally into prior support-now-resistance. Each marked the end of that rally. You will see this classic setup occur over and over in downtrending charts.

 

Hope this is helpful,

 

Eiger

5aa70eb533774_Feb2609ES3-min.thumb.png.a259a300e9809f84abc99161a2d8ac3b.png

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Hi Eiger,

 

I know there are low volume upthrust, but normally when I think of an upthrust I think of high volume.

I notice all of the Hidden Upthrust on your chart are on relatively low volume. Is this the norm when looking for HUT's?

 

~Mike

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...the background is weakness (always, always know the background first). You can then start to look for confirmation and triggers. One of my favorite triggers in a downtrend is the Hidden UpThrust (HUT).

 

Hi Eiger,

 

just saw your post and llike to ask you a question regarding the anaylsis of the background.

Are there any guidelines/ tipps of how to analyse the background? what are you looking first, what second and so on...? Is it that you just look if there are LH/LL (downtrend = weakness) or HL/HH (uptrend= strength)?

Once you wrote that one have to consider in which phase the stock etc. is (accumulation/markup/distribution/markdown) and you wrote that is difficult to see where we are and you think more of different stages of volatility. Can you explain this a little more (how do you measure volatility?)

 

As analysing/evaluationg the background is so important, your tipps are very welcome!

 

Thanks and regards

mcfotos

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Hi Eiger,

 

I know there are low volume upthrust, but normally when I think of an upthrust I think of high volume.

I notice all of the Hidden Upthrust on your chart are on relatively low volume. Is this the norm when looking for HUT's?

 

~Mike

 

You are right, Mike, UTs can be high volume or low volume. The HUTs that I identified here are in a downtrend. In general, a downtrend often moves on lighter volume compared to an up trend. Fewer traders participate in a downtrend. HUTs aso occur at the end of a weak rally. By definition, a weak rally indicates a rally on low volume. So HUTs will usually have lighter volume. Good observation.

 

Eiger

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Hi Eiger,

 

.... Are there any guidelines/ tipps of how to analyse the background? what are you looking first, what second and so on...? ....

 

In assessing the background, I personally take a top down approach. I look at the weekly chart for the major trend and the daily chart to see where we are in that trend. That gives me the larger picture. I then drill down using the 180-minute and hourly charts for a finer view of Support/Resistance, trend lines, and trend channels. I am always aware of the S/R levels from the hourly chart, and especially yesterday's highs and lows.

 

On the intraday charts I draw lots of lines, again for S/R, trend lines, and trend channels. I then look for confluence with important larger time frame areas (described above) and how volume and price interact within these areas. It is all about preparation, which is done religously every night.

 

Eiger

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Ani - You need to post your charts correctly as we cannot see the details. Charts need to be uploaded separately and not pasted into the text area of the post reply box. Click on GO Advanced (bottom right corner of post reply box) and you will see a section to upload charts, which have easy to follow instructions. From what can be seen on your charts, it looks like you are missing the background conditions of a trending market, which typically takes more than one bar of weakness to turn.

Edited by Eiger

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Hello Eiger

 

I'm beginner in VSA trading approach. I'm just trying to paper trade (SIM). Market NQ mini - from 1 pm to 3 pm

 

I read a lot about VSA a can recognize bars like ''no demand, no supply, upthrust etc. but I'm struggling whith these bars in a real time. It's very easy to interpret these bars on the left side of the chart when I can see the right side.

 

I'll try to write down my feelings during a real time.

 

60 min. chart - market in trading range, I expect the move of the market within this area

 

10 min. chart - market starts to turn down just on the very strong SR line,

 

1- upthrust, volume increased, next bar close of the high

2- no supply

3- no demand - I started to think about short position

4- upthrust - I started to think about short position - the low of this bar was not taken

5- wide spread UP bar with ultra high volume - I started to look for no demand or upthrust - short again

6- test but still a lot of supply there - I did not take long position (the wide spead UP bar with ultra high volume was the second reason)

 

5 min. chart

 

1- no demand

2- hidden upthrust

3- some demand enters - this is the reason why I did not take short position

4- wide spread UP bar + high volume = weaknes

5- no demand - I wanted to take short position - the low of tis was not taken

 

When I can see the right side of the chart - after the trading session

 

1o min - chart

 

1- upthrust, volume increased, next bar close of the high

2- no supply

A- some demand enters

3- test with low volume

B- supply enters

C- second test with low volume

5- pushing through supply- strenght

6- shake out?

 

5 min. chart

 

1- test with low volume

2- no supply

A- supply enters

B- second test with low volume

4- pushing throught supply

5- test with low volume?

5aa70eb9b73ce_ScreenHunter_01Mar_1722_01.thumb.gif.cedcf7f58b646243b3c051c9e5ec59f9.gif

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Hi Mantra,

 

Good Questions. The key to your questions and difficulties reading this market is in the background. I can never emphasize this enough: Always seek first to understand the background, then look at your trading time frame chart and bars.

 

The background is your context. You have to have some context to take trades. If you don't have the background firmly in mind, you are trading random patterns. It doesn't matter if you are using fibonacci, MACD, VSA, MAs or any other methodology. If you don't have the background conditions in mind, you are trading random setups, and this is one good receipe for failure.

 

You have the background on your charts. It's in the 60-min chart. Looking at that chart, I see an uptrend. The 60-min is making higher highs and higher lows. Although not shown here, volume comes in on up bars and tends to recede on down bars. There has been no climactic action or a clear tiring of demand at the top of the rally on the 60-min. These would suggest a turn in the market, but they are not there. There is no weakness. Everything points to strength.

 

When you have good strength in the background as you do on this 60-min chart, you want to be looking for long setups on your trading time frame. Longs in this background context will be safer and will produce greater profits than shorts. If you do elect to countertrend trade, it should be scalp-only, otherwise, you will be paying the market for your play. That is what you found out when thinking about shorts. Upthrusts and No Demands do not work well in uptrending conditions, just like Tests fail in downtrends. Background.

 

Let's go a little deeper into the 60-min chart so you will be able to recognize these conditions again in the future:

 

From the bottom of the chart at 1, the market rallies at 2. Look at the character of that rally. What do you see? Wide spread up bars pushing through the resistance (supply) and continuing higher. Demand has clearly overcome supply at this point - bullish.

 

The market rallies up to he market at A. Note what happens here. There is a resistance line drawn at A representing supply from the old top to the left. Note the qulity of the reaction at A. It doesn't react much. The market is not giving up ground. Instead, it is holding its gains. THus, rather than reacting, the market is just resting and absorping whatever supply exists from the old top. Supply is unable to take control, and this is bullish behavior.

 

At B, we see a similar event. You can see to the left, there is a larger congestion area compared to the old top at A. Thinking about this logically, this area is larger and could represent an impossible obstacle for the current market to overcome. However, just as at A, the market rests rather than reacts here. It is longer in duration than the resting at A, but this makes sense because the supply area to the left s larger. Nevertheless, the gains are held. No big reaction takes place. At the bottom of the trading range, the market tried to go lower, but lower prices were rejected. All of this is bullish behavior.

 

With all the bullishness in the background, it is far better to be looking for long trades rather than shorts.

 

Hope this is helpful,

 

Eiger

5aa70eba17336_60-minExample.png.cf3996b6cefe2fe7ba6ab888d44748ab.png

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For Eiger -

 

The question I have simply is why you dont make mention of the annotations I added to the chart - all the ND's, tests, NS's, upthrusts, etc. There were plenty of signals that I added to the chart (in the elipse) but they havent been mentioned by you at all - why?) Hopefully you can answer those questions because then I can see why you chose to stay out of some trades, and stay in others.

 

This is simply a copy repaste of a chart you did recently on the ES - thank you for your time!

 

To start:

 

Today's 3-minute ES:

 

Background - Price rallied after the open, then spent an hour reacting in a slow drift down. Volume was less on the reaction than the volume on the rally off the AM lows. Spreads were also generally narrower on the reaction, and as the reaction progressed, volume receded. A Higher Low (HL) was put in.

 

After an earlier, failed attempt to break above resistance at 1, price held its gains at 2 on light volume (no supply) and also held the Demand Line YY of an uptrend channel. All of this is bullish.

 

Note the emphasis placed on the background. We always start with the background.

-----

 

A - Price pushes through the resistance area (red line) on high volume.

 

B - Next bar has sustained volume, but the spread is narrowed and the close is in the middle.

 

C - This bar is up, but the volume has dropped off precipitiously. This tells us in advance that the Supply Line, ZZ, is unlikely to be broken.

 

D - Supply enters where expected. D is a down bar, closing on its lows on heavy volume.

 

E - An up bar, closing on its highs after dipping below D indicates another rally will be attempted. However, the narrow spread and low volume indicate that professional money has withdrawn, so the rally is unlikely to go very far.

 

F - Volume increases and the spread widens a bit (increased activity), but the result is a close on the lows. This Hidden UpThrust indicates supply.

-----

 

More Background - Support and resistance are important to VSA. Look at the current chart in relation to the 15-minute chart (attached). We are currently just above yesterday's close and, more importantly, in the 825 area which offered support yesterday moring and early afternoon, but which is now likely to offer resistance. Thus, the background conditions from yesterday are joining with the immediate supply conditions seen on the 3-minute chart for a nice short set-up.

-----

 

G - the market reacts to the previous low at E and rallies, but does so on a narrow spread and low volume - No Demand.

 

H - A Hidden UpThrust that closes below the close of G on an increase in volume. The market now starts to fall.

 

Good locations to initate shorts were at F, G & H

 

I - As the market falls, volume increases. This bar was a down bar on average spread closing on the lows. The increas in volume and poor close tells in advance that the support levels from the trend line at YY and the horizontal support line (red line) are unlikely to hold.

 

J - Tells basically the same story - supply is in control (down bar, increased volume, above average spread, and close on lows).

 

K - The bar after J is narrow spread, close in the middle and high volume. Next bar is up. Some buying came in here, but K swamped whatever buying existed with a widerer spread down bar, close below the previous two lows on an increase in volume.

 

L - The swelling volume that came in between J and K knocked the market sideways. Note the spreads and the volume. Spreads are narrow, volume is low and receding as the market attempts to rally. The two bars immediately before L are No Demand. L is a Hidden UpThrust on an increase in volume which caught stops and then closed on its lows. Another good location to initiate a short. The last bar on the chart is wide spread down bar with an increase in volume, closing on its lows. Supply is in full control.

 

This is just pure VSA. Not too shabby is it?

 

Always look first to the background, then follow the bars as they tell the story of the unfolding market. Trying to read the market by looking at a bar or two won't work. It will only hurt you. As you can see, adding other things extraneous to VSA is unnecessary and likely to be confusing.

 

Hope this is helpful,

 

Eiger

5aa70eba26a22_Eiger1.thumb.jpg.b92cc1686b7542da995ef29bc74b2883.jpg

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For Eiger -

 

The question I have simply is why you dont make mention of the annotations I added to the chart - all the ND's, tests, NS's, upthrusts, etc. There were plenty of signals that I added to the chart (in the elipse) but they havent been mentioned by you at all - why?) ...

 

Because that wasn't the point of the post. The point of the post was all about background in context of the higher time-frame, 15-minute chart. The area you circled wasn't relevant to that discussion. I would encourage you to go back and read the entire post with both charts.

 

As I try to point out, looking at the trading time fame bars without understanding the background conditions is tantamount to trading random patterns. Sure there are technically plently of VSA indications in that hour, but it was a slow drift down after a good rally up so these are ignored. There was no SOW. Any NDs, HUTs etc were not high odds indications for trades. Given the SOS in the background, these are only random bar patterns. The market will make you pay dearly for trying to make trades out of these. The market had already tipped it's hand to the upside. Until the market hit resistance later, any worthwhile trades were longs, not shorts no matter how many NDs, etc. there might have been.

 

Eiger

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Hi Eiger,

 

Thanks for your response. Must be quite a task responding to these posts, I appreciate your efforts.

 

I have literally poured over your posts and charts so many times, that I have a mini "Eiger" book being created on my pc. So yes, I am not only getting your point, but see further questions with material that you have already posted. I trust that makes it clearer.

 

So with that in mind - a few more q's:

 

1) The previous few days on a 15min chart (background, background, background), there was a lot of selling. Literally, it was all downhill.

 

The rise in the market in the elipse I marked out, was for me, perhaps unexpected. I would have expected you to be looking for shorts, as the short term trend was down - concur?

 

2) At 10:15 (on the 15min chart) we hit the previous days low (main session). We trade through it, and retreat somewhat. This is on fairly high volume - certainly the highest volume of the 2nd Feb up until that time. Is the only SOS that you are looking for?

 

3) As we continue in the resistance shown on the 15min chart of yours, the volume definately slacks off. Is this the general SOW you are now looking for (which works well with the resistance on the 15min close).

 

4) At 11am, we have a traditional No Demand bar - this could be interpreted as a test? - the next 15 min bar, we trade down, making a no supply bar, and the very next bar, another no demand (or test).

 

The rest of the questions are on the chart. Trying to figure out the signs here, and see if you are using supplementary signs in making your trades.

 

Mucho gracias!

 

GLE

5aa70ebaf006a_Eiger15minESQuestion.thumb.JPG.e33b9f99538788e00092a8636238a90e.JPG

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Last night I was working with another trader and we reviewed the structure (i.e., background) of the market on the higher time frames. From our analysis, we anticipated high odds of either an upthrust of yesterday's high or a lower high being put in this AM. Lower odds given the structure was a further rally above yesterday's high. It is very useful to layout the market structure like this because when you do, you are well-prepared to make a trade the next morning should one of your anticipated scenarios prevail.

 

You can see from the attached 5-minute chart that the UpThrust scenario played out as anticipated. Planning for this possibility in advance allowed for an aggressive trade on the UT. A more conservative (and, maybe more sensible overall :) ) entry was on the No Demand. Another good location to initiate a trade or add to the winning position was on the Hidden UT.

 

Again, understanding the background is the critical component here. It allows you to anticipate and plan out different market actions for the following day. We can never know what the market will do tomorrow, no matter how clear it seems to us at the moment. Nevertheless, reading the background and scoping out different scenarios allows you to 'see' the right edge of the chart more clearly and be more aggressive in your trading as an anticipated event unfolds.

 

Eiger

5aa70ebb085ad_UpThrust3-19-09.thumb.png.359b8268a52695a45477eeef5572e409.png

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... The rise in the market in the elipse I marked out, was for me, perhaps unexpected. I would have expected you to be looking for shorts, as the short term trend was down - concur? ...

 

 

No. There was nothing that spoke of a short there. The market had become over sold and was being bought over the intial 45-mins. It then began moving up with some impulse. It pushed above yesterday's low and did not react strongly from there.

 

 

... At 10:15 (on the 15min chart) we hit the previous days low (main session). We trade through it, and retreat somewhat. This is on fairly high volume - certainly the highest volume of the 2nd Feb up until that time. Is the only SOS that you are looking for? ...

 

There is other SOS as shown on the chart.

 

... As we continue in the resistance shown on the 15min chart of yours, the volume definately slacks off. Is this the general SOW you are now looking for (which works well with the resistance on the 15min close)...

 

I don't understand this question.

 

... At 11am, we have a traditional No Demand bar - this could be interpreted as a test? ...

 

A No Demand is the opposite of a Test. No Demand indicates no buying, a Test indicates no selling.

 

... see if you are using supplementary signs in making your trades.

 

This is pure VSA. That is all that is used.

 

 

You should not try to learn VSA solely by the posts and charts on the VSA Forum. You would be wise to get a copy of Tom Williams's The Undeclared Secrets that Drive the Stock Market and study that text. It will clarify the indications for you and when to look for them, detail SOW/SOS, explain the proper drawing of trend lines, etc, etc. Most all the questions you are asking are addressed there.

 

Eiger

5aa70ebb12ecd_BullishChartExample2-2-09.thumb.png.b449901152f8e1724bf7d78b6b67cd2d.png

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