[MC]

Originally Posted by monad »

Interesting concept Tasuki, have a question though

On any bar the volume represents contracts buyers = sellers, so how can buying vol be different from selling vol.

At bid or At ask volume.
My question though is how reliable is it to expect at bid means it was a sale and ask means it was a buy.

It seems highly probably that that tick delta works well, but I'm curious to hear from those that trade on the delta info.

Thanks guys.

[jjthetrader]

Originally Posted by Tasuki »

jj,
I've managed, I think, to reproduce your chart from permalink #973. It's a five minute chart, right?
Many pages ago on this thread, I recommended an enhancement to VSA in which volume would be broken down into volume up vs volume down. The "experts" on the thread didn't like my idea, but here's an example where it is valuable (in fact, invaluable). See attached chart. On your putative upthrust, the total volume is too high, but just as importantly, the upvolume nearly matches the downvolume (upvolume is seen as a green line inside the wider red line which is downvolume). This clearly shows that there was significant buying on this bar, hence it was not an upthrust. The total volume itself would have been a clue, but the picture is clearer if you separate the up from the down.

Thank you for your input. I also was considering that volume may have been too high and that at that level the bar should have pushed down more if it where more selling. So the spread was wrong, in hindsight.
Everytime I make a trade that ends up going the other way I try to see why and hopefully not have it happen again.

Yes it was a 5min chart of the ES. I will post more info on the next chart I post.

[Anonymous]

Let us be clear: Up onto a few days ago when Sebastian made his first post, there were no Volume Spread Analysis experts posting here. Only students on a journey like everyone else.

[marketguy]

I really love this thread, guys. Thanks everyone. By the way, does anyone have the Boot Camp CD's and, if so, are they worth the $? Does it offer much beyond the book?

[Anonymous]

Originally Posted by jjthetrader »

Can anyone shine some light onto why I might have misread (VSA wise) this trade I took yesterday?

We had a nice run up (this in on the ES), got an ultra High Volume Up bar followed by an upthrust on huge volume as well.
We broke the low of the upthrust so I started watching for a short entry. Once I saw that no demand I took it.
The next bar moved up against me on increasing volume to close near the top so I put in a break even order and got out on the bar following that.

In hindsight you could say I was clearly wrong but in real-time it looked so right. Any ideas about what I may have missed? Was it the no Supply bar 5 bars back from the no demad that signaled higher prices?

Thanks

Obviously this is after the fact. However what I will say can be seen in more than one post in this thread-at the very least it is consistent.

1. Ultra High volume on the up bar. Markets do not like Ultra High volume up bars because they can hide selling within them.

2. The next bar is down, confirming that there was some supply entering on the previous bar. This bar also happens to be an Upthrust. Another sign of weakness.

3. The very next bar is the key. It is a narrow range bar on volume less than the previous two bars. It closes lower than the previous bar and the bar that follows it closes up and does not make a lower low. Simply, it is No Supply and is not confirmed until the bar after it closes.

Take a look at what you have as No Demand. Notice that the bar after it is up and makes a higher high. This negates the bar as being No Demand. While the base definition of No Demand would be a narrow range up bar with volume less than the previous two bars (a 1 bar signal), one really needs to wait for confirmation by the following bar. This is how TG works.

Back to the No Supply. This is a repeating pattern that is a good sign of strength. A No Supply bar immediately after the Upthrust that followed an influx of supply.

Since I filter this through my own perspective, I would add that it appears that the No Supply bar would be with in the range of a WRB (the up bar on Ultra High volume if in fact that is a WRB). More reason to be looking to go long not short.

**edit***

Just wanted to add this. There is a sign of supply coming into the market that only moves prices sideways (a sign of overall strength). This is where the triangle on the chart is. Now if you look at the Up bar in question, it is more likely Absorption volume and therefore a sign of stregnth not weakness in and of itself.

[jjthetrader]

I did not wait for the bar following the no demand to confirm it. I just jumped on in. But it is the reason I moved my exit to break even. At least I knew enough to get out in real-time.
Thanks to everybody. It makes me a better trader to see what I may have missed.

[Tasuki]

Originally Posted by mcichocki_ »

Please correct me if I'm wrong, isn't the volume shown there just at bid or ask? Red if at bid or green if at ask? And if that's correct how reliable do you think it is to expect that an order at bid was a sale and at ask was a buy?

OK, MC, I'll be happy to correct you. No, this is not bid/ask volume. Rather, these bars are created from the Time and Sales data, which just represents actual sales, not bids and offers. In a standard T&S window, there are two colors, red and green. The bars in my upvolume indicator simply tally up the number of contracts in each sale that's green on the T&S, and the bars in my downvolume indicator simply tally up the number of contracts in each sale that's red on the T&S. The only novel thing I've done is to arrange my tradestation indicators so that the upvolume appears inside the downvolume on the same bar--it just gives you a handy way to look at the difference between buying and selling, or to be more accurate, selling on the offer and selling on the bid.

The green represents selling at the offer price, i.e. selling as price is going up, which means that the buyer is buying when the price is going up, which means that the buyer is "paying up" because he expects the price to go up even further. In other words, the green represents buying pressure.

The red represents selling at the bid price, i.e. selling as the price is going down, which means that the seller is selling at the lower price (the bid price is always lower than the offer price) because the seller expects prices to go down even further.

If you look at the up vs down volume for a while, you will convince yourself that this is not "smoke and mirrors" (as bids and offers often are when they don't result in actual trades), and I think you can also convince yourself (as I have) that this information is very valuable.

[tawe trader]

JJ, I would most probably have taken the trade in realtime as well. You did well to get out for a breakeven trade.

I was wondering though ........... if we follow the futures charts and thus the futures 'smart money' players via VSA then do the 'smart money' sometimes get it wrong, which would lead us to be wrong ?

Say in this case (your trade) the 5min futures 'smart money' were selling (and/or going short) but the larger timeframe cash mkt still had plans to keep trending up, this would have resulted in the 5 min boys being on the wrong side of the mkt.
Or am I completely on the wrong track here ?

I now know after PP's explanation that it looks like you mis-read the chart and there were sign's of strength not weakness.

What I didn't like about the chart was the upthrust bar had the same size volume as the previous up-bar. I was thinking that maybe there was a sudden change in the mkt and there was some hidden buying in the upthrust.