[lhookway]

Hi there,

I'm trying to wrap my addled brain around VSA and I have a couple of questions that hopefully some VSA guru can answer.

Taken from Master the Markets p39, Effort vs Results

If the additional effort implied in the higher volume and wide spreads upwards had not resulted in higher prices, we can draw only one conclusion: The high volume seen must have contained more selling than buying. Supply on the opposite side of the market has been swamped by demand from new buyers and slowed or stopped the move.

This has me scratching my head. If the high volume contained more selling than buying then doesn't this imply that there is more supply than demand? The quote above from MTM suggests that the opposite is true and that supply has been swamped by demand. If supply is being swamped by demand then wouldn't we expect to see higher prices and a continuation of an upward move?

Mark-Ups and Mark-Downs

In MTM mention is often made of the Smart Money (i.e. the Pro's) marking prices either up or down to facilitate their nefarious purposes.

Just so I can get a handle on marking up and down but without getting into very detailed specifics how does the Smart Money do this?

Using Forex as an example if the Smart Money wanted to mark-up say EURUSD would they buy a whole bunch of EUR, gobbling up some of the EUR that other traders have previously bought but now want to sell, thereby forcing the price up?

Likewise if the Smart Money wanted to mark-down EURUSD would they sell a whole bunch of EUR presumably to other traders that have previously sold EUR themselves but now want to buy, thereby forcing the price down?

Regards,

Laurence.

[forrestang]

Disclaimer: I'm knew to VSA as well, so don't expect much.

About your first part, the quote, I'm having a hard time visualizing it?

the higher volume and wide spreads upwards had not resulted in higher prices

I guess this is assuming a bar like in this picture? The quote said there is a wide spread, huge volume, but price did not move higher.

I'm still confused as to the question, but generally, I think the market does not like WRBs. I guess, if the market heads up on high volume, then immediately falls, there can be no other explanation other than the fact that large amounts of selling was occuring, or distribution during the up move(Buying Climax).

You can't see it though. Because if you plot Up/Down Volume over-layed on each other during an upmove, you will naturally see more buying than selling occuring. But immediately the market fell, so what other explanation can there be, other than we were in the distribution phase? See the other attached picture.


Do you have an example we can disect?

[lhookway]

Hello Forrestang, thanks for the reply.

If there is a WRB that closes towards the low then the implication is that there was more supply (i.e. selling) than demand (i.e. buying) and that caused the price to fall. Your example picture of a buying climax fits the bill.

The quote from MTM says...

If the additional effort implied in the higher volume and wide spreads upwards had not resulted in higher prices, we can draw only one conclusion: The high volume seen must have contained more selling than buying. Supply on the opposite side of the market has been swamped by demand from new buyers and slowed or stopped the move.

The last sentence ... "Supply on the opposite side of the market has been swamped by demand from new buyers and slowed or stopped the move." ... is what has me scratching my head.

Shouldn't that last sentence actually say ... "Supply on the opposite side of the market has swamped demand from new buyers and slowed or stopped the move"

Regards,

Laurence.

[forrestang]

Originally Posted by lhookway »

Mark-Ups and Mark-Downs

In MTM mention is often made of the Smart Money (i.e. the Pro's) marking prices either up or down to facilitate their nefarious purposes.

Just so I can get a handle on marking up and down but without getting into very detailed specifics how does the Smart Money do this?

Using Forex as an example if the Smart Money wanted to mark-up say EURUSD would they buy a whole bunch of EUR, gobbling up some of the EUR that other traders have previously bought but now want to sell, thereby forcing the price up?

Likewise if the Smart Money wanted to mark-down EURUSD would they sell a whole bunch of EUR presumably to other traders that have previously sold EUR themselves but now want to buy, thereby forcing the price down?
.

About Mark Up/Down. I'm a bit conflicted about this. But as i understand it(at least the way Todd Kruegar explains it), there are four phases in the market. You have Accumulation -> markup -> Distribution -> mark down.

But it doesn't sound like that's what you're referring to?

It seems like you might be talking about when someone is checking for supply or demand.

So say you had a Selling Climax, naturally this occurs on HEAVY volume, and an increase in the velocity of price. So price is headed down fast in furious. Now we're in the accumulation phase supposedly, where someone is accumulating supply.

Now, they want as much supply as possible, and they want it from the masses. They also want people to believe the market is heading lower. So they would artificially mark prices down, in an attempt to acquire more inventory at a lower price or to trap unsuspecting shorts and shakeout any longs.

You want price to be lower, supposedly this is seen after a selling climax, with a narrow range bar, with reduced volume, showing the lack of interest in selling at these lower prices. This "Test" bar would dip below the selling climax checking for supply, and trapping new shorts and breakout shorts.

Disclaimer: Again i don't know what the hell I'm talking about, just trying to learn here.

[lhookway]

Hello Forrestang,

Now, they want as much supply as possible, and they want it from the masses. They also want people to believe the market is heading lower. So they would artificially mark prices down, in an attempt to acquire more inventory at a lower price or to trap unsuspecting shorts and shakeout any longs.

It is how they artificially mark prices down and conversely how they artificially mark prices up that I was enquiring about.

Regards,

Laurence.

[forrestang]

Originally Posted by lhookway »

Hello Forrestang,



It is how they artificially mark prices down and conversely how they artificially mark prices up that I was enquiring about.

Regards,

Laurence.

I don't think I meant "artificially" the way I put it, as if something was happening that really wasn't happening.

I'm unsure how they do it, could be temporary unloading some supply to check for the presence of sellers or to see if anyone is interested in continued selling beyond this point?

[brownsfan019]

Originally Posted by lhookway »

Hi there,

I'm trying to wrap my addled brain around VSA and I have a couple of questions that hopefully some VSA guru can answer.

Good luck, not sure that exists...

[lhookway]

Thanks for the replies although I must admit I am quite suprised that no-one as yet has been able to answer my queries.

Regards,

Laurence.