# Reading a trade with VSA: A working example



## tech/a (23 August 2011)

*SPI 1 Min CHARTS*

This is a trade today of around 40 mins.
I place it as a working example --- I took shots through the trade to make notes on later and to show the analysis during the trade.
I had 2 contracts which returned $1050 for the trade in 40 mins.
I didn't trade again for the day as I was busy with business.Missing a great move up.
If you have a 1 min SPI chart and digest my notations on the trade shown--you'll see you would have got pretty well all of it!

Futures are different to stock
We have buyers and sellers of longs
and buyers and sellers of shorts
Influencing price direction.
(1) We look for effort---*-VOLUME*
(2) What is it *TRYING TO DO?*
(3) Is it* SUCCEEDING*
(4) Trade accordingly.

Now I posted at the time (Close to it) That I took the trade and at the time I exited so those who want time stamps can check credibility.





*THEN*
View attachment 44172


*THEN*


	

		
			
		

		
	
 SORRY THE DOWNLOADING PUTS THE CHARTS OUT OF SEQUENCE
I think you can follow?

*THEN*



*THEN*


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## tech/a (23 August 2011)

*Re: "Reading a trade with VSA a working example."*

This should be NO 3 in the sequence.


*THEN*

Ive spent over an hr on this and cant get more than 5 charts so have run out of patience.
I know there is a duplication but cant be buggered to sort it out.

Hope it helps those interested.


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## Gringotts Bank (23 August 2011)

*Re: "Reading a trade with VSA a working example."*

Thank you.  Just reading through them now.

Basically you want volume to confirm the direction of the move.  Is that an oversimplification for me to say that?


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## dutchie (23 August 2011)

Nice work tech/a. Thanks for posting.

I assume you don't need the TG signals for your analysis but did you get a chance to see if they agreed with you?

dutchie


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## Boggo (23 August 2011)

I have been putting off getting my head around VSA for a while and with the current busy period its unlikely I will get to it for a while.
In MTPredictor it highlights the volume bars in red when it believes that the volume in conjunction with the pattern (potential turning point) is of significance.

GOR came up in a scan last night.
The software has nailed a few turning points on this EOD data for GOR and has highlighted the volume as well, of particular interest are the volumes on the 7th and 8th April.

If you get a chance to have a quick glance at the GOR chart in TradeGuider tech/a I would be interested in whether their highlighting is around the mark or not.

(click to expand)


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## 5oclock (23 August 2011)

*Re: "Reading a trade with VSA a working example."*



tech/a said:


> This should be NO 3 in the sequence.
> 
> View attachment 44181
> *THEN*
> ...




Thanks for the post Tech, i have found the VSA subject very informative. I hope you may post more trade examples time permitting.


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## tech/a (24 August 2011)

Had another go this morning
to load the missing chart. Its an important chart in the sequence of the trade.


Things to note.
Two super low volume bars after much higher volume bars *TRYING* to push higher.

We look for* EXTREMELY HIGH* volume bars and* EXTREMELY LOW* volume bars.
this is where our analysis begins at these bars Trades begin at clearly seen reaction in the direction of the success or failure of effort.

We ask the questions
(1) Whats is price trying to do?
(2) Is it succeeding

*IN THE DIRECTION OF THE CURRENT MOVE* (Trend)

***If price gives no clear answer over a number of bars then it will mean* EITHER*

(1) Accumulation 
OR 
(2) Distribution

Once a trend line is* BROKEN* by a side ways move you must ask
(1) Whats is price trying to do?
(2) Is it succeeding

When this becomes clear (Breakout to the top or bottom) There are methods to alert if its Accumulation or Distribution by Volume count )Play with it yourself I wont be disclosing it as it took ages to develop.
But as the trade progresses ask at each attack on direction.

(1) Whats is price trying to do?
(2) Is it succeeding

Ill post a read on consolidation (My read) if interested so you can look for the same.
Reading VSA is the same in* EVERY* time frame.


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## $20shoes (24 August 2011)

tech/a said:


> Ill post a read on consolidation (My read) if interested so you can look for the same.
> Reading VSA is the same in* EVERY* time frame.




Thanks Tech. I'd be interested in seeing more VSA analysis. Good work.


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## tech/a (24 August 2011)

Just completed a short SPI trade.

And just have a look what happened after!
A little less than yesterday but still $950
for 20 mins.







And they say its all a gimic!


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## Gringotts Bank (24 August 2011)

Here's a flow chart.  I think this summarizes things.  tech can correct me if wrong.                                 




...........................................   * current trend*

*UP  * ................................................................................... * DOWN*

is volume above average? ..................................................is volume above average?

Y = buy/cover ...................................................................Y = short/sell
N = sell/short .....................................................................N= buy/cover


is volume below average?......................................................is volume below average?

Y = sell/short ...................................................................... Y = buy/cover
N = buy/cover.........................................................................N = sell/short



[The more sharply above or below average the volume, the stronger the signal.  Market must be trending, obviously].


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## tech/a (24 August 2011)

Gringotts Bank said:


> Here's a flow chart.  I think this summarizes things.  tech can correct me if wrong.
> 
> 
> 
> ...




*GG*

I wish it were that simple but infact its ALMOST the exact opposite.

The KEY is EXTREME VOLUME both EXTREME IN VOLUME and EXTREME IN LACK OF VOLUME
These are the keys to what comes next.
I know thats against everything you have learnt but all will become clear over time.

Im flat out and must leave for a while sorry back again later.


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## Gringotts Bank (24 August 2011)

It's GB.  GG is the guy with the hat and cigar.... and bicycle.

OK, modified:



.......................................... *current trend*

*UP* .................................................. ..................... *DOWN*

is volume sharply higher? ..............................................is volume sharply higher?

Y = buy/cover .................................................. .................Y = short/sell
N = sell/short .................................................. ...................N= buy/cover


is volume sharply lower?.......................................... ......is volume sharply lower?

Y = sell/short .................................................. .................... Y = buy/cover
N = buy/cover............................................. ............................N = sell/short


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## skcots (24 August 2011)

Thanks both of you for posting.


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## tech/a (24 August 2011)

Gringotts Bank said:


> It's GB.  GG is the guy with the hat and cigar.... and bicycle.




Yes so he is.



> OK, modified:




My modification.



.......................................... *current trend*

*UP* .................................................. ..................... *DOWN*

is volume sharply higher? ..............................................is volume sharply higher?

Y = Sell /cover long.................................................. .................Y = buy / cover short 
N = Monitor.---Wait for extremely low volume or extremely high volume................................................... ...................N= Monitor.---Wait for extremely low volume or extremely high volume................................................... 

I hasten to add that this is SIMPLISTIC and you need to understand if Volume both EXTREMELY high and LOW is doing as it is indicating.
Is it exhaustion OR Continuation---youll know in the next few bars. I can tell in the next bar (experience)



> is volume sharply lower?
> 
> Y = sell/short .................................................. .................... Y = buy/cover
> N = buy/cover............................................. ............................N = sell/short




You can fill in the blanks to this.

Note big difference.
Most people have al sorts of problems getting their head around this.
I really must go!!!


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## Gringotts Bank (24 August 2011)

ok thanks tech.  I've added in candle direction because I think it adds something as regards the exhaustion/continuation factor.  Forgot to add into legend, VL = suddenly sharp drop in volume, VH = sudden rise in volume.  BC = buy/cover.


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## 5oclock (24 August 2011)

skcots said:


> Thanks both of you for posting.




Great posts! I think many others are interested too!


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## Gringotts Bank (24 August 2011)

Remember candle direction is different to whether the stock is up% or down% for the day (ROC).  Some of the recent big buy signals were green candles with negative ROC.


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## aarbee (24 August 2011)

Tech,

Thanks for taking the time and effort in posting the analysis of trades you have taken using Volume analysis. I am new at this and find it fascinating. Look forward to more examples with detailed analysis. 

Cheers


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## Gringotts Bank (24 August 2011)

This codes just one possibility using the flow chart above (for Amibroker).  Very basic but it works.

Gives a decent return in the order of 30-40%pa.  Needs tweaking of course.  Substitute TEMA if you don't have Jurik MA.


//!!Simple VSA - Gringotts Bank, Aussie Stock Forums!!//
OptimizerSetEngine("cmae");
SetBacktestMode( backtestRegularRaw );
SetOption("MaxOpenPositions", 100 ); 
PositionSize = 20000;
PositionScore = 100+V;
a = JurikJMA(C,Optimize("A",16,1,50,1),600);
aa = a<Ref(a,-1);//downtrend established
b = C>O;//
d = V-Ref(V,-1)>0  AND (V-Ref(V,-1))/Ref(V,-1)*100>70 AND V>JurikJMA(V,600,-500);//+ve volume spike
Filter = Buy =  aa AND b AND d AND C*V>500000;
Sell = V>Ref(V,-1) AND (V-Ref(V,-1))/Ref(V,-1)*100>40 AND C<O;


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## tech/a (24 August 2011)

*GB*


As I pointed out on the sister thread.

In reply to Franks Post




> Again very true. Take Tradeguider and VSA. What they want is the software to show an arrow to take a trade then another to exit. Infact someone asked just that with my trade yesterday. The analysis is SOUND the application in software as you know is via an algorithm (Something we are dealing with--in testing) so it regularly breaks down as its based on a set of conditions which may alter slightly and still remain true---yet the software will not recognize a failure or a continuation as the price and volume falls outside of the conditions of the algorithm.
> 
> This knowledge which comes with experience --- is the DIFFERENCE between success and failure---(I mean the ability to recognize when a Price /Pattern and or Volume and understand what its saying---even more important how to practically apply it.)




Read carefully----your falling for the same thing many before you have fallen for.
They eventually abandon the *ART* as un reliable.

If you rely on *SOFTWARE* for analysis you'll find it almost impossible!
Nothing is more powerful than OUR recognition skills.


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## Gringotts Bank (24 August 2011)

Yes you did and I recognize that, but you also said VSA systems won't give you simple buy and sell arrows.  This very simple system, still unoptimized, does it all for ya!  I'm sure you could get 50%pa out of it with a bit of extra work.

If anyone has AB and a *screaming fast* PC, can you please optimize this (below) or even for 10 minutes?

//!!Simple VSA - Gringotts Bank, Aussie Stock Forums!!//
OptimizerSetEngine("cmae");
SetBacktestMode( backtestRegularRaw );
SetOption("MaxOpenPositions", 100 ); 
PositionSize = 20000;
PositionScore = 100+V;
a = TEMA(C,Optimize("A",14,1,100,1));
aa = a<Ref(a,-1);//downtrend established
b = C>O;//
d = V-Ref(V,-1)>0  AND (V-Ref(V,-1))/Ref(V,-1)*100>Optimize("B",50,1,200,1) AND V>JurikJMA(V,600,-500);//+ve volume spike
Filter = Buy =  aa AND b AND d AND C*V>500000;
Sell = V>Ref(V,-1)  AND ROC(C,1)<0 AND (V-Ref(V,-1))/Ref(V,-1)*100>Optimize("C",40,1,200,1);
AddColumn(V*C,"IVT");//


And I agree.  I'm not a systems guy.  I much prefer gut feel.  I won't be using this system, but others might enjoy it.  It's just an intellectual exercise.


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## Gringotts Bank (24 August 2011)

It works in all market conditions.  Have a look at 2008 - very nice profits going long.

Some people will say it's stupid to post up the bare bones of a really good system, but as you know, sticking with a system is bloody hard.  99.9% of people won't have the discipline to trade it, me included.  That's why I say i won't be using it myself.

But if anyone wants something that will return 50%pa, without spending 10 years developing a system, well here it is.  Free!


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## tech/a (24 August 2011)

What did you run it on--Data base?


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## Timmy (24 August 2011)

skcots said:


> Thanks both of you for posting.






5oclock said:


> Great posts! I think many others are interested too!




Yep, good trade and good thread, thanks Tech.


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## Gringotts Bank (25 August 2011)

tech/a said:


> What did you run it on--Data base?




ASX 2007-2011  blue chips, so need not worry about slippage.  The final code I used is quite different, because I worked on it for a few hours last night.  Here's the equity curve.


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## tech/a (25 August 2011)

Must get my Amibroker up and running.
Got it but never cranked it up as I use metastock.
If I had it going I could couple it with Tradesim and run some Montecarlo.


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## Gringotts Bank (25 August 2011)

If I use Positionscore = Random(); and run it heaps of times, all the results are all >25%, and mostly above 45%, but yeh a monte carlo would be a good test for it.

The code is so basic, you could almost transfer it straight across to metastock.  

It lends itself quite well to 'trading the equity curve'.  It would be the sort of thing I'd use if ever automation was possible for retail traders, otherwise I couldn't be bothered.

You can bet there are lurkers reading this who have gobbled up all this info for free and run out the door, hoping no one says another word!

PS. still running them manually, just got an 18%, but holding up well with >40%


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## pavilion103 (15 November 2011)

Not sure if this is the best place to post it, but wasn't going to start an entire thread for this. 

I've been doing testing over hundreds of charts and am becoming more and more familiar with VSA bars/setups. 

I don't have any ambition to try what I'm about to suggest, but I wonder what the results would be from a system that entered on 'no supply' bars (before the close of day) and then exits 1 or 2 days later. It is amazing how often these bars result in price shooting up the next day. 

Most trades I enter on seem to be on no supply bars. But I'm wondering if there was a system where you enter on a large number of these opportunities, regardless of the background and held for only 1 or 2 days, whether this would yield positive results. 

Emphasising, I am purely curious, not interested in actually doing this. 

Do people think it would be profitable?


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## Billyb (15 November 2011)

Gringotts Bank said:


> It works in all market conditions.  Have a look at 2008 - very nice profits going long.
> 
> Some people will say it's stupid to post up the bare bones of a really good system, but as you know, sticking with a system is bloody hard.  99.9% of people won't have the discipline to trade it, me included.  That's why I say i won't be using it myself.
> 
> But if anyone wants something that will return 50%pa, without spending 10 years developing a system, well here it is.  Free!




Gringotts,

I dont have the Jurik JMA code so I replaced it with a normal EMA which I presume would give reasonably similar results.

GREAT, in fact FANTASTIC results with no trade delay. Perfect equity curve, I've never seen anything better.

But when you you make it realistic and incorporate a one bar trade delay - it loses money.

Did you find the same?


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## tech/a (15 November 2011)

*PAV*



Ive had 3 FTSE trades tonight and currently opened a 4th.
See if you can pick them? And my stops.

*

*

Ill post up answer in an hr.


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## tech/a (15 November 2011)

Off to bed. Had a good night.


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## pavilion103 (16 November 2011)

I didn't get a chance to have a crack before the answer was put up! Ah well.....


What hours does the FTSE trade Australian time?

I'm potentially starting a new job, and this could mean I can set up an account with IB. I'm wondering if it would be a good idea for me to begin trading after work (if the market is open then).

Is it much different to trading equities? Obviously the same VSA principles apply. 

What are the differences?


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## Gringotts Bank (17 November 2011)

Billyb said:


> Gringotts,
> 
> I dont have the Jurik JMA code so I replaced it with a normal EMA which I presume would give reasonably similar results.
> 
> ...




Hi Billy, I didn't see this post till today.

What would stop you entering at close same day?  Assuming you had live data and could scan at close for entry to appropriate stocks.


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## tech/a (17 November 2011)

Gringotts Bank said:


> Hi Billy, I didn't see this post till today.
> 
> What would stop you entering at close same day?  Assuming you had live data and could scan at close for entry to appropriate stocks.




GG
The problem is that when testing we have the advantage of hindsite.
So EVERY trade will be shown as a winner with the entry on the same day.
Those that dont qualify wont be shown.
In real time however most buy triggers cant be confirmed until close out.
Just have a look at your problem with your method.

Often a buy triggered during the day wont be there at close.


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## Gringotts Bank (17 November 2011)

tech/a said:


> GG
> The problem is that when testing we have the advantage of hindsite.
> So EVERY trade will be shown as a winner with the entry on the same day.
> Those that dont qualify wont be shown.
> ...




Yes but if a system says 'buy at close', and the scan is performed at close (4pm) and the SP is well within the bounds of the system's requirements, then that should allow one to enter at the closing auction without affecting the reliability.


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## Billyb (17 November 2011)

Gringotts Bank said:


> Yes but if a system says 'buy at close', and the scan is performed at close (4pm) and the SP is well within the bounds of the system's requirements, then that should allow one to enter at the closing auction without affecting the reliability.




But your buy criteria relies on the Close price from THAT day. You do not know the close price in real life until AFTER the close. IMO this means real results probably wont align with testing results.


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