Reading a trade with VSA: A working example

[tech/a]

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

 

[tech/a]

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.

 

[Gringotts Bank]

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?

 

[dutchie]

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

 

[Boggo]

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)

 

[5oclock]

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

This should be NO 3 in the sequence.

View attachment 44181THEN

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.

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

 

[tech/a]

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.

 

[$20shoes]

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.

 

[tech/a]

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!

 

[Gringotts Bank]

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].

 

[tech/a]

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].

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.

 

[Gringotts Bank]

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

 

[skcots]

Thanks both of you for posting.

 

[tech/a]

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!!!

 

[Gringotts Bank]

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.

 

[5oclock]

Thanks both of you for posting.

Great posts! I think many others are interested too!

 

[Gringotts Bank]

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.

 

[aarbee]

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

 

[Gringotts Bank]

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;

 

[tech/a]

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.