VSA Chart Analysis Discussion Thread

[mr. jeff]

From the chart for BRU, it appears that there is not enough demand to overcome the supply at current levels, this appears to be distribution however volume has been decreasing suggesting that the selling is dropping off as buyers withdraw.

In my mind and with the moves to date action is positive - there is no selling down at these levels - I would expect to see more volume and more of a down move if there was significant weakness which has not appeared yet. On the balance, it appears that a further up move is more probable at this stage.

If it were to drop, it may drop painfully quickly if selling volume appears. (So far not evident).

 

[pavilion103]

Is the condensed version.

BRU chart tells a tremendous story.
I have highlighted "some" of the story and its participants.

I'm happy to run a commentary but thought some may wish to have a go before I do.

Remember a chart cannot/will not advance unless
Supply is withdrawn
Or
Supply is overcome by demand.
What we look for is EFFORT what is it (participants) trying to do?
Is it (Participants) succeeding?

CLICK TO EXPAND.
View attachment 46400

It doesn't look to me like one I would enter. That huge upthrust type bar looks like a sell off. I'd want to see a few more days' action if I was to change my opinion. Is there something beyond the obvious here?

 

[Sutekh]

It doesn't look to me like one I would enter. That huge upthrust type bar looks like a sell off. I'd want to see a few more days' action if I was to change my opinion. Is there something beyond the obvious here?

A few days on it has since meandered past that upthrust bar to an all time high, however that day also appeared quite weak. Maybe some marking up of the price to help someone exit their position? The weekly chart seems to show a similar story.

 

[tech/a]

Ill do a full analysis in VSA on the marked chart this weekend sometime.

BUT

New highs on lowish volume is a strong sign that there is no supply at resistance.
So participants are holding their stock.

 

[pavilion103]

Ill do a full analysis in VSA on the marked chart this weekend sometime.

BUT

New highs on lowish volume is a strong sign that there is no supply at resistance.
So participants are holding their stock.

But isn't the volume spike still relatively high compared to all recent activity? Or are you saying it isn't that high compared to previous high volume days e.g. the one in August which was enormous?

 

[tech/a]

There is a massive amount of information in this chart
It will serve as a good reference to those who wish to chart read and as I walk through quite a few charts OF THIS CHART (BRU) I will show practical application of analysis and Where/Why/and How to place low risk entries for maximum R/R (Reward to risk)

As such I think it appropriate to place all of this in the tech analysis thread.
Ill try and get it all done this weekend.

There are some great opportunities right now and more emerging all the time.
This I'm sure will be helpful.

 

[joea]

Price and Volume Analysis, from Read the Ticker site for those interested.

http://www.readtheticker.com/Pages/Blog1.aspx?65tf=489_price-volume-analysis-on-the-tbt-2012-03

joea

 

[Monkeyzu]

Hi tech, can you give me some idea of the success rate of VSA? Many people on this forum say when looking at a system find out the P/L, expectancy, maxDD etc. But VSA seems to be a system but also very subjective, so the 'system' stats never seem to be mentioned. As someone who has used VSA over a long period how have you found the success rate?

Given that part of the rules are trading with the trend, trading with the index, using stops and cutting losers as soon as the move goes against you there should be some positive edge just from these actions (i'm thinking on par with Nick Radges flipper). How much of an edge does the VSA entry and exits add?

 

[Trembling Hand]

Hi tech, can you give me some idea of the success rate of VSA? Many people on this forum say when looking at a system find out the P/L, expectancy, maxDD etc.

I'm not Tech but I can guess his answer. Its not a system its an approach to analysis. Therefore you cannot give any stats as to its performance.

 

[tech/a]

I'm not Tech but I can guess his answer. Its not a system its an approach to analysis. Therefore you cannot give any stats as to its performance.

Correct.

VSA will give indications of supply and demand arising from single or multiple bar behavior.
While you can design a system around the method in itself it isn't a system as such.
Where a lot go wrong is they buy TRADEGUIDER they expect the signals to be an in built trading methodology. Its NOT.

Its a learning curve----you cant take each signal and simply buy and or sell upon it.
You must learn the story that the chart is telling you and understand how to take trades which give lowest risk for maximum gain.

But while I'm on this question its been a goal of mine to construct systems using VSA and to see what edge it gives in many time frames.
Kris (my in house Quant) and I are strapped for time but are making some positive moves in this general direction. I will be able to one day definitively answer your question with the stats you require.

I question why we haven't seen stats from Tradeguider?
You'd think that a few systems run in the back ground showing positive results would be a massive marketing tool.
The sizzle keeps being pedaled and the pundits keep buying it without knowing if when they apply it it will give them an edge.

For me it does.
For many it frustrates.

 

[joea]

Correct.

The sizzle keeps being pedaled and the pundits keep buying it without knowing if when they apply it it will give them an edge.

For me it does.
For many it frustrates.

Tech/a
The peddler does not require stats. because the he is exceptionally good salesman.
Selling "snow to the eskimo's", or "Carbon tax" to the Australian voter, this is the guy to call.
joea

 

[Monkeyzu]

I'm not Tech but I can guess his answer. Its not a system its an approach to analysis. Therefore you cannot give any stats as to its performance.

Someone using VSA over long period must have some basic stats or even feel for its performance. It may vary from person to person depending on their skill, which is why i'd like to here from someone who uses it effectively - when entering a trade based on VSA, based on your past experience, what is the probability of the analysis being correct and the trade moving into profit? If Tech has taken 1000 (for example) trades based on VSA he must have some idea of how profitable (as a %) those trades have been?

 

[tech/a]

Someone using VSA over long period must have some basic stats or even feel for its performance. It may vary from person to person depending on their skill, which is why i'd like to here from someone who uses it effectively - when entering a trade based on VSA, based on your past experience, what is the probability of the analysis being correct and the trade moving into profit? If Tech has taken 1000 (for example) trades based on VSA he must have some idea of how profitable (as a %) those trades have been?

Well then it comes down to which signal.
Of the trades I take on entry 70%+ move in my direction for at least 1 bar.
Exit signals are similar.
But I dont trade signal to signal.
I trade off of a signal sometimes a few bars after.
I want to see reaction to the signal.

My return on account so far is 43% but thats discretionary trading I cant put it down to a specific signal or signals of VSA.
Extremely low volume bars tell me more than extremely high volume bars.
A lot of my VSA trading is an adaptation of "taught" skill.

I wouldnt trade without taking note of VSA.
But unfortunately the "art" is lost to some extent in the marketing.

 

[Monkeyzu]

Tech/a
The peddler does not require stats. because the he is exceptionally good salesman.
Selling "snow to the eskimo's", or "Carbon tax" to the Australian voter, this is the guy to call.
joea

I've been wondering for a while if Seb Manby, who learnt from Tom Williams and has been using VSA for years now, is no longer with Tradeguider because he has retired to his yacht with his millions made throught trading. If he hasn't done it yet the rest of us have no hope!

VSA do have a couple of guys who have done well in World Cup Advior using the method. The latest came 2nd with about 40% profit. Gary Holmes ("The peddler") himself did say he wss going to enter the comp, which i would love to see.

 

[tech/a]

Gavin Holmes.

 

[Monkeyzu]

Gavin Holmes.

Ah, yep Gavin. Thanks Tech.

I should add, i have TG and I think it has merit. But the marketing machine can be a bit off-putting. I'll keep persisting. My interest and question in this thread is really because I wonder what the ultimate goal is? Taking a step back from the marketing what is a realistic expectation compared to systems with a known expectancy? Thanks for your responses Tech.

 

[tech/a]

Ah, yep Gavin. Thanks Tech.

I should add, i have TG and I think it has merit. But the marketing machine can be a bit off-putting. I'll keep persisting. My interest and question in this thread is really because I wonder what the ultimate goal is? Taking a step back from the marketing what is a realistic expectation compared to systems with a known expectancy? Thanks for your responses Tech.

Actually if you dont mind post your PM to this thread.
I think my answer when I get the time to answer fully will be o interest to the many others in your position.

 

[Monkeyzu]

I have Tradeguider, I'm new to it and probably not putting in as much time as I should (or as much as Pavilion for example), but I'm not in a rush so happy to plod along just reading/watching seminar recordings on the bus to work. In reality I have debt that takes priority, but I know that at some point I won't and the money that's has been going to it will have to go somewhere useful. I'm taking my time now to come up with a plan for that day.

Tradeguider is something I will persist with because I am learning, which is something I enjoy. Just the "beware the news" advice is probably worth the $500 I paid. But I do wonder if I will ever use all the VSA knowledge in my plan. VSA through their software seems time consuming to narrow down candidate stocks and very dependant on the individuals interpretation. When a trade goes wrong the experts are quick to say it was an error in interpretation ("clearly there was still some selling in that bar..."), rather than just say we have X% success. The implication is that when you're good enough (maybe some more cour$es??) you'll be right all the time!

It's definitely not mechanical! How big is the 'edge' for all the time involved?

So here is my thinking: Tradeguider recommends we wait until a trend is in place (for 3 bars) after a low/high. So it is trend following (actually trend following in multiple timeframes if we follow their recommendation). They also recommend we trade in harmony with the index, so we have a form of (discretionary) index filter in place. This could just as easily be a EMA/ROC on the XAO to simplify. Tradeguider recommends we have a plan and we stick to it. The VSA software generates Chandelier stops we are told to use. All good advice.

So even without any VSA signals we have a trend following system not totally dissimilar to the 20% Flipper out of Nick Radges book. Except we have chandelier stops rather than fixed %, and we are looking at more than 1 time frame for the trend. We are also shorting falling stocks (not long only). Could this all be an improvement on the "Flipper"? Would it be unreasonable to assume that if the stocks fitting these criteria were selected AT RANDOM without even looking at the VSA signal we should get a CAGR of 30% (al-la the flipper)? Potentially more because of the added criteria?
My question is, if we add the VSA methodology to these "trend following" rules, do we get an edge?

On your point of automating VSA signal into a system, the easiest to start with would have to be End of a Rising Market (narrow spread, close in the middle 3rd of the bar, very high OR very low volume, on a high into "fresh new ground", say 50 bars)? Or Buying/Selling Climaxes, then change in trend to confirm. Apparently they don't happen too often, so having Amibroker keeping an eye out for you would be handy, just in case you're not looking at the right stock at the right time.

Have you considered getting the trial of the "add-in studies" and just using their indicators for some testing?

 

[tech/a]

I have Tradeguider, I'm new to it and probably not putting in as much time as I should (or as much as Pavilion for example), but I'm not in a rush so happy to plod along just reading/watching seminar recordings on the bus to work. In reality I have debt that takes priority, but I know that at some point I won't and the money that's has been going to it will have to go somewhere useful. I'm taking my time now to come up with a plan for that day.

Plans are fine but unless you know if your plan will return a profit it just a group of ideas.

Tradeguider is something I will persist with because I am learning, which is something I enjoy. Just the "beware the news" advice is probably worth the $500 I paid. But I do wonder if I will ever use all the VSA knowledge in my plan. VSA through their software seems time consuming to narrow down candidate stocks and very dependant on the individuals interpretation. When a trade goes wrong the experts are quick to say it was an error in interpretation ("clearly there was still some selling in that bar..."), rather than just say we have X% success. The implication is that when you're good enough (maybe some more cour$es??) you'll be right all the time!

Unfortunately nothing on the planet is fool proof.Certain chart patterns and bars "indicate" supply and demand characteristics,subsequent bars confirm or refute the indication. How you apply the analysis to your trading and how you manage your trades will determine your success. To expect anyone to place a % on trading their VSA setups is pretty well impossible unless they are using the same set up time and again in isolation and have excellent recording ability like STATOR.

It's definitely not mechanical! How big is the 'edge' for all the time involved?

The edge over people who have no idea what they are looking at is massive.
Over experienced traders ( ones who turn a consistent profit ) it's just another tool in the box.Yes you could make it your only tool but you'd need to be well well ahead of the basic knowledge Tradeguider make available.
You see it's not the analysis that will make the profit --- it's the application and that goes way beyond any technical tools.Think position sizing/ trade and portfolio management.to name a couple.
Seriously you need to know how to develop a mechanical system or subscribe to someone who does like RADGE.

So here is my thinking: Tradeguider recommends we wait until a trend is in place (for 3 bars) after a low/high. So it is trend following (actually trend following in multiple timeframes if we follow their recommendation). They also recommend we trade in harmony with the index, so we have a form of (discretionary) index filter in place. This could just as easily be a EMA/ROC on the XAO to simplify. Tradeguider recommends we have a plan and we stick to it. The VSA software generates Chandelier stops we are told to use. All good advice.

Well it's logical but that's it. There are no numbers or stats which justify the advice.
There are no clear guides to application of the suggested analysis. It's just a set of ideas.

So even without any VSA signals we have a trend following system not totally dissimilar to the 20% Flipper out of Nick Radges book. Except we have chandelier stops rather than fixed %, and we are looking at more than 1 time frame for the trend. We are also shorting falling stocks (not long only). Could this all be an improvement on the "Flipper"? Would it be unreasonable to assume that if the stocks fitting these criteria were selected AT RANDOM without even looking at the VSA signal we should get a CAGR of 30% (al-la the flipper)? Potentially more because of the added criteria?
My question is, if we add the VSA methodology to these "trend following" rules, do we get an edge?

You can use ATR , CHANDELIER or any number of other indicators or add VSA
Endless. Will it improve your results ---- maybe.
My method in it's raw form is better than Flipper.
Radge's is way way better than both who knows what he uses in his.
But I'll bet you could write it on the back of an envelope.

On your point of automating VSA signal into a system, the easiest to start with would have to be End of a Rising Market (narrow spread, close in the middle 3rd of the bar, very high OR very low volume, on a high into "fresh new ground", say 50 bars)? Or Buying/Selling Climaxes, then change in trend to confirm. Apparently they don't happen too often, so having Amibroker keeping an eye out for you would be handy, just in case you're not looking at the right stock at the right time.

Sure you would set up a search to give you prospects. Once of course you have a system your happy with.

Have you considered getting the trial of the "add-in studies" and just using their indicators for some testing?

No.

 

[motorway]

So even without any VSA signals we have a trend following system not totally dissimilar to the 20% Flipper out of Nick Radges book. Except we have chandelier stops rather than fixed %, and we are looking at more than 1 time frame for the trend.

Have not read the book. But the flipper would appear be a non chronological time signal ?
Defining a trend without reference to time frame or chronological time?

If so it is a P&F ( intrinsic time ) signal. Outside the concept of time frames

10/15/20/25% would be traditional (major ) trading range breakout for many P&F breakout systems.

VSA is looking at the volume. it again is derived from an intrinsic time methodology.

and related to P&F methodologies. Through the intrinsic time connection

consider... Price and Volume scale together in a stationary manner (intrinsic time)

Time is then always Non Stationary in relation.

So using Volume ( with a directional sign ) or a 20% flipper would be same. But not volume in a VSA sense .but in the same non chronological sense as the 20% flipper.

I would expect the 20% flipper to be a better signal than simple VSA bar signals.

If I have understood the 20% flipper properly.

Motorway