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Old 19-05-2013, 04:15 AM
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Angry Experiences in VSA (Volume Spread Analysis)

Hi,

I had chosen to learn Volume Spread Analysis back in 2009-2010 when I first put money into stock market. Back then, it was utter failure. But now, after a gap or 2 to 3 years, I am trading VSA setups successfully and making profits regularly. In this thread, I am going to note down my experiences and additional observations on this subject. The experiences are not noted in any particular order. All my opinions are personal and merely for the purpose of sharing. Conceive them as advice at your own risk.

I may be wrong at plenty of places, but then, do know that I have not pressurized myself to be 100% correct all the time and that I have the right to be wrong (Yes, I definitely mean it!)

Let it be known that I am no veteran trader. I am an ordinary trader with just 4 years of exposure to the stock market. I have some knack for writing since school day. And I have been an sought-after "teacher" for some time. So I am capable of writing in such a manner that seems "authoritative" to some people. Make no mistake about that, I am no authority.

Please note that this thread is not for analysis of charts. Summaries and inferences from chart analysis are noted down in a separate thread here.

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Old 19-05-2013, 04:19 AM
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Angry Background - the father of any VSA analysis

In my opinion, the "background" is the fundamental element of any chart. Without background, no day or bar can be analysed. The "background" is the only element capable of confirming any sign of weakness or strength seen in the present.

If the background is strong, minor signs of weakness can be safely ignored.

If the background is weak, minor signs of strength can be safely ignored.

Get your background wrong and all conclusions will fall flat.

There is an experienced trader by the name Kartik Marar(from Chennai, India)who successfully trades VSA setups. Back when I was new to VSA, I would discuss my views with him on this forum. 99% of the times when I was wrong, it was always because I had ignored the background.

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Old 19-05-2013, 04:46 AM
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Angry

At present that are three books doing rounds of the internet.
Tom Williams' The Undeclared Secrets that Drive the Stock Markets
Roy Didlock's Master the Markets
And Gavin Holmes' Trading in the Shadow of Smart Money

All these authors belong to the "TradeGuider" clan which was fathered by Tom Williams.

I would prefer reading Tom William's book over Didlock or Holmes' book. In the latter two books, a few things are manipulated in a way to fit the curve rather then be virtuous of themselves. Example: Negative actions or implications. In my opinion, the entire string of topics along negative action is a manipulative content added. These sections are not there in Tom Williams' book. The reason I say they are manipulative is because they are indirectly advising the reader to look at a bar in its individual character rather than have it read in relation to the background.
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Old 19-05-2013, 04:55 AM
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Angry

Wide spread bars are the most common flags that will elicit curiosity about what happening with the stock. Without exception, all wide spread bars are likely to disturb the judgment of weak money, which is what the smart money really wants.

Once you see a wide spread bar, you know something serious is happening or has happened recently. It could be selling pressing, falling pressure, absorption, pushing, stopping, etc. All there are directly strong signs of strength or weakness. You almost always have a trade setup around a wide spread bar.
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Old 19-05-2013, 05:20 AM
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Angry Trading an index

Majority of the illustrative chart in Tom Williams' books are on indices and their futures. However, in my practice, I have found it impossible to trade the S&P CNX NIFTY 50. I have never ventured into trading NIFTY FUTURES based on VSA. So cannot comment on that.
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Old 19-05-2013, 06:33 AM
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Angry Common sense v/s VSA rules

Sometimes, there is a big clash between common sense and VSA rules. If every VSA rule is followed stringently, you will get an opposite conclusion. Its maddening at times and there is no guidance.
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Old 19-05-2013, 03:34 PM
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Which is why i'm trying to cut out the clutter & focus on the most significant (& the activity factor) at significant areas (This could alert me earlier & perhaps even give 1-2 bar earlier entries than my indis).

The Red & Green are the most significant in my scheme for both price & volume. The golden bars usually appear later in the move & the white ones are low activity Blue is more normal/continuation. (This is not strict VSA though There's another thing i want to include but still in the works).

As an e.g. In COALINDIA, the selling pressure has certainly decreased but no firm sign of much buying either (the activity factor, specially in terms of volume, has also come down It's shaping up like a classic triple bottm). Some of my other indis signal it may still remain sideways to down for a few more sessions So better would be to wait for a cross of the 308 lvl (By then evidence of buying would emerge).

The 19/03 bar would have been a red but for a marginal decline in volume It's still significant though in volume terms. (The delivery vols too were higher in the previous two visits than the current one)
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Old 24-05-2013, 04:09 AM
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Angry

A test-bar whether high or low volume should could only if there are supportive bullish indications in the "immediate" background(say preceding one or two bars). Whats the point of having a test if you have seen events like upthrust, effort to go down, no demand, etc.

Thats what I think.
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Old 27-05-2013, 02:13 AM
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I do not understand how VSA can be applied to indexes. The price action in indices is cumulative and could be offsetting but the volume is still added arithmetically.
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Old 27-05-2013, 10:32 AM
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Dear Bunny ,
in your opinion if VSA is to be followed , Tom William's book is to be followed in stocks only.
My doubts are
1.Is it best for Eod or intraday ?
2.Which one of Marar's AFL can be used to study Tom williams ? could you please post it here ?
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