Disappearing indicators
I sat next to a guy who used the old vsa - it wasn't bad but it did plot retrospective indicators (therefore useless as a mechanical system aid).
Great for getting people to think about vol strength/weakness and supply/demand but very much like Roy Kelly's cylce indicators - uselss to try and trade with (IMHO)
I sat next to a guy who used the old vsa - it wasn't bad but it did plot retrospective indicators (therefore useless as a mechanical system aid).
Great for getting people to think about vol strength/weakness and supply/demand but very much like Roy Kelly's cylce indicators - uselss to try and trade with (IMHO)
SOCRATES
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Favourite saying No.13 =
"The trouble is....to get a programmer to understand all this....they are not interested....they just want to finish the job as quickly as possible......and get paid immediately............they have no understanding...NO UNDERSTANDING WHATSOEVER...... NONE.........and if I had from the very beginning..........you know.......I would already have achieved the Holy Grail years ago".
"The trouble is....to get a programmer to understand all this....they are not interested....they just want to finish the job as quickly as possible......and get paid immediately............they have no understanding...NO UNDERSTANDING WHATSOEVER...... NONE.........and if I had from the very beginning..........you know.......I would already have achieved the Holy Grail years ago".
SOCRATES
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Favourite saying No. 14 =
"It should not be doing THAT......that signal......... is wrong....WRONG.....TOTALLY WRONG.....it is the programmer's fault........these people never follow instructions........it will have to be changed.....and all these things cost a lot of money".
"It should not be doing THAT......that signal......... is wrong....WRONG.....TOTALLY WRONG.....it is the programmer's fault........these people never follow instructions........it will have to be changed.....and all these things cost a lot of money".
SOCRATES
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Favourite saying No. 15 =
"THAT....is not a test....its NOT"
".....but it has a tail underneath.... and the price.... has gone up....and....."
"YES.....BUT IT IS NOT A TEST......you have got it...... ALL WRONG AGAIN ......you give these things spin which is NOT NECESSARY......IT IS NOT NECESSARY....it is all in the book.....just read the book....just stick to what's in the book...for Christ's sake !".
"THAT....is not a test....its NOT"
".....but it has a tail underneath.... and the price.... has gone up....and....."
"YES.....BUT IT IS NOT A TEST......you have got it...... ALL WRONG AGAIN ......you give these things spin which is NOT NECESSARY......IT IS NOT NECESSARY....it is all in the book.....just read the book....just stick to what's in the book...for Christ's sake !".
'..if you ever see this in your lifetime, you want to rush out and get a bank loan, cause what happens here..'
That's my favorite.
Changing topic cause its Sunday. where's this one from '... put the lotion in the basket ?'
Or this ' ...man, you come right out of a comic book'
Porks
That's my favorite.
Changing topic cause its Sunday. where's this one from '... put the lotion in the basket ?'
Or this ' ...man, you come right out of a comic book'
Porks
SOCRATES
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Favourite saying No. 16 =
"You people do not understand supply and demand at all.....you do not understand what a test is.....and you, persist in giving it spin, which is not necessary.......you are completely wrong.....If I had £1 for every test I have seen.....I would be a billionaire by now".
"You people do not understand supply and demand at all.....you do not understand what a test is.....and you, persist in giving it spin, which is not necessary.......you are completely wrong.....If I had £1 for every test I have seen.....I would be a billionaire by now".
SOCRATES
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Favourite saying No. 18 =
"You....... by now ought to have picked up quite a bit about this.....but you don't know a lot......you still have a lot to learn..... about supply and demand......there is such a thing as supply and demand....but there is such a thing as..... NO SUPPLY.......... and NO DEMAND"
"You....... by now ought to have picked up quite a bit about this.....but you don't know a lot......you still have a lot to learn..... about supply and demand......there is such a thing as supply and demand....but there is such a thing as..... NO SUPPLY.......... and NO DEMAND"
SOCRATES
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Favourite saying No 20 =
".....What you want to do....is when you see really bad news.....get hold of the newspaper......and cut out the article.....and put it to one side....and keep it.....and then later....you will see .....how it is ....that that was the absolute bottom of the bear market......GUARANTEED.....it is GUARANTEED to be the bottom".
".....What you want to do....is when you see really bad news.....get hold of the newspaper......and cut out the article.....and put it to one side....and keep it.....and then later....you will see .....how it is ....that that was the absolute bottom of the bear market......GUARANTEED.....it is GUARANTEED to be the bottom".
No VSATrader is Sebastian Manby.
There are a number of traders that use TG successfully, e.g., Sebastian and Mike Elvin. Tom has spoken (to me) very highly of Mike Elvin.
They certainly use VSA methodology. I don't think their trading success is due to using TG.
There are a number of traders that use TG successfully, e.g., Sebastian and Mike Elvin. Tom has spoken (to me) very highly of Mike Elvin.
They certainly use VSA methodology. I don't think their trading success is due to using TG.
Bigbusiness
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I seem to remember Socrates mentioning he had lost over £3 million learning to trade, so that $75k would be a drop in the ocean. Not sure how that goes along with his natural born trader theory though.
Right, back to the business of mastering volume spread analysis. I have been thinking about how to organise this thread and I have the following ideas:
1. We will not discuss Tradeguider indicators and will not use charts from Tradeguider. We will keep the discussion limited to VSA only. Tradeguider is meant to be a learning tool. In order to trade with VSA, all we need is high, low, close and volume. That is all we will use.
2. We will define and describe the major patterns and discuss what they represent and why. We will then discuss how this pattern can be used in practical purposes, in actual trading.
First some basic definitions:
Up bar = a bar that closes above the close of the prior bar
Down bar = a bar that closes below the close of the prior bar
Let's now define our first pattern: yes you guessed it, it's the test.
Test
----
Definition: A test is a sign of strength and occurs either during a down move, or during a retracement within an up-move. A test is defined by the following characteristics:
- low volume
- close near the high
Detailed description and rationale: A test is performed by large players who are bullish on the market, but are not sure about the amount of supply still present. The only way to find out is to mark the price down with a little selling. If the bears still have a lot of supply to offload, they are likely to sell into this weakness, resulting in a high volume and the bar closing near the low possibly with wide spread. If however the supply has been removed, there will be little selling from the bears and the volume will be light. Price will close near the top because there is no selling other than the little amount engineered by the bullish professional.
Reliability: TW describes test as the most important low volume buy signal. Reliability is increased if the test bar goes into new lows (i.e., the bears are not interested even when the price has reached a several-month low, meaning there is really no supply left). There is however a note of caution. A test is not a buy signal. It must be confirmed by immediate sign of strength (e.g., wide spread up bars on good volumes, bars closing near the highs etc).
Practical use: This is something I haven't worked out yet and this will take time and observation. I am not an expert in this. The purpose of this thread, as I said is to create a trading plan based on VSA. A possible practical use of tests could be to watch the next 3 bars. If no sign of strength appears, we ignore the signal and wait for the next one.
Note that in the attached chart, not all tests were followed by an immediate appearance of strength. I can't see any strength after, for example,
- points a, b, c, (many bars still closing near the low or middle);
- point h (next bar is up, but volume is huge and close near the middle, meaning lot of hidden selling)
Comments (particularly from the experts) welcome.
1. We will not discuss Tradeguider indicators and will not use charts from Tradeguider. We will keep the discussion limited to VSA only. Tradeguider is meant to be a learning tool. In order to trade with VSA, all we need is high, low, close and volume. That is all we will use.
2. We will define and describe the major patterns and discuss what they represent and why. We will then discuss how this pattern can be used in practical purposes, in actual trading.
First some basic definitions:
Up bar = a bar that closes above the close of the prior bar
Down bar = a bar that closes below the close of the prior bar
Let's now define our first pattern: yes you guessed it, it's the test.
Test
----
Definition: A test is a sign of strength and occurs either during a down move, or during a retracement within an up-move. A test is defined by the following characteristics:
- low volume
- close near the high
Detailed description and rationale: A test is performed by large players who are bullish on the market, but are not sure about the amount of supply still present. The only way to find out is to mark the price down with a little selling. If the bears still have a lot of supply to offload, they are likely to sell into this weakness, resulting in a high volume and the bar closing near the low possibly with wide spread. If however the supply has been removed, there will be little selling from the bears and the volume will be light. Price will close near the top because there is no selling other than the little amount engineered by the bullish professional.
Reliability: TW describes test as the most important low volume buy signal. Reliability is increased if the test bar goes into new lows (i.e., the bears are not interested even when the price has reached a several-month low, meaning there is really no supply left). There is however a note of caution. A test is not a buy signal. It must be confirmed by immediate sign of strength (e.g., wide spread up bars on good volumes, bars closing near the highs etc).
Practical use: This is something I haven't worked out yet and this will take time and observation. I am not an expert in this. The purpose of this thread, as I said is to create a trading plan based on VSA. A possible practical use of tests could be to watch the next 3 bars. If no sign of strength appears, we ignore the signal and wait for the next one.
Note that in the attached chart, not all tests were followed by an immediate appearance of strength. I can't see any strength after, for example,
- points a, b, c, (many bars still closing near the low or middle);
- point h (next bar is up, but volume is huge and close near the middle, meaning lot of hidden selling)
Comments (particularly from the experts) welcome.
Attachments
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As I understand VSA:
A test should follow a sign of strength and if successful (immediate rising market), is a good indication of an upmove. A failed test (no immediate rise, The Dog That Didn't Bark as I think DBPhoenix puts it) is a sign of weakness.
An upthrust is a test in reverse (sign of weakness, followed by an up bar closing on its lows).
As I said earlier, tests following a strong sign of strength (wide spread down bars on high vol) are a favorite of Tom's, and form the 'W' or double bottom.
I can't see that tests are tradeble without taking into account the context, etc.
Some of the bars marked on the chart are 'No Supply' or 'No Demand' bars rather than tests, in my opinion.
A test has to test something (whether there's any floating supply left), and that's normally down into an area of previous high supply(high volume, activity), trying to get the weak holders worried and catch stops. If they isn't any supply coming onto the market at these lower prices, this 'proves' that the floating supply has been removed, allowing prices to be marked up without any fear of meeting resistance from the weak holders dumping their supply onto the market at the higher prices. This is Tom's theory of course.
No supply is a down bar, narrow spread, with vol less than the previous 2 bars
No demand is an up bar, narrow spread, with vol less than previous 2 bars
No supply and No demand bars are great confirmation signals,
Porks
A test should follow a sign of strength and if successful (immediate rising market), is a good indication of an upmove. A failed test (no immediate rise, The Dog That Didn't Bark as I think DBPhoenix puts it) is a sign of weakness.
An upthrust is a test in reverse (sign of weakness, followed by an up bar closing on its lows).
As I said earlier, tests following a strong sign of strength (wide spread down bars on high vol) are a favorite of Tom's, and form the 'W' or double bottom.
I can't see that tests are tradeble without taking into account the context, etc.
Some of the bars marked on the chart are 'No Supply' or 'No Demand' bars rather than tests, in my opinion.
A test has to test something (whether there's any floating supply left), and that's normally down into an area of previous high supply(high volume, activity), trying to get the weak holders worried and catch stops. If they isn't any supply coming onto the market at these lower prices, this 'proves' that the floating supply has been removed, allowing prices to be marked up without any fear of meeting resistance from the weak holders dumping their supply onto the market at the higher prices. This is Tom's theory of course.
No supply is a down bar, narrow spread, with vol less than the previous 2 bars
No demand is an up bar, narrow spread, with vol less than previous 2 bars
No supply and No demand bars are great confirmation signals,
Porks
