Volume Spread Analysis (VSA) - Traders Hideout | futures io social day trading
futures io futures trading


Volume Spread Analysis (VSA)
Updated: Views / Replies:46,075 / 57
Created: by slumlord Attachments:8

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors Ц all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you donТt need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 8  
 
Thread Tools Search this Thread
 

Volume Spread Analysis (VSA)

  #11 (permalink)
Elite Member
Quebec
 
Futures Experience: Intermediate
Platform: NinjaTrader wt Rancho Dinero's profiling tools
Broker/Data: Stage 5 trading/AMP/CQG
Favorite Futures: ES, NQ, YM
 
trendisyourfriend's Avatar
 
Posts: 3,697 since Oct 2009
Thanks: 3,041 given, 4,496 received


traderlars View Post
If you guys have any questions on this method then please speak up. I spent several years trading these techniques. VSA is a good solid way to understand supply and demand via the chart. This is especially useful in the futures market.

Take care.

I have one question. What do we need to analysis price under this model ? I see so many different ways to look at volume that i find it unnecessarily confusing. Is there something like a short practical guide to start analysing price a la VSA?

Reply With Quote
 
  #12 (permalink)
Elite Member
Chicago
 
Futures Experience: Advanced
Platform: custom
Favorite Futures: ES
 
traderlars's Avatar
 
Posts: 96 since Dec 2009
Thanks: 1 given, 88 received


trendisyourfriend View Post
I have one question. What do we need to analysis price under this model ? I see so many different ways to look at volume that i find it unnecessarily confusing. Is there something like a short practical guide to start analysing price a la VSA?

Why don't you start by being a little more specific. First tell me a little about your background with volume or VSA. Then let me know some of the ways you currently read price action. From that info I'll be able to give you a good recommendation that will help you fill in some of the knowledge gaps.

Take care.


Reply With Quote
 
  #13 (permalink)
Elite Member
Atlanta, Georgia
 
Futures Experience: Intermediate
Platform: NT
Broker/Data: DDT
Favorite Futures: ZN, ZB
 
cbritton's Avatar
 
Posts: 224 since Mar 2010
Thanks: 152 given, 237 received



traderlars View Post
If you guys have any questions on this method then please speak up. I spent several years trading these techniques. VSA is a good solid way to understand supply and demand via the chart. This is especially useful in the futures market.

Take care.

Maybe I'm asking too much, but here are my questions:

I would like to know what to look for on a breakout pullback that indicates that there will be a surge to higher prices (going long) or lower prices (going short). Contrast this with a trend is knocked into a range. What should we look for in volume that shows either accumulation or distribution that indicates a continuation or reversal of a trend?

I use price action in my trading, but I've been looking to use volume more in my trading to help identify potential moves by smart money. I've read William's book on VSA but I can't quite nail down the specifics.

Thanks,
-C

УStrategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.Ф - Sun Tzu
Reply With Quote
 
  #14 (permalink)
Elite Member
Chicago
 
Futures Experience: Advanced
Platform: custom
Favorite Futures: ES
 
traderlars's Avatar
 
Posts: 96 since Dec 2009
Thanks: 1 given, 88 received


cbritton View Post
Maybe I'm asking too much, but here are my questions:

I would like to know what to look for on a breakout pullback that indicates that there will be a surge to higher prices (going long) or lower prices (going short). Contrast this with a trend is knocked into a range. What should we look for in volume that shows either accumulation or distribution that indicates a continuation or reversal of a trend?

I use price action in my trading, but I've been looking to use volume more in my trading to help identify potential moves by smart money. I've read William's book on VSA but I can't quite nail down the specifics.

Thanks,
-C

Good question.

This differs when looking at the cash market vs the futures market. The example you cited highlights one of the important distinctions between the two. The cash market not only has a limited number of contracts at each level, but it also has a limited number of contracts altogether. This is unique compared to the futures because an unlimited number of total contracts are potentially available. So to summarize, the concept of a cash market "float" and a derivatives market "open interest" make the interpretation of supply and demand slightly different at respective swing points.

The general rule regarding volume at swing points surrounds the idea of sequentially increasing or decreasing volume. In general if volume and spread are both decreasing and contracting as price approaches a swing point, then traditionally, we should interpret that as a weak test and a form of price rejection. So in the example you stated above concerning a test after a breakout, you would look for those characteristics. First, you want to see both volume and spread expanding as price pushes through the breakout point, then, as price pulls back, you'd want to see both volume and spread contracting as we test back to the breakout level, finally you would once again like to see an expansion of volume and spread as price thrusts in the direction of the breakout.

The previous explanation is a general interpretation of price action that, for the most part, accurately describes both cash market and derivatives market behaviors. There are however, some nuances that apply to derivatives and not necessarily cash. These involve a relative volume comparison at the breakout level that helps elucidate the strength of the breakout. Essentially what you want to see is more volume on the current breakout relative to volume at the previous swing high found at the same price point.


Take care.


Reply With Quote
The following 4 users say Thank You to traderlars for this post:
 
  #15 (permalink)
Elite Member
Quebec
 
Futures Experience: Intermediate
Platform: NinjaTrader wt Rancho Dinero's profiling tools
Broker/Data: Stage 5 trading/AMP/CQG
Favorite Futures: ES, NQ, YM
 
trendisyourfriend's Avatar
 
Posts: 3,697 since Oct 2009
Thanks: 3,041 given, 4,496 received

At what timeframe or interval does VSA become less effective ? Can we use it on a 3min chart ? or 5min ?

OK i know a longer timeframe is always best but what about small intervals ? Can you make sense of volume on a 5min chart ?

Also, what's the difference between a bar that breaks a key level on high volume and a bar that shows a climatic mood at the end of a move on high volume ? To me, they look the same.

Reply With Quote
The following user says Thank You to trendisyourfriend for this post:
 
  #16 (permalink)
Elite Member
Chicago
 
Futures Experience: Advanced
Platform: custom
Favorite Futures: ES
 
traderlars's Avatar
 
Posts: 96 since Dec 2009
Thanks: 1 given, 88 received


trendisyourfriend View Post
At what timeframe or interval does VSA become less effective ? Can we use it on a 3min chart ? or 5min ?

OK i know a longer time-frame is always best but what about small intervals ? Can you make sense of volume on a 5min chart ?

Also, what's the difference between a bar that breaks a key level on high volume and a bar that shows a climatic mood at the end of a move on high volume ? To me, they look the same.

Time-frame:
I really depends what instrument you are trading and what type of market you are trading. It depends on how much order flow the issues receives on a daily, weekly, monthly basis. You really need to learn your instrument and determine what time-frame provides well defined price action. As far as the ES is concerned, it is traded on a 5 and 30 minute time-frame. Fixed income is generally traded on the 15 or 30. The cash market should be traded on the daily or higher unless the issue has earnings related news at which point it can be traded on a 5. When using VSA I never trade lower than a 5 because proper relative interpretation of price/spread/close elucidate the price action within that bar.

Climax:
A bar that breaks a key level does exactly that, it breaks a key area of supply found to the left on the chart. A climactic bar is not breaking any level at all. A climactic bar is found well into new highs in fresh high ground. A climax can occur on wide spread or narrow spread and the important thing to remember is very high volume with no previous supply levels at that price point. Using a two day look-back on a 5 or a 3 month look-back on a 1 day is generally a decent approach, however, this is subjective and can vary depending on the market.

A climax and a breakout shouldn't look the same, if you are finding that your breakouts are failing and seem to look like a climax, what you really might be seeing is simply a weak/failed breakout that gets pushed back into a trading range.

Post a chart if you like.

Take care.


Reply With Quote
The following 3 users say Thank You to traderlars for this post:
 
  #17 (permalink)
Elite Member
Quebec
 
Futures Experience: Intermediate
Platform: NinjaTrader wt Rancho Dinero's profiling tools
Broker/Data: Stage 5 trading/AMP/CQG
Favorite Futures: ES, NQ, YM
 
trendisyourfriend's Avatar
 
Posts: 3,697 since Oct 2009
Thanks: 3,041 given, 4,496 received

The ES today:

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


A and B pretty much look the same but price changed direction at B. Is B a climatic bar ?

Reply With Quote
 
  #18 (permalink)
Elite Member
Chicago
 
Futures Experience: Advanced
Platform: custom
Favorite Futures: ES
 
traderlars's Avatar
 
Posts: 96 since Dec 2009
Thanks: 1 given, 88 received


trendisyourfriend View Post
The ES today:

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


A and B pretty much look the same but price changed direction at B. Is B a climatic bar ?

Nah, that's a breakdown at B, not a climax, and it looks like we will continue lower after lunch or tommorow.

Two things I want to point out.

1. You are not doing VSA, you are using bid/ask volume interpretation. We can talk about that as well, but VSA is a separate methodology. Furthermore you are pointing to the bid/ask volume net calculation, that calculation involves taking the difference between volume at the bid and volume at the ask. When dealing with VSA we want to use total volume not net volume.

2. It is easy to lose perspective on the 1 minute time-frame. If you post a 5 minute chart you'll see a swing low put in at around 8am central. The bar labeled B is breaking that swing low on high volume, so it qualifies as a breakdown not a climax.

The market could squeeze higher off this high volume low, we also have news at 1 pm central, the treasury budget, so that can distort supply/demand as well. However, in general, even if we rally or squeeze higher, we are going to have to revisit the 1111 level because of the amount of supply found there. In my opinion we will move below that level this afternoon or tomorrow.


Reply With Quote
The following 2 users say Thank You to traderlars for this post:
 
  #19 (permalink)
Elite Member
Quebec
 
Futures Experience: Intermediate
Platform: NinjaTrader wt Rancho Dinero's profiling tools
Broker/Data: Stage 5 trading/AMP/CQG
Favorite Futures: ES, NQ, YM
 
trendisyourfriend's Avatar
 
Posts: 3,697 since Oct 2009
Thanks: 3,041 given, 4,496 received


traderlars View Post
Nah, that's a breakdown at B, not a climax, and it looks like we will continue lower after lunch or tommorow.
...

The market could squeeze higher off this high volume low, we also have news at 1 pm central, the treasury budget, so that can distort supply/demand as well. However, in general, even if we rally or squeeze higher, we are going to have to revisit the 1111 level because of the amount of supply found there. In my opinion we will move below that level this afternoon or tomorrow.

That's one difficulty i have with VSA reading. The VSA reader seems to use so much discretion in his interpretation a bit like the guy who tells a story "I saw a strange creature once while I was walking the old abandoned railroad tracks near here. It looked like a bear-man" then another person continue the story and then another and finally we lose track of the original version. That's what VSA looks to me.

Reply With Quote
The following user says Thank You to trendisyourfriend for this post:
 
  #20 (permalink)
Elite Member
Chicago
 
Futures Experience: Advanced
Platform: custom
Favorite Futures: ES
 
traderlars's Avatar
 
Posts: 96 since Dec 2009
Thanks: 1 given, 88 received


lol. my interpretation isn't all that subjective. it's pretty simple really. why don't you tell us how you read that markets with your charts.


Reply With Quote

Reply



futures io > > > Volume Spread Analysis (VSA)

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

Linda Bradford Raschke: Reading The Tape

Elite only

Adam Grimes: TBA

Elite only

NinjaTrader: TBA

January

Ran Aroussi: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
VSA for ThinkorSwim cbritton ThinkOrSwim Programming 429 November 21st, 2016 01:13 PM
Webinar: FulcrumTrader Cumulative Delta Volume Analysis on CME FX Futures FulcrumTrader The Elite Circle 64 October 6th, 2016 10:59 PM
VSA alexav Russian Traders 5 December 17th, 2012 05:03 AM
WTI-Brent spread analysis...why the record gap? RM99 News and Current Events 0 August 4th, 2011 02:54 AM
VSA in MC? TonyB MultiCharts 10 May 28th, 2011 11:37 AM


All times are GMT -4. The time now is 06:02 AM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-12-11 in 0.09 seconds with 19 queries on phoenix via your IP 54.82.79.109