Volume Spread Analysis (vsa) For Forex Trading Insight – If you’ve heard of it, chances are you’ve been put off by how confusing it can be.
Theoretically, you will find that mastering the VSA will take as long as it gets complicated. However, always remember that theory is not what makes you money in the market.
Volume Spread Analysis (vsa) For Forex Trading Insight
VSA is a comparison of the distance between the highest and the lowest over a period of time to the total volume traded.
Vsa For Scalpers: 5 Top Tips To Easily Find Scalp Trades Using Volume Spread Analysis • Flameforge
That is, what is the difference between the closing price and the opening price of the candle. Furthermore, how does that gap compare to trading volume?
If you are starting to get confused at this point, be patient as I will illustrate it with real life examples shortly.
I will go into more detail on each of these strategies and illustrate a trade setup to help you better understand VSA.
Both of these trading strategies work on every timeframe. If you are swing trading or day trading, it doesn’t matter.
Phương Pháp Volume Spread Analysis (vsa) Là Gì?
You will find that VSA is equally strong on all timeframes and is especially effective when analyzing multiple timeframes.
Remember that not all trading strategies are perfect standalone. Everything requires constant adjustment and this is just one tool that can be combined with others for greater accuracy and success.
You can see in the next chart that our VSA is down 6.06% in just 8 trading days! This is a great trading opportunity.
Now let’s flip the setup and see how volume arbitrage can be used to capture long-term reversal trades.
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As you can see on the chart below, the candlestick range (high minus low) is very narrow. This is a low spread.
Once you get your other trading strategy benchmarks, you can try low risk, high probability for a long time here.
You can see that this trade setup generated a whopping 15% profit in just 12 trading days. That’s a great return in a less than three-week holding period.
If you want to trade more passively, check out our newsletter, trading ideas and live analysis in the Swing Trader package here >
Tac Vsa Volume Spread Analysis
The information in this post is for educational purposes only and does not constitute investment advice. The risks of trading in the stock market can be substantial. You should carefully consider whether engaging in such activity is appropriate for your financial situation. TRADEPRO Academy is not responsible for any liability arising as a result of your participation in the market or personal trading activities. Do you have volume on your chart? Do you know how to use it? Volume Spread Analysis (VSA) provides a fundamental framework for better trading with volume analysis.
You’ve heard of Volume Arbitrage and the value it can add to your analysis. But it seems like a complicated method of trading with uncommon terms like “No Demand Bar” and “Stop Volume”. Is VSA really unreachable?
Let’s take the first step together to understand VSA. With this guide you will find that VSA is an intuitive method.
Jesse Livermore talked about a theory based on market manipulation. He also applied his theory to his legendary trading career. However, he did not pass on specific trading methods. His legacy is that of a merchant, not an educator.
Volume Spread Analysis Trading Indicators
Richard Wyckoff was more interested in education. To find the methods that work in the markets, he interviewed top traders including Jesse Livermore. Wyckoff proposed the idea of an “Aggregate Trader” representing the entire market. He used the “Aggregate Trader” to explain the accumulation, bullish, distribution, and bearish phases of the market.
Neither Jesse Livermore nor Richard Wyckoff used the term “Disparity Analysis”. It was Tom Williams who used the term to describe the methods he built on the ideas of Richard Wyckoff. Tom Williams books and software have helped promote VSA concepts among traders.
The basic idea is that the general public can only make money from the market if we understand what professional traders are doing. And professional traders are not petty players. They play big.
Therefore, they leave their traces in the volume of data. When the professionals are active, the market shows high trading volume. Conversely, when market volume is low, professionals can keep their horses.
Vsa] Volume Spread Analsysis Part Iii
Accordingly, to understand what the big boys are doing, just looking at the price action is not enough. We need to look at price along with volume.
VSA focuses on price and volume and looks for the action of professional traders. Therefore, as long as the market has a group of experts and provides reliable price and volume data, the trading premise of VSA will stand.
However, in the spot forex market, volume is a complex concept. You will not receive the actual trading volume. You get tick volume that measures how long the price went up or down. If you are going to use VSA methods to trade spot forex, you need to decide if your tick volume source is a reliable representation of real volume. (Need help deciding? The ForexFactory forum has a discussion about forex trading with VSA.)
I will not cover up the fact that VSA is difficult to master. This is because traders have interpreted different VSA concepts differently. To trade well with VSA takes years of practice and market observation. (See how much time Jesse Livermore, Richard Wyckoff, and Tom Williams spend on market research.)
Forex Volume Spread Analysis
However, we can still improve our trading with easy to understand basic VSA concepts. Therefore, in this first tutorial, we will look at two simple VSA concepts.
If the market goes up with spreads and volume decreases, then the market has no demand. Without demand, it is unlikely to continue to rise.
If the market falls with the spread and volume down, the market is not interested in selling. Thus, the possibility that the market will continue to decline is unlikely.
In the two examples below, we will use the 20-period simple moving average as a trend indicator. Our aim is to use the concepts of “No demand” and “No selling pressure” to find trend retracement trades.
Volume Spread Analysis
In the charts below, I have marked the “No Demand” bars with red arrows and the “No Selling Pressure” bars with green arrows. (Click image to enlarge.)
There is a lot of discussion about VSA on Traders Laboratory and Forex Factory. To find information about VSA in popular trading forums in one click, try our Trading Forums Search Engine.
There are many software that claim to use VSA techniques to help you trade better. I won’t comment on their effectiveness as I haven’t used them yet.
But I am sure that no software will bring you success in trading unless you really understand the principles of VSA. Therefore, you should definitely learn as much as you can about VSA before relying on software for analysis. This approach will ensure that you don’t blindly use the software, if you buy one.
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These are not classic VSA methods, but they will help you understand the interaction between price and volume.
Volume is valuable because it provides another market dimension to analysis. Volume is also dangerous because it confuses people who don’t understand it.
Take one step at a time. Acquire VSA concepts on a regular basis and use them judiciously in your trading. When volume starts to make sense to you, you’ll see progress, but the improvements won’t come overnight.
Price and volume give conflicting signals? Main price before volume. Learn more about my price action trading course. Have you ever thought about using volume spread analysis for your trading needs? Do you know what kind of analysis entails? And why are more and more traders using it on a daily basis?
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Too many volume-related questions require detailed answers. Stock traders all over the world are eager to learn all the details and possible analysis that can greatly help them in achieving their trading goals. Since volume spread analysis is so popular, it is not surprising why more and more people are enthusiastic about arbitrage analysis.
So we wanted to give you a basic explanation of what the term means in the first place, right?
Volume spread analysis refers to an analysis method that observes candlesticks and the volume on each candle. The main objective of this particular analysis is to decide on the price direction. It looks at the following three things:
In other words, volume differential analysis, or VSA, represents a whole new way of looking at the market as a whole. It’s like candlestick analysis looking at volume. This is one of the most important concepts of technical analysis.
Vsa Volume Spread Analysis
The Volume Difference Analysis Indicator deals with data of large volumes. Color histogram shows the test value. The per bar histogram indicator represents the spread of the last bar or any other bar initially indicated in the info panel to the right. It is usually white number.
In short, this indicator represents the volume rating per single bar according to the rules of the VSA.
The concept of Forex volume arbitrage was clarified by Dr. Alexander Elder, one of the most successful developers of technical tools. Besides, he is also the author of many best-selling financial books, making him
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