Nill's log - VSA & PA on the 1D

Creating this to log ideas, and hone my skills in the FX arena. New to the currency instrument, so I am sure I will make many bad calls. I wouldn’t trade these ideas, but rather use them to learn along with me. I am familiar with VSA and PA, and I so far I like working the 1D and 8H charts.

My basic idea so far is to look for PA trends/setups on the 1D/8H and confirm them with VSA. I like working from clean charts so you will not see any indicators just s/r zones (I like the Keep is Super Simple methodology) in this journal.

I am not trading a live spot FX account as of yet. But have set a 3 months goal to gain enough confidence in my method to go live.

Any questions feel free to ask… I may not have a reasonable answer though :stuck_out_tongue:

Safe trading everyone!

Looking at the EU 1D yesterday I was looking to see if the current up move was dying out, relative volume has dropped on the up move, but not a gradual drop, so this may be a quick retrace back to support and then a push off again.

So I would Short EU back to the support zone. management would just be a SL above the resistance zone, and a TP just before the Support zone. This would be about a 250pip move over 1-2 days. Depending on the PA and volume behind the move you could pull half the position at my initial noted TP, and set BE and see if you get any further retrace to a lower/stronger support area.


And two days later:
We got the move! looks like it is fighting at the support zone for a hold there… We can watch this and see if anything looks like it will come out of it for another move.


This is a big drop onto some higher relative volume, so I would wait and see what happens before getting into anything else. I would close my position here, and wait. I like watching the charts on Sunday evening to see what the big money is moving towards. Ill update a new log entry after that.

Looking at the last week we have waning volume into this week, I think this will drop back down to the previous support zone, but if it is a distro/accum phase with a shakeout before the uptrend resumes one could track it on the 4H, this is only worth about 100 pips, so I would wait to see what the next candle close brings to the table.

Short with a SL just above the resistance zone. TP just before the support zone. manage on the 1d and wait for the candles to show a good entry. I would also pull half the position and set BE at the halfway if it does go. This is because if it is a small shake before the upturn, we can ride the fake, and at least make a few pips. then we will watch to see if the uptrend holds.


And two days later:
It dropped to the support we would have banked the pips on that one. Our stop loss would not have hit and our TP would have hit, banking about 100ish pips.
The drop wasn’t firm and didn’t hold. Looks like a drop onto some volume, looking like an uptrend is about to come form. I’ll post a new trade entry log for that move.


Just a few rules on my trade ideas (this is just me making notes for myself…) You will notice I reinforce these ideas in my head with definite verbiage for a reason. To avoid making emotional trades… I have found they never work.

  1. I will not enter a position unless the candle I enter on proves itself to be trending the way I believe it to go first. So if I say price drop, I want a dropped candle first.
    This is not always a sure thing, but it mitigates some risk. It’s all about the edge.

  2. Volume (activity) should always show a correlative action to the candle. ex. If I see a major relative increase in activity on a dropped candle with a small body, this is not inline with a true price drop… there has just been a massive price battle. Wait to see what happens.
    You cant win them all, but you can ensure survival to sustain battle. Many small strategic battle wins = an overall campaign win.

  3. I will only enter trades Monday - Friday. I will close all trades before the First Friday of the month to mitigate psychological effects of possible loss due to NFR. Candlestick PA reading Generic. News can affect price even just temporarily, and the emotional impact of this can cause a cut and run before the true trend resumes. Why bother stressing… There will always be more opportunities.

  4. I will only risk 1.5% of account balance per trade with a max of four positions per week, this means even a total loss of every position is only an 4% drop in account balance. I will always use a SL but I will allow my positions to “breath”. I look at S/R as zones, not defined lines, and I account for shake outs with this “breathing room”. This might keep me from making money, but between 8-10 of the most active pairs, I’ll still capture some solid moves every week.

  5. After assessing my pairs over the weekend (Sunday evening) I will pick the four that PA and activity gives the greatest probability of success. These are my only trades for the week. My wife asked how many positions I will enter at a minimum. I explained my minimum is 0… Why? If I don’t see anything worth going for at first glance, I will wait until the market gives me what I want. When I dive, I don’t take a shot unless the fish is worth eating :wink:


So Those two trades would close out the week for me… We would have hit 2/2 and banked about 350 pips. Not bad for about two hours invested in these moves. I have tried scalping and I get too emotional watching the damn candles jump around. This is why I go with the swing trade. I am only devoting about 2-3 hours to looking at 8 pairs right now. I know there are more opportunities out there, but for time invested and ROI on that time I am happy with this method. We won’t always win, but a nice + pip roll into the weekend will make anyone happy.

Safe trading everyone and Happy New Years!

Watching this weekend (Sunday evening):

EU: looking for the bounce and uptrend to begin… A lot of volume (activity) absorbing the down move. Update Sunday evening: small drop forming from London session, but on the 4hr it’s shows relative volume decrease (trend weakening) continue to watch.

UJ: hammer formed. Higher relative volume. Maybe a slow resume to the uptrend? Update Sunday evening: on the D1 we have a fat down candle… H4 shows some action moving price up then down. Wait to see what NY close brings then re-access.

UCad: price is fighting for a low, but volume shows a lot of activity absorbing this… Watch for an up move to begin. Update Sunday evening: hmm not sure if I want to invest anymore time looking at this I still think it will move up, just not sure if it will do it this week.

AU: PA showing interest in upmove… A lot of activity behind this. Watching for an upmove. Update Sunday evening: the London session doesn’t know what to do with this it’s moved into a S/R zone, waiting for NY close to re-access.

20 mins invested in this list. Update Sunday evening: 20 more minutes invested. Might look for some PA set ups in other pairs tomorrow morning.

G’night all!

Ahhhh slept in and hit the gym late (gotta shake these lazy bones!) I haven’t even looked at my charts yet. Gotta run some errands and I’ll be back at the computer after lunch HST. Hope everyone is having a good Monday! Edit: I am running MT4 through Wine on a mac platform, anyone else doing this? It is giving me some serious issues with freezing and such. I am most likely going to use FXCM as my broker, but I am not very happy with their TS Web platform. It doesn’t have many options, and I do not like their volume feed so much either… I like IBFX for their volume feed, but loading them through MT4 on my mac is giving me a headache. :34: Any ideas would be greatly appreciated.

Looking at charts tonight based on Ny close 1/6/14, will post updates in a bit, still working through my mt4 issues…

Hi Nill,

Have you considered using a Virtual Private Server (VPS)? That would allow you to run MT4 on your Mac and has the added advantage of letting you keep the platform running 24 hours a day, even if your Mac is disconnected from the internet. A typical VPS service can cost $30 to $35 per month, but if you have an account balance of at least $5000, you can get free VPS access.

Mahalo

PS: I’m the first to admit that one piece of software does not fit all traders. That’s why FXCM offers clients the choice of several trading platforms including MT4, NinjaTrader and Mirror Trader. That said, I would appreciate your feedback on what we can do to improve our Trading Station platform. You mentioned that it did not have some options you were looking for. Could you tell me a bit more about what you feel is missing? Thanks :slight_smile:

@jason I’ll get back to you as soon as I can, some things have come up, but I’ll be back in a few days, I’ll address your question then.

Because we all get to this point in our game…

Since I was a child I have always enjoyed taking things apart. Breaking them down into their smaller prices, in an attempt to create understanding of how it worked. In an attempt to understand how I work as well… This statement will help you understand the following.

To be successful in any aspect of life I have come to note that definiteness in belief, or “being sold” on something is critical. Being sold on oneself’s abilities; physical or mental… I was not sold on my own abilities whith trading, I traded with self doubt. The following journal is me selling myself on being a successful trader, if you have something you would like to add, so long as it is constructive, go for it! I know that won’t stop some people…

After a series of losing trades recently I asked myself the simple question of why do 95% of retail traders fail, and only 5% succeed?

This led me to ask myself a series of questions. I do not remember the exact questions I asked but a basic idea follows; these are taken against common themes derived from many different sources.

Cites

So I Noted the following after searching around for a bit, you can find a gazzilion bajillion forum posts about these things broken into many different levels but here they are in their most generic form.

System/Methodology is an all too common theme, Everyone notes how too many traders focus on finding a system that is accurate to some extent than they do on risk management. But if this is an obvious observation, why does it remain so important for us?

Time is a common theme found amongst successful traders, If you run through forums you will also see many “experienced” traders expounding upon this on different levels, from times of day to the timeframes on their charts. Why is this variable something of such importance?

Psychology of the trader is something that comes across in many different forms from chasing trades to switching strategies before they have a chance to work or are understood, down to entering positions outside of their strategies bounds. What level(s) of this are actually the most quintessential to success?

Risk Control/Risk Management is something that everyone sees as of particular interest. The idea is simple but can be made complex if desired. The more money you risk than you stand to make, the more you will lose over time; call it compounding interest on the debit side of accounting. Why if this so important, if it the main cause of failure why does it persist? Is this tied to Psychology?

Many will read this and begin to ask different questions than the ones I have asked myself above, the idea is the same though, we are trying to break things down from one level to the next Whether it is through a conscious clearly defined objective, or subconscious thinking that drives us to find answers we are willing to accept.

The modus of acceptance can be different depending upon the person. On a higher level this could be explained as: An academic arrives at a hypothesis of somethings operation, he is unwilling to accept what knowledge is available at his level so he conducts research to his set of standards based on his perspective. This research has a conclusive (based on his perspective) result. Now at a lower level of thinking we have many who will not question this conclusion, “it has been proven by someone else with much more experience.” is a commonly accepted idea. But if we had understanding at the same level, or even a higher level than this “more experienced” person would we still agree? Or would we have a deeper understanding of an aspect they they failed to make a correlation to?

A few statements I noted while going through things, prompted an idea; Listen to how and what successful traders say when they speak about different ideas. This concept comes from the an idea I have formed that people who ease into things slowly and do not make correlations easily will have a hard time communicating how different ideas tie together to create a bigger picture. For these people, the idea of cause and effect is not an established model for implying a bigger picture based on the smaller components. They understand that certain ideas are of importance to overall success, but they may not be fully conscious of to what extent or importance this is so, this can also be relative to their perspective of life in a more general context as well.

The following posts will explore the above posed questions in greater detail, breaking them down further; using whatever evidence available or potential to support or disprove these accepted ideas.

Again this is an effort to sell my subconscious on the idea that I have enough knowledge to be successful in any trading arena. If this information can do the same for anyone else, all the better!

Anyone want to come for the ride?

I am a PA and VSA guy, or at least that is how I define my trading self with confidence. I am sold on these ideas to an extent, but maybe not enough? I think I need a more solid understanding; but how to approach this objectively? I think I will take the “opposite side of the fence” perspective first, off to hunt for arguments against PA and VSA trading, I am sure more ideas will develop as this line of questioning continues.

So I searched around a bit, keep seeing the same ideas repeated. Nothing truly written with signifigant academic merit against the use of PA, or VSA as a system. Within these two many people report failures while ignoring or not having solid understandings of specific concepts such as when to enter/exit trades, what market sentiment (background) is truly saying etc… exploring more how the the ideas of time and risk management cause effect to this way of trading.

Of note I have found a common idea pushed by “the teacher/successful” that larger timeframes make trading in this fashion easier. For the purpose of identifying the trend as well as entry and exit strategy. Why I asked? People see trends and targets more easily from these larger timeframes? Why? The larger money moves on the larger timeframes? This brings up the idea of market “noise” at lower levels. who plays these levels? The inexperienced, the traders with the smaller accounts? So is the “noise” simply small money not having a solid idea of what price is doing?

This I will explore more.

Hi mate,

I think that is the point that I always agree and like. Thanks for the great post.

After exploring some resources about my selected methodology of choice, I began to break down the complex ideas of what information I was looking at into its most basic form. These are TIME and PRICE. With these two things how can I tell where the market will go? These are known variables on both sides of a trade. But I have a hypotheses that smart money takes a conservative approach to trading. How can you trade more conservatively with only the same information. TIME! More money buys more time! What advantage is more time? Think risk:reward ratio… Small stops never seem to work either… Meihua (301 Moved Permanently) proved the math behind this idea.

Smart money will generally follow smart money, they will also watch market sentiment, and make money doing it because they are able to buy more time for their positions. This is a simple concept that I have been blind to until now! They are successful merely because they can buy more time, because they have more money. When the price is in their favor enough they exercise the ability to capitalize.

How are S/R formed on any time frame? This us a simple question, anyone out there care to jump in?

This is a trade I entered last night before bed. The blue line was my SL red was entry and green was TP. This trade entry is based on some of the ideas I am breaking down at the moment. Anyone want to know why, just ask.


Earlier I made the statement that “Smart money will generally follow smart money.” I made this statement blindly based off experience. Now I will attempt to prove this… Within the linked thread above there has been some evidence to support the idea that the Tokyo session creates the most “noise” (Highs/Lows) during the day as compared to the London and New York sessions. I wonder if this has anything to do with the statement I made, or the last question I asked how S/R zones are formed… Anyone out there?

My wife is off seeing some friends for the weekend and as it is just myself and the mutt, so I will be back to post some evidence to support this idea later, if I can figure out a way to present it visually, as I am a visual kinda’ guy.

So as you can see I haven’t found out a way to prove the “smart money generally follows smart money” statement. I am not too savvy on the MT4 platform, and trading off a MAC has some serious disadvantages.

What I would like to do is compare movement distance and direction during the major session time frames and compare them to one another. Less any major news event days, as these are the wildcard days that generally only change price direction for short periods. A lot of people are viewing this thread, Anyone care to help a fellow trader out? even just a push in the right direction to achieve this would be great.

Anyone use Xtick from the app store? they give you 8 days free, and then if you want to continue they charge a monthly subscription, rubbish in my opinion.

Anyway, I have been going back through some books I have acquired over time and looking for common ideas… I have found some pretty neat things that didn’t make sense, or register any greater correlations before.

One of the things I read that struck a chord was an interview of Bill Lipschutz; he was asked how his trading has changed since leaving Salomon, his initial response was he was trading smaller, which was a disadvantage… He went on to say big money can influence price (nothing new there) and then talked about how getting out of positions can be difficult with larger money but in that lies the advantage, as you have more TIME! And those big money impacts give you time to move around and better position yourself. If anyone does not know Lipschutz is a very fundamental trader. Why? He is moving so much money, he relies heavily on the news to gain the liquidity he requires to enter and exit positions, interesting eh? Many of us already have a common understanding that news generally influences prices, but in many cases for only a short period of time. Lipschutz also follows the major trends very well, which he again bases off of fundamentals…

Interesting stuff there, but he is a very dedicated trader who LIVES the markets day and night. I am not that motivated by this game or the money… We all know what trend lines are, and we also know that big money buys more time to an extent… looking at larger timeframes on our charts can give us an idea of what big money is doing… Again these are my uneducated ideas, anyone can chime in and set me straight or realign my ideas at any time.

I just found this thread today and had to make an account to comment on it. I’ve been lurking on BP for a while to learn the ins and outs of trading and have had good success (maybe by luck?) until this month. Long story short, I started off with a demo account and had some decent profits and moved into live trading without a clue as to what I was doing. After losing a couple of hundred dollars and getting it back again I found VSA trading and it made a lot of sense to me. Within 5 months I made a 400% profit (wildly over-leveraged and reckless trades after looking back at it). Just this month I started getting lazy and took trades that were less than favorable with the yen pairs and got stopped out on several trades. A couple of days ago I began reading up on price action again and even though I lost 50% of my account in the past 4 days, I’m actually happy. If it wasn’t for that, I would’ve never took the steps to start learning PA and back testing it. I think that finding trades via PA and confirming with VSA is the best way to trade because you get a good idea of what the market is doing. I hope to learn more about PA and continue learning about VSA so I can have steady returns even with volatile pairs like the EURJPY and USDJPY. Keep putting out the good information. Even if people aren’t replying, they’re definitely reading it and absorbing the information - I know I am. I’m also considering starting a journal on here with the following format (accompanied by pictures, of course) :

1/28/2014
EURUSD entered short 1.36550
S/L 1.37506
T/P 1.34567
Reason: 4hr 70 pip pin bar (1.36685 to 1.37385) retraced 40 pip up move at 1/24/14 12:00 highest volume in 14 days; failed to close over 1.37000 resistance; sideways trend; entered at break of 1.36550
Close at:
P/L:
Time in trade:

Thanks for the comments, what threads are you learning VSA and price action from?

The PA threads I’m currently reading through are
http://forums.babypips.com/free-forex-trading-systems/58037-price-action-matters.html
http://forums.babypips.com/free-forex-trading-systems/42378-forex-price-action.html
and another one by James16 over at forexfactory.

The VSA threads I read a while back was
http://forums.babypips.com/free-forex-trading-systems/21453-1-500-pips-per-month-method-vsa-sr-fibb-etc.html

Can you recommend any others?

EDIT: did a quick search and found another promising VSA thread over at forexfactory by a user named Shamus. I like to read through 10 or so pages from each thread and move on to another to digest the information and compare different views. Then I just back test them on several forex pairs going back a couple of years.

Pete fader is a great resource! Very knowledgable. He has another thread with a more condensed version here under 301 Moved Permanently

I read through it often to reinforce ideas. Another good PA resource here is under the name forex school online. I can’t remember his name off the top of my head, but it’s a good resource.
Are you familiar with order flow trading? If not link and I’ll post a link to that resource here, it follows in line with supply and demand ideas (accumulation, distribution)… Another perspective of the market for you.

Have you taken the “what kind of trader are you” quiz here? I see a lot of people struggle here to understand things that their personality types don’t jive with. I learned the hard way that your trading style has to fit your personality in order for you to be confident in your abilities…

You run back tests? Are you able to query data from charts easily? I’m still looking to see if price direction has an overall correlation based on each of the major markets (Tokyo, London, New York). I’m just not a really technical kinda guy with the computer…