Hey Pete
Here I used VOLUME and felt allot more confident entering the inside bar at the bottom bands.
Iv added VOLUME now to my Picking Tops and Bottoms strategy. 
Cheers Lino
I donāt use bolinger bands but they are so popular around here maybe I should take a second look. If you are already picking tops and bottoms, than YES, this should helpā¦very nice.
I took this EJ short scalp today off 5min. High volume at the top of double top.
Yep! While Iām learning it has been more useful in keeping me out of bad trades, Iām beginning to see the light.
Look familiar?
Do you enter at the close of that candle?
Yep, the candle closed down with little to no wick on bottom. It was a follow though of high volume pin with medium volumeā¦perfect setup.
o990l6mh
FX-Men Honorary Member
Join Date: Aug 2008
Location: Southern Sweden
Posts: 1,583
Finished reading Tom Williams
301 Moved Permanently
As promised I will try to do a small review of his book, The Undeclared Secrets That Drive The Stock Market.
This is basically the same book as the one called Master the Markets, just without all the Tradeguider promotion.
In order to explain why this book was so fundamental to my understanding, I first need to stray a little.
Early on i was led to believe (my own fault for not doing my own due diligence) that volume in forex was worthless. Period.
I am sure this is what almost everybody thinks. We learn that since thereās no central exchange, there cannot be any reliable volume information. At least not for us retail clients. After hearing this and bowing to the logic of this argument, I, like probably almost everybody else, go on our way and never look back.
Big mistake! Why? Well because there is actually such a thing as useful volume information also in forex.
Thereās tick volume. Not true volume but a good enough substitution. Tick volume adds every up and down tick during a bar. The logic is that every tick represents a forex transaction. If we accept that all transactions will be of different sizes and therefor of different volume, still over the long run every tick can be said to represent one average transaction.
Tick volume doesnāt measure volume, thatās true. But it measures the level of activity, which is almost the same thing.
Letās now introduce Tom Williamsā concept of weak and strong holders. Whatās that?
A weak holder is the non professional trader. This trader will frequently panic sell when the trade has gone against him, causing him to be shaken out of his position just before price action reverses. Or he will be unable to withstand the urge to jump in on the action just as the market is reaching a top or a bottom. Weak holders do not know what theyāre doing simply.
Strong holders are well capitalized and are the exact opposite. They know exactly what to do. They know the psychology of the markets and will use this to their advantage. They know when weak holders will panic, allowing the strong holders to either accumulate at a bargain level, or to sell at an overly expensive price. in both cases it is to weak holders they sell.
According to Tom Williams, this is how a market works at its core: value is continually transferred from weak holders to strong holders.
Obviously what we as retail traders then need to do is to trade alongside these strong holders. Sell when they sell and buy when they buy. Sounds easy, but as we all know, itās not.
This is where volume spread analysis comes into play, VSA. This was created by Tom Williams who used to be a syndicate trader in the stock markets in the UK.
He says that the actions of the strong holders, aka smart money or big fish or what will you, are plain to see for everyone. All you need is a bar or candle chart and a volume histogram.
He points out that only the strong holders are big enough to move price substantially. For a reversal or rally to happen, strong holders must be active.
The VSA method can be reduced to itās core idea: the relation between effort and result.
Take a doji after a long rally. Volume on the doji is very high.
What does this mean according to VSA?
It means (probably - VSA is like everything else not perfect) that in spite of high volume, price failed to be pushed up to a higher close - there must have been a lot of selling in that high volume! Guess whoās selling. Thatās right - strong holders are selling to weak holders as they now expect lower prices ahead. They are distributing. What happens next is that since thereās no strong holder interest in buying anymore the market reverses and indeed starts to fall.
It will continue to fall until weak holders panic and start selling. When price becomes attractive, strong holders will step in and buy at these bargain prices, they will accumulate from the weak holders and price reverses again.
This is repeated endlessly and is how value is constantly transferred from the weak to the strong holders.
As we saw earlier, we can however track the actions and intentions of the strong holders by looking at VSA - effort vs result.
VSA contains much more than that, but this post is already to long. Iāve never found a book that so well explains why the market does what it does.
As an ending note, Tom Williams points out repeatedly that bad news and good news is frequently used by the strong holders to conceal their actions. When all news are extremely bearish, this makes it easier for strong holders to accumulate without giving themselves away and vice versa. He advices against paying attention to news since that will often affect your market view in an adverse way.
All I can say is, get this book and read it! Since reading it Iāve not had a loss in ten trades. Thatās quite true, and itās the first time for me.
Thanks PTB, good post (re-post). 
Pete,
I just read this thread. Good Stuff!
Let me ask you a question about volume with different brokers:
I use MT4 with IBFX. Is the tic volume on these bars from ALL the brokers that use MT4 or is it just IBFX tic volume?
Also, BB are great areas to spot volume changes.
Also, strong news days (up or down) are great to trade with the trend using VSA.
I look forward to reading and posting on this thread.
Thanks,
Michael
Hey, Michael. Yep, although I donāt use it, BB with VSA seems to be a nice combo.
Rightā¦after news release I look at the the REACTION to the news move, never trading the initial move. Thatās the key to dealing with news, with VSA.
You are just getting the IBFX volume. Thatās why each brokers volume will be different.
I like ODL and SpotTrader mt4 for volume. If you want a combined feed of a few hundred brokers, you would have to pay for a chart service, but after comparing that with induvidual brokers, I found it to be a waste of money. I personally didnāt like IBFX volume. I found some extreme differences from the combined feed, rare, but at some crucial points.
i think some people here need to relax!
How do the hours of Noon- 7pm EST effect volume analysis?
I know that during these hours there is hardly any volume, so would VSA be more appropriate to use from 7pm- Noon EST?
Nice and neat Pete!
Thank you and all other contributors!!!
This is the REACTION to news move trade I often talk about.
At news release, price dropped fast. So I watched how the first 5min candle closed. It has a large wick on bottom.
THE INITIAL NEWS SELLOFF WAS ABSORBED BY BUYERS WHO FOUND THE LOWER PRICE ATTRACTIVE.
Then I watched the next 5min closeā¦are they still buying? YES, the close of the second candle put price back to where it was before the news came out.
Now we have a 10 min, slow and steady rise after intial drop. Since price was not exactly skyrocketing yet, I decided to wait for the 15min closeā¦PIN BAR!
That was enough for me, currently up +78 pips.
Same news reaction trade today. Banked +25ā¦letting a piece run for more, locked at break even.
Hereās what Iām seeing now on EU.
Green marked areas are big money buying last week. We have not seen them sell off yetā¦no high volume selling (red areas).
So, they are still holding longs. The only reason I see it turning down, would be to gather up more longs before another move up.
Rather than get long here, I would like to see a dipā¦or what some may call a shakeout. Basically a high volume drop that pins on the bottom.
If it just continues up, with no pullback, I would have to take a breakout trade to get in, and I hate breakouts. Technically, VSA speaking I should be long from closer to the bottom pins area, but I closed a EU long on friday.
1.3732, top blue line, is last weeks high and I dont want to buy against that eitherā¦if anything a sell of there on a retrace, if volume agrees.
