@Eddz
It might be very useful for you to google “Master the Markets” as that has some good basic information on VSA. It shows good examples of strength/weakness etc. Just ignore the hype on Tradeguider and do not think about buying that as it does not help you understand what you are doing. This thread teaches you more on understanding the reasons behind making a trade, rather than giving a signal to buy or sell.
Identify strength/weakness in the background. When there is strength, SM is accumulating long positions. They do this on down candles. This sounds back to front, but when you understand it, it will seem obvious. The down candles will have larger volumes on them showing the supply is being brought up by the SM and quite often will have a pin on the bottom - quite sizeable at times. What I ask myself on any one candle is “What happened during the candle?”. You can see the Open, the high, the low and the close. These things will tell you a story if you chunk it down to its simple parts. This is all in MTM and it is not too hard to read. They can explain it all much better than I can.
Entry trigger - You need to have some sort of reason to enter instead of just seeing strength or weakness. Someone a little while ago reckoned he could see the strength, weakness, support and resistance levels yet lost his account due to bad entries. Let’s just assume we are going for long positions. You have seen strength in the background. Volume has increased each time the candle hit a low and for some time volume slowed up at an upper level and price drifted back down. SM was accumulating their long positions. We would like to see a break through that upper resistance level. Quite often we will see a new low made on quite high volume resulting in a large pin on the down side. This was a “stop hunt” and would have taken out stop losses on people waiting just below the previous lows before they commence their mark up - don’t fall for that one. We wait until the price pushes past the upper resistance level and when it does, we wait for a “NS confirmation”. This is when the price drops, but on lower volume than the last two candles. Then, after price closes above the previous NS candle, an entry is triggered.
We now have seen strength in the background and an entry is triggered. We still need to consider Stoploss BEFORE making that entry. This will determine the amount of lots we are going to go long with and the amount of $$$ we are willing to risk.
Stoploss should be at a point where you consider the trade is no longer valid. If it is not valid, cut your loss and get out of the trade. Chasing a loss, especially after an invalid trade will kill your account.
Did the price push through a fib zone before giving the entry signal? If so, closing below that fib level would cancel the validity of the trade, so a smart place to put a stop loss would be possibly 5 pips below that fib level.
If there was no fib level and the next resistance level back was the bottom of the range, place your S/L 5 pips below the bottom of that range.
Now, what about a target??? We have gone long and completed an entry with appropriate S/L placement and position size for risk (2% on a clean setup). Where will the price possibly go to? Draw a fib from the previous high to low point and mark the area between the 50 and 61.8 fib zones. This is a big area to look out for. Also, any previous areas of pins on top of the candles and lastly, have a look at the daily pivot. Very often, you will see a confluence of multiple possibles there. This does not mean to get out at these spots. Trade management is very important now.
As you approach these possible resistance areas, you can expect higher volume occurring. If we get any high volume pins happening, this might mean supply is coming in and demand is slowing. We only want to trade when supply exhausts demand and vice versa. If you do see supply coming in, move your stop loss to Breakeven and make your trade risk free. Quite often, a person may also take off an amount of the trade to guarantee some profit, possibly take off half and leave half to see if it gets through that resistance level.
From here, discretion is the key. If you feel supply IS coming in, it is time to close the rest of your position.
This is a lot to digest, but I do believe it is accurate information for you to try to understand. Ask any questions if I have confused you any further. I am happy to help, and many others will also provide advice if they see something that is useful to add
Here are some charts to hopefully illustrate a clean entry, first seeing it on the one hour chart and then entry on the 5min through to when it should be closed out.
The above 1hr chart finished a long down trend with high volume and a long down candle. This then stayed in a range for a day until we got a high volume climactic pin as marked on the chart. I then wait for the following candle to see if the volume did stop the down move and start the up move and it did. This now makes me look at the 5min chart for a possible entry. While waiting for this, I marked up the 50-61.8 fib zone as a possible retrace point which would become a target area.
The above 5min chart certainly shows a classic climactic volume and pin rejection. Now, this chart is from back in March and I would have entered a bit later than the first spot I marked. The price bounced off that pin and created what is known as an “Automatic Rally” point. This is the high just above the huge volume down candle. An “AR” point is where the rising price first meets resistance. Draw a rectangle encompassing the pin across and that will become your push through entry if you do not receive a No Supply confirmation entry first.
You see the first entry point marked. This is quite aggressive as it has not pushed through the “AR” point, but it is valid. Ideally, I would not enter here, but would after it broke through the rectangle area at the “AR” point.
In this actual case, I was not home at the time and entered much later as shown on the chart. My stoploss was below the previous resistance line (5 pips below). I held my trade until we hit very high volume again and a large pin on top. Sigh of weakness. My decision was to get out of the trade and I was happy with that.
In this case, you can see that the price went all the way up tot he fib level I marked from the 1hr chart, which it hit twice and then fell away from it.
The trade shown here is possibly the best example of a nice clean setup that I have. The best apart from this was on January 14 this year, but I was not home for that and it would have easily been the trade of the year for me.
alright, after go through your replied for so few rounds, i got some concept about it,but still i dont understand for few parts, would you mind to do some explanations again?
the question about h1 chart:
is that a pinnochio bar with a climactic volume is some sort of “signal” in this vsa and pa strategy?
question about M5:
1.was it separate from your h1 chart? i mean the trades. it’s different pair right?
so indeed i can just directly use M5 chart to trade in instead of using H1 as a background entry?
so based on ur picture, i can make a conclusion like such way:
a pinnochio bar with climactic volume is a “hint” to do entry(either long or short)
T/P is an opposide for this right.
P/S: i know about some basics of the trendline and also P.A so i think my problems is to find out a “confirm” entry point.
sorry for troublesome,again thanks alot for the picture u provide, it really give me a clear background on this VSA strategy.
I’ll take a stab it (one of the resident experts will hopefully correct me where I am wrong):
[I]1. is that a pinnochio bar with a climactic volume is some sort of “signal” in this vsa and pa strategy?[/I]
A pin bar is a valid price action indicator but doesn’t carry any real VSA weight on its own, meaning there is no VSA pin bar “signal” per se.
[I]question about M5:
1.was it separate from your h1 chart? i mean the trades. it’s different pair right?[/I]
Should be the same pair, date and time. You look for background and a favorable set up on the 1 hour and then drill down to the 5 minute for the actual entry.
[I]so indeed i can just directly use M5 chart to trade in instead of using H1 as a background entry?[/I]
You can, but why would you want to ignore the background? It is like entering a boxing ring for a heavyweight championship bout with one hand tied behind your back.
[I]so based on ur picture, i can make a conclusion like such way:
a pinnochio bar with climactic volume is a “hint” to do entry(either long or short)[/I]
Ignore the pin bar aspect. It could be any type of bar with a relatively large spread on excessive volume (preferably larger volume than any volume recorded during the up trend since the swing low) confirmed by the following bar which fails to close higher.
John is correct. Both charts were Au charts. One is the 1hr and the other is 5min chart.
The idea of the 1hr is to see the background information. Is there strength/weakness. We want buyers overwhelming sellers or vice versa. We do not want a consensus with them. This is one thing that moves our probability greater than a 50/50 bet. Remember, we are not gambling. We are trading higher probabilities.
The pinnochio bar is useless by itself. You also need to see the reaction to it. That is where I waited in the 1hr chart to see a close above after the high volume bar before going to the 5min chart.
Using the 5min chart alone will get you more trades, but your probability of a successful trade reduces, and I only want high probability trades.
Patience in waiting for the right setup is key. Keeping a cap on an ego as well. When you have a few winners in a row, it does not mean that you “know it” and you are on an absolute winner. There are many things to learn still, and skills to hone so that you will remain a consistently profitable trader.
Just keep in mind those things I said before.
Background information is only a small part
Entry is only a small part
Setting Stoploss is only a small part
Trade management is only a small part
Exit is only a small part
Your own psychology is a bigger part
BUT, if you are able to improve consistantly with all the small parts above and the psychology, you can make it as a consistently profitable trader
yeah,i understand about the psychology part as well, people said strategy and analysis only contain 30% as a part but psychology are the bigger part.
and so would you mind tell me what trend for the current eurusd for now H1
this is a markup right? and what i need to do is wait for the mark down happen.
The simple answer is to buy pullbacks until climactic high volume is shown to stop an up move.
Right now you can see signs of that showing up on the 5 min. High volume, wide spread bars leading to a down move. It’s how smart money takes profit on longs and/or enter short. Those are early warnings the trend will change, AKA distribution into markdown. The proper safe entry has yet to setup though, the 1hr should back it up with the same weakness showing.
Yes, you can see a lot of volume and closed at the lows, so selling overwhelmed the buying. As Pete said though, do not jump early on something like this. It has been a long uptrend and will take a fair bit to reverse. Expect a sideways range for a while maybe still. Also good to keep more of an eye on the 1hr to see what it is doing. Looking at it now, you can see a definite uptrend still.
The analogy of trading with the trend holds true.
For now, wait and see what London open does, and maybe even to the crossover of London/New York for the highest volume of the day.
What is MTM. From your quote-This is all in MTM and it is not too hard to read.- And can someone tell me if my assumption on no supply and no demand is correct. From my last post. Thanks! That No supply candle and test is to see if there is supply left, mostly in markups, I think, to see if there is still supply left which would indicate a longer period of markup before distribution, and no demand, mostly in markdowns, I think, to see if there is more buying going on, which would indicate more supply still in the market. And a markdown less likely to continue or happen. Something like that!
Too early eddz,
That was higer volume to previous, but lower volume compared to same time yesterday. This is posted an hour after your question and it did move a bit lower, but it hit a support level - to the pip - and has bounced off with a large pin at the bottom with high volume. That tells me that SM are not ready to let it go down yet. They are taking out the newbies that saw a possible top and have gone short.
Have to be very careful there as you are guessing the top of a significant up move. SM will allow it to drop, let the “herd” get excited and place short positions, then push it up and take the sellers out of the market. Some point after that, after they have gorged on the remains of the short sellers, then they will swap into distribution mode, followed by a mark down.
Do not guess when that is. Allow the chart to tell you
fairly bare EU 1hr chart from just now. High volume candle with wick on the bottom - Strength.
This would not be a good time to short. The trend is still up. This is simply a retracement, but very late in the up move and I also would not really be looking at new long positions into new ground. I am not experienced enough myself for certainty there. I like to trade what I know, not what I think
I will be waiting for a significant climactic volume event, price to drop and pull back up to a No Demand confirmation, then I might be interested, but that is just me
hey tassie, would you kindly explain what moving averages youre using and how you use them? ive seen pete use similar indicators but was never really sure as to how he uses them. ive only been using the 200 sma as s/r.
