GU On A Short Trend Daily
Still sticking with the Trend
Has anyone ever used the “Better Volume” indicator and applied it to a VSA approach?
Over the years I have looked over various “Volume indicators” such as Ord Volume, better volume, etc. and always came to the same conclusion; a simple volume graph is the clearest and most logical way to go. The reason is all those “Volume indicators” are [I]derived[/I] from volume itself. In other words, it is volume rehashed. Why not look at pure volume?
Think of price indicators such as Stochastics, RSI, Williams % R, etc. They are all mathematically [I]derived[/I] from price. Using pure price action is better than using a derivation of price action.
At the end of day no matter what there are only three pure indicators: Price, Volume and Time; all others are derived from these in some way or another.
Having said that indicators can be useful in timing a trade, maybe to see what other traders are looking at or to search for divergences however all in all they are the least useful of all tools.
With Volume indicators the only ones I have found useful are those that let you make a quick comparison between current volume and previous volume at that PRICE or TIME of day - i.e. volume zones, VMA.
I hope this answer helps guide you in the right direction 
I always thought that the very purpose of tests during accumulation - is to evaluate floating supply left after Selling Climax…
so if price goes to the rejection area on low volume this time - isn’t it good sign that supply been removed and it’s time to move up ?
can you please explain me where am i wrong ?
I’m sure he picked that up from me so I’ll explain. What you are saying is technically correct as far as traditional VSA. But I’ve stared at these charts/volume bars long enough to know this… A high volume test of the climax area more often leads to another rejection. A low volume test of a climax area more often leads to a continuation through that s/r.
There is logic behind this involving “sustained” versus “temporary” activity. Maybe it’s a forex tick volume thing, but I call it like I see it.
and yes, a test after accumulation on low volume is what we are looking for to show lack of supply before going up, but the question here is where we look. I’m looking as price pulls away from the low/climactic area for that low volume test…and certainly at the Automatic Rally.
When you talk about climactic area for example in the accumulation phase do you mean the top and in a distribution phase is the bottom ?
or did i get them mixed up?
Thx
-'ve News Announcement, Bad GDP results for the UK
Last post on this. Just a follow on screen showing the continuing significance of the daily trend line providing support, even for a news event.
Thank you mmmahdi, well said I appreciate the response I completely agree with your post. My only issue is I use the FXCM TSII platform, and they have failed to provide a decent volume indicator with it. “Better Volume” is the best one I’ve found to a natural volume indicator such as you would find on MT4. I’ve voided the colors on the Better Volume, and done a bit of comparison between it and of the MT4, and found them to be consistent with each other. So for now, it’s Better Volume minus the color coded b.s that we can all agree we don’t need. I wish I cared more for the MT4 platform, but I dislike the way that it scales price. I imagine it would be in my best interest to make the permanent switch to MT4, and I’ve known this for a couple years now, but have just grown too fond of TSII.
The Better Volume feed on FXCM’s TSII still comes from the FXCM tick volume feed. The tick info shouldn’t be any different from what FXCM provides on its MT4 platform. Other than bars that are visually bit narrow (as opposed to the fat, squat looking bars on TSII) the information/volume levels should be the same. Unless I am missing something… which is an ever present possibility.
What is considered low volume or high volume test? How much volume?
Has anyone had success trading with a 1 min timeframe?
It’s relative to the recent range. Technically, volume lower than previous 2 bars qualifies.
For VSA entries? I don’t watch it anymore, and don’t know of anyone who does. If you want a close look at the action why not, but keep it in context with the higher TF.
Yes that’s what I mean, you have them reversed though. Accumulation is climactic/high off the bottom. Distribution is climactic/high off the top.
E/U 1hr chart this past week is a good example of Accumulation into markup.
Credit is due where credit is deserved; petefader is indeed the first (and only) person I know in FX trading to present this approach in regards to volume on the test.
I have far more experience in trading stocks than in FX, however the underlying supply/demand principle is still the same; the probability that the test will be successful is far greater if the volume on the test is high. I have traded stocks based on this premise (with slight differences in comparison to FX of course) and have noticed many times a low volume test fails.
Fx4mt Think of it this way; from our Volume analysis point of view, we believe the price level we are watching where climactic volume has occurred is significant because large entities (SM) have taken a position there. In the case of accumulation, you want to ensure [I]supply[/I] has been [I]removed[/I] from that price level - this would lead to price rising, where we would look for a low volume test at a higher price.
If supply is indeed removed from that price level, then logically price should not return to that area. However if price returns to the area where SM took a position, you would expect them to become involved again, leading to more buying which we would see as higher volume on our charts. This sustained buying confirms to us a large entity/entities have taken a position at that price level.
In terms of VSA we often speak of tests, low volume tests, high volume tests, etc. many times without actually thinking of why these things make sense. Don’t forget, if it does not make sense then its probably nonsense.
I think petefader did a great job explaining the background mechanics of supply/demand, liquidity pools, etc. which will really help people learning VSA understand these concepts. I think the series was called “What is really behind price movement”.
Setup currently stalking - pictures should be self explanatory 
Of course we do not get excited and just enter blindly; we wait to see the signal we want.
An update to the AU trade I took yesterday, shown in my post above:
The last profit objective I had has not been hit, but I see heavy volume coming into the market now, without further upside progress. So I took off the remaining portion I had.
Furthermore take a look at EU, possibly setting up a fake break-out:
On the 5 Min chart you can see very heavy volume yet lack of upside movement - suggesting huge amounts of funds trading hands without further upside. Keep an eye on this one for a short.
E/U gave a lovely spring pattern today during it’s markup.
Had to chime in real quick and say thanks Pete, your videos have proved very very helpful. I appreciate it!