Quote from Tom Williams who's an ex-syndicate trader talking about trading professionals..... "It’s important to realise at this stage, that when we refer to the definition of a professional, we are not talking about the ‘professionals’ who run your investment fund or pension. At the time of writing this section (June 2003), the vast majority of investment funds have been making huge losses for the last 4 years! Furthermore, some of these investment fund companies (including insurance firms) have even closed down, owing to their inability to invest wisely in the markets. People nearing retirement are extremely worried, as the value of their pension plummets further into the doldrums – some pension companies have even been reported to be teetering on the brink of financial crisis. In the UK, the vast majority (if not all) of the endowment funds are in trouble, even failing to make meagre returns of 6%, which means that most homeowners are now at serious risk of not being able to raise funds to pay for their homes. The ‘professionals’ in the previous examples do not live by their trading talents, instead they receive a salary from the respective investment or pension fund company – which is just as well, since these people would otherwise be homeless! I make no apology for these scathing comments, since millions of people have been adversely affected on a global scale, and billions of dollars have been lost to the witless idiots who have been given the responsibility of investing your hard-earned money. The truth of the matter is that most fund managers find it difficult to make profits unless there is a raging bull market. So what do I mean by a professional trader? Well, one example is the private syndicate traders that work in co-ordinated groups to accumulate (buy), or distribute (sell), huge blocks of stock to make similarly huge profits. You can be absolutely certain that these traders have made more money from distributing stock in the last four years, than they did during the bull market in the 1980s. Why? Because we have just witnessed one of the best moneymaking periods in your lifetime – the largest fall in stock prices for decades…"
I've enjoyed Tom William's perspective. As well as received valuable nsights as you describe. Back then the idea of order flow, what is a VSA trader looking at on the DOM and T&S's? How does one distinguish an order resulting from a stop being taken out vs a market order from a new participant entering?
%% True; most of the time, right. One exception.... comes to mind. HI volume on NasdaQQQ open can mean PANIC SELLING OR PANIC BUYS/retail panic[.LOL] High vol can start a good trend or stop it, eventually,every bull elephant, or polar bear know that. Not a prediction. And its like IBD founder noted, ''when an elephant gets a bathtub '' , you may see that also
His book master the markets is a great read and brilliant for getting into price and volume, the only one you need imo, here is the free link for anyone interested http://tradeguider.com/mtm_251058.pdf I've moved on from VSA now basically adding insights onto that base and the software they're selling is a crock but the underlying idea of VSA is correct . VSA traders are using the shares traded volume histogram indicator available from most data providers.
Well you need to know first where the participants are likely to enter on a chart (market structure) and *what it's going to take to get a participant to open a trade* Have a serious think about this * statement and get back to me . For example weak hand traders tend to buy breakouts and are active around swing high-low (res-supp)areas. So having an idea where weak hand traders have entered you will know where the stops are placed , often just above the high of the swing high for example, weak hands are often stopped out with failed breakouts and fake outs after they have just entered and this why they find trading so hard.It's not easy I agree and requires thinking and concentration but once you start looking for what I'm describing through historical charts then onto live it will become easier. Can you see what I'm getting at? Like I say this is a lot to take in and just this short paragraph and it will take you months to process properly and the reason so many traders fail - lack of willingness to put the required time in , i'm not kidding but do take the time to try and understand it. ( I may continue this method in a private ET thread for anyone more seriously interested I've already given away too much info as it is )
The vocabulary and concepts of weak and strong hands, as well as the interpretation of various zones is clear. From what you've described, I hear that VSA has bar to bar interpretations of Price Action through a Volume lens. What is unclear to me, is whether or not VSA looks at any other tools (DOM, T&S and OTC) to influence it's determination. Also I wonder if whether the concept of Dry Up is addressed at all in the method. I've not studied VSA with as much intensity as other methods, hence my questions.
I don't think VSA looks at any other vol tools I may be wrong. Fair enough not sure if VSA looks at dry up not sure of your definition, it probably does with the no demand (small up bar low vol) bars.
Thank you. Yes, no demand = dry up. How does it address rising Volume bars but with alternating direction of price action? Also, in your study what did you notice as it's strength and also it's weakness?