Vsa Volume Spread

Vsa Volume Spread
1 thought on “VSA Trading Strategy”
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In this article, I am going to discuss VSA (Volume Spread Analysis) Trading Strategy in detail. Please read our previous article, where we discussed Spring and Upthrust Trading Strategy . At the end of this article, you will understand the following three VSA Trading strategies.
Today we will discuss volume spread analysis intraday trading strategy. Basically, the volume spread analysis entry strategy is based on reversal trading. That means finding a turning point in a trend either
Today will discuss pullback reversal. I mean how to make a trade based on volume spread analysis in an existing trend
Note: – today we will discuss only finding an entry in an uptrend. Exact opposite of downtrend
Volume spread analysis that suggests a sign of the end of downtrend or end of the pullback in an exiting uptrend are
The above points are discussed in this article Volume Spread Analysis
In our Previous article, we have discussed
We have discussed this article here .so please go through this article for more information
The background is extremely important. You should see strength in the background. You should see strength in the background with stopping volume or a selling climax OR an end of a falling market
Also called pin bar or spring or upthrust
Go through the below article for more information
Smart money placed limit sell order above resistance and limit buy order below support to absorb panic buying or selling by retailers for breakout trading entry by placing stop loss buy order above resistance or stop loss sell order below support
Spring is an example of a “bear trap”. WHY? Because price drop below support appears to signal resumption of the downtrend. But In reality, the drop marks the end of the downtrend, thus “trapping” the late sellers or bears.
The strength of the sellers can be judged by the depth of the price drive to new lows below the support and the relative level of volume on that penetration.
A spring involves the penetration of a well-defined support level on low or moderate volume .think if a stock going to break the support, it must break with high volume. The spring action shows that the stock trying to break down and failed. It is an important sign of strength
The background is extremely important. You should see strength in the background. You should see strength in the background with stopping volume or a selling climax OR an end of a falling market
As the name suggests shaking out weak holders in an existing uptrend shaking out weak buyers
The background is extremely important. You should see strength in the background. You should see strength in the background with stopping volume or a selling climax OR an end of a falling market
A ‘Shakeout’ on low volume is really a violent test and has the same effect. It shows supply has disappeared and you would expect higher prices.
A ‘Shakeout’ on high volume shows demand was prepared to absorb the supply on that bar but they would likely want to test that supply in the future. Any low-volume testing back into the area of the Shakeout would be a strong SOS.
Please watch the following video if you want to learn and understand the VSA Trading Strategy concept in a better way.
In the next article, I am going to discuss the Option Chain Analysis in Trading. Here, in this article, I try to explain VSA ( Volume Spread Analysis ) Trading Strategy . I hope you enjoy this VSA ( Volume Spread Analysis ) Trading Strategies article. Please join my Telegram Channel and YouTube Channel as well as my Facebook Group to learn more and clear your doubts.
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Home Learn Price Action What is Volume Spread Analysis?

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Volume spread analysis or VSA trading is a technical analysis method that is used to forecast price by using volume in forex or stocks trading.
The importance of the VSA method is that every single candlestick is analyzed on the basis of volume. That’s why volume spread analysis reveals a lot of information regarding smart money.
There are three key factors in volume spread analysis
In Volume Spread Analysis, the price goes through four phases. Simply means a trend reversal in price occurs through four phases .
Reading logically is the most important step in technical analysis instead of trading blindly using indicators .
Let’s talk about the four phases of a bullish trend reversal.
The first step of VSA is to read the volume bar formed corresponding to the candlestick. Volume bars are categorized into four types in this technical analysis
The reference point is the average volume bar. To identify average volume, add a 21-period moving average indicator. If the volume bar is close to the moving average line, then it will be considered as an average volume bar. A volume bar below the moving average line is a low volume bar and above the MA line is a high volume bar.
If the volume is unexpectedly higher than all the other volume bars (at least the last 61 bars) then it will be considered as a very High Volume bar. It reveals a lot of information regarding the activity of professional traders.
The volume bar corresponding to bullish candlestick is called bullish Volume. In the bullish trend, bullish Volume bars are greater than bearish volume bars.
The volume bar corresponding to bearish candlestick is called bearish volume. In the bearish trend , bearish volume bars are greater than bullish Volume bars.
Chart reading using VSA is the most important topic. According to the VSA method, if spread size is average and the size of the volume bar is greater or lesser than average, then there is smart money in simple words. A low volume indicates that smart money is not interested in buying anymore. High Volume means big traders are selling to retail traders by buying.
Ultra-high volume represents a trick played by big traders.
The market moves in the form of repetitive cycles. After one cycle completes, then the next will start. You can also name it market swings. In the same way, volume bars progress in the form of cycles. One market cycle represents one volume climax. This is helpful in identifying market cycles.
Volume spread analysis working is on the basis of four market phases. According to VSA, a bearish candlestick represents the strength of the market, while a bullish candlestick shows weakness. This is opposite to what retail traders think (bullish candlestick shows strength and bearish candlestick shows weakness).
Only big players can move/reverse the market . If the price is in a bearish trend then big players have already sold from higher price, and it will continue until markdown phase completion. After the markdown phase, the accumulation phase starts, now big players are buying at wholesale rate. Then mark-up phase will be complete. In the distribution phase, big players will sell at higher retail prices.
This is a simple cycle, and it continues on all timeframes . Now I will explain to use volume and Spread to identify accumulation and distribution in the market to capture the mark-up or markdown phase.
There are two ways to use the volume spread analysis method. The first is to use the VSA method alone and the second method is to use price action with VSA. I will go with the second method which I will recommend to you.
Follow the following steps below to trade using VSA (volume spread analysis) and PA (price action) .
I have used a volume spread analysis indicator from tradingview that is showing different colors according to high, low, average, and ultra-high volume. You can also use that VSA indicator for free.
The best method in technical analysis is chart reading. Without proper logic, you will not be able to forecast properly and can win a few trades, but you will fail in the long run. So always trade with logic. The volume spread analysis method gives us the way to read the method of market makers.
Yes, it works in forex. But in forex, volume is generated using ticks. It is not the original volume like in stocks because of a decentralized system.
In forex trading, Volume is calculated by using the frequency of ticks and size of that ticks in a specific timeframe. A tick is the smallest possible movement in the market.
Tradingview is best for VSA trading. Because in tradingview, you can access a lot of free VSA indicators with a lot of customizations and alert features.
Discover Hidden Opportunities with Supply & Demand indicator
It will draw real-time zones that show you where the price is likely to test in the future.
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Volume Spread Analysis – VSA Futures Trading Strategy by Max Brinn

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I wrote this article more for trained traders. If you are a beginner, start with simple VSA books or skip straight to the examples section.
The microstructure of the Futures of FOREX market is a layer of scientific financial literature devoted to the foreign exchange market at the micro level – at the level of order execution, exchange rules for processing orders, and the price impact of transactions on the order book.
The difference between the microstructure and macroeconomic models is that it does not take into account fundamental indicators, macroeconomic indicators, news, and so on. The microstructure studies the mechanical impact of orders on quotes, studies the principles of the spread of returns, the laws and reasons why the distribution of the returns of the foreign exchange market differs from the Gaussian normal distribution model.
In simple terms, microstructure allows you to understand why markets spend more time in flats than standard patterns expect, and what causes strong price moves and crashes.
There are a great many topics, and work on them has become possible due to the fact that exchanges store more and more information about trading. Such information becomes available to researchers who build price movement models based on it, as well as models of efficient order execution – both for institutional traders and regulators.
The first thing the microstructure gives a trader is an understanding of how to start building technical systems.
Technical trading is represented by different styles. These are trend-following systems, counter-trend systems, scalping, swing trading, breakout systems. Their disadvantage is that they take the price as a starting point, as the first and main resource. But they do not take into account the principles by which the price moves.
The depth of understanding the market, the basics of pricing, understanding the behavior of large participants is the field of microstructure. It allows you to start building technical trading systems on principles deeper than price.
Initially, the appearance of this layer of information was motivated by the desire of the researchers themselves to be useful for institutional traders. As a result, many scientists who study the microstructure of the market become staff or advisors in hedge funds or work in structures that regulate the markets. Great motivation to follow their work.
We applied the layer of knowledge from the microstructure to the Volume Spread Analysis (VSA) method and as a result we got VSA 2.0.
To understand this method, I recommend reading books on VSA. it contains at least many different patterns that you need to learn everything in order to understand what is happening in the market at one time or another. For example, there is such a formation 1-2-3.
Here is an example. I must say right away that I’m sorry for the poor quality of some of the photos, I took them a long time ago, when I was still learning to trade using the VSA method.
If the second shoulder is lower than the first and the volumes are lower, then you can sell at point three.
Here is a beautiful example when selling volumes appear on the border of a broken sales range – you can add sell:
Now look at this picture from 10.25.2014:
An example of a long-term analysis with GBPUSD is generally simple here, the demand is zero, the sale is complete:
One-two volumes
Volatility!!!
Volume low
Range low
It’s on a downtrend
The trend is clearly down.
I also want to attach a picture of the volumes of dealers and ordinary mortals – below is a picture of the volumes of dealers:
As you can see, sales are only increasing, so the current prices are only the beginning of the next fall, and not a trade up!
Look at the statistics: UK economic growth data for the third quarter was in line with market forecasts, but due to the Ebola virus and the threat of its consequences, pressure on the pair will be strong.
See also how strong the dollar index is growing.
Point 3 – the volume of the fall on an unrealistically huge volatility + volume, where they passed and fixed under the price of 130,000 (critical level).
Point 4 – upthrust, buyers bar on strong will and mega volume. Those. buyers pushed, gave birth, And but failed to give birth. So we go to hell.
Conclusion: We are falling down and we will fall for a long time!
As we can see from the picture, we have no demand for the euro in general. From 11 of July 2015.
Bullish pin (bullish negation) on volume, strictly at 1.1000 (indicated by triangle number 1). The shadow of the bar is exactly on the border with the level.
Applying the effort-result principle, it can be seen that the July 7 bulls failed to take the price far from the 1.1000 level and the market falls not on the volume of sellers, but rather on the lack of demand from buyers. The only buyer (strong) that exists is sitting and defending the 1.100 level, but at the same time, his strength is limited, as the chart shows.
In the medium and long term, the trend turns out to be decreasing, although small upward corrections are possible, in view of some buyer.
Other Live Examples of How to Analyze the Market Using the VSA Method
And also download a pdf book about the basics of VSA analysis.
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With the VSA Indicator for MetaTrader, trading becomes flexible and profitable!
The guide to installation of VSA indicator and template
The Terminal InstaTrader/MT4/MT5 with installed VSA indicator
By holding the mouse pointer over a VSA histogram bar, you can see the VSAnalysis comment for current Market quotes. VSA histogram bar shall mean the element of the VSA indicator which shows Volume Spread and color that explains the particular market situation.
Moving Average MA(100) (100, by default) All of the VSA histogram bars which are over the MA(100) that is the signal to active trading.
The color of VSA histogram bar is White. Volume Climax Up: High volume, high range, up bars. That is the signal to BUY!
The color of VSA histogram bar is Black. Volume Climax Down: High volume, high range, down bars. That is the signal to SELL!
The color of VSA histogram bar is Blue. Neutral Volume: When there are no volumes. That is the signal to Wait!
The color of VSA histogram bar is Green. High Volume Churn: High volume, low range bars. That is the signal to Close your trades!
The color of VSA histogram bar is Magenta. Both the above conditions (High Volume Churn and Volume Climax Up or Down or Volume Climax Down). That is the signal to Wait!
The color of VSA histogram bar is Yellow. Low Volume: Low volume bars. That is the signal to Wait!
Volume Spread Analysis Indicator analyzes the market situation and gives a forecast for the current moment, but your trading will be much more profitable if you have the ability to volumetric analysis and strategy analysis in the broad sense of the word. This means that you need to connect the VSA indicator data with other indices, which include the analysis of macroeconomic, political, currency, stock and commodity trends, as well as correctly assess seasonal fluctuations in various sectors of industrial production, real estate, services, unemployment level, interest rates of Central Banks and much more.
Our experience in creating indicators for market analysis shows that it is necessary to regularly develop your ability to volume analysis. No indicator can replace this ability. VSA indicator is your assistant, but the final decision: to buy, sell or stay out of the market is only your decision.
We offer you this test that can be an excellent simulator for developing your skills for volume analysis.
We recommend starting with the Entry-level test, and only then proceed to the Mid-level test and High-level test!
1. Download and Extract all VSA files from the VSA-indicator-en.zip (In English)
2. Start the trading terminal MetaTrader МТ4/МТ5;
3. If you started the MetaTrader, select [File] [Open Data Folder];
4. Copy two folders from the VSA-indicator-en.zip to [MQL4] and [templates];
6. Select the template [VSA-indicator-en] from the MetaTrader templates list;
7. [VSA-indicator-en] template is pre-installed template for any MetaTrader chart wish VSA indicator using particular VSA color scheme, like at following figure.

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Vsa Volume Spread

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