Quote from mitsubishi:
No! sorry i am not being rude but i'm no expert but would suggest googling VSA (volume spread analysis) The only thing i would reiterate is that vol alone i find useless and lots of people say that and i believe the reason is that vol alone simply tells you the amount of trade done.Big vol is a clue that sm is in the market but the key thing is what is the result of big vol as to the bar? and where is that bar in relation to the current pa?
I would add this. Imagine you are the smart money.Which is the best way for to 1) operate 2) disguise your intentions. (i'm no guru this is simply food for thought) I am trading in very large quantity such that if i attempt to put my full position on in one go i will adversely move the market,so if i am buying the price will go up and i will be continually paying higher price when i am trying to profit. Makes sense to me to buy when price is falling and put on my position at increasingly cheaper price No? Of course i would prefer to do this when others are selling in numbers panic would suit my purpose even better as the job will be done quicker but certainley lots of sellers,as i said, i have large positions to fill. Once i got my position filled price bottoms out - i have removed the supply or most of it (support- to me support means someone is supporting the price literally if after all if everyone is selling why is the price not falling further?)
This is where i think a lot of people go wrong.Price is falling on big volume= sell .I am looking for the complete opposite IF the bar confirms the smart money is buying,by closing near the top of bar on big volume in a down trend.
Once supply is removed a breakout of this support area which was 'accumulation' occurs trapping the shorts who must cover at higher price- 'capitulation' meanwhile those on the sidelines jump in adding to the momentum,and at this point anyone attempting to average their short position gets wiped out.
Volume at this point is IRRELEVENT the sm is holding letting others make them money by jumping on the breakout.Big bars ending near the top confirms the 'markup' The only time i want to look at vol again is when we hit a key resistance level (not a floor pivot or some small fib or your own personal trend line you become fond of )
Just reverse this whole process when they are ready to unload .Remember, i need to unload my position at increasingly higher price (because of my size) rather than when price is falling hence resistance/ sideways distribution BUT that is only confirmed by big volume at a resistance level with the bar closing near the bottom. That tells you that when most people were buying somebody sold large size there.
Its not that they are out to get you it's that they are forced to trade this way because of their size though of course they need you to be going the opposite way.
Now, to me everything inbetween key s/r is 'noise' and part of a buying/selling campaign by the sm. If you are unaware of the basic intention at any given time you are.. lets put it this way, at a disadvantage
