Hi Anna, I found your site because I was googling on Market Makers. Your articles on the topic was very helpful. It isn’t a topic that’s talked about much but it really deserves more attention. After all, any of us private traders are essentially battling against the MM. You’ve touched on a few examples and explain them from an MM’s perspective. I’ve not really thought about it in those terms even tho I’ve simply remembered the axioms like “higher prices on declining volume is bearish.” Do you have more examples covering volume and price synchronous interpretations? Is there a book perhaps you’ve come across that summarizes this topic? I look forward to learning more on this topic. Many thanks! Xin
Hi Xin,
Many thanks for your question and also your kind comments. The subject you are interested in is generally referred to as Volume Spread Analysis, and is the study of charts and the relationship between volume, and the resulting price spread ( or price action) seen in the associated candle. Volume spread analysis has many facets, and can be interpreted in many different ways, but in my view it starts with the fundamental principle that the markets are manipulated by the market makers, every second of every day. By manipulation we mean that any event, no matter how large or small, is used by them as insiders to move prices accordingly. As a trader you will see this every day in the charts. If you have ever watched prices in the first few minutes of trading, then you will see huge price moves, with no associated volume – this is an anomoly, and in VSA we are looking for these to help us in making our trading decisions. As you say, falling volume and rising prices is bearish, as a move upwards requires effort which is volume – similarly falling prices with falling volume is also a signal, since this implies that there is little effort or volume in the move and is therefore a trap set by the market makers to frighten you into selling. They themselves are not participating in the move, as shown by the lack of volume. Whilst they can hide many of their tricks, volume is the one activity that they cannot hide and is therefore visible to us as traders. So all volume is viewed with the associated price action. A small up candle with large volume is odd – the price spread should have been wide, not narrow – so what can we deduce? We must assume that the market makers are selling hard, but that the market is not buying, as indicated by the narrow price spread. In other words the market makers are having a tough job dumping stock on the market, and as soon as they have sold out, then prices will start to fall fast.
Volume spread analysis is a huge subject and I am currently writing a book which I hope to release in the next 3 months or so, and I will be publishing details in due course. If you google VSA or volume spread analysis you should find plenty of comment ( both good and bad ) on the subject. As I’m sure you can appreciate it is more of an art than a science, but with practice it becomes almost second nature. In essence what we are doing in trading using VSA, is to use our knowledge of how the markets work(and are manipulated ) to follow the market makers and their trading – after all they are on the inside and see both sides of the market. One of the other tricks they use is a test on low volume – drop the price to see if there is any selling coming onto the market, if not, then they can safely move prices up knowing that they can sell higher and higher, until they reach the point at which everyone is buying, then when they are ready, move prices down again fast!
Hope the above helps and once again many thanks and good luck with your trading – Anna.
hi anna
could you tell me where to get your book.
thank you
Hi Michael
Many thanks for your interest – I’m afraid the book is still in draft format and has not yet been completed due to work pressures. As soon as it is ready I will let you know, and it will probably be published as an ebook rather than in hard copy which I hope is OK. Once again many thanks and good luck with your trading – anna
Hi Anna,
I would also be interested in your ebook on VSA when published. What about putting a section where we can ‘opt in’ for details about when it is ready ?
Thanks
Willowgal
Hi
An excellent idea and one am I working on now – I will add your name to the list and as soon as the book is finished I will advise you by email which I hope is OK – all best wishes Anna and many thanks for the suggestion
Hi Anna…I wouldbe interested in your book as well
Thanks
Terry
Hi Anna
new on your sight and love it, love to purchase your book
Question
I noticed on 7/30/2009 there was allot of stocks, vz, v,T and others that on a daily chart the candle was in a upthust and opened higher than the day before, Smart money was pushing the price up and I think selling their shares. Most candles had a long wick for that day and large volume. Because I observed them in multiple stocks and similar candles, is the smart money driving the market for the day to drive the price up and get out of their positions? And if this is so how are they all (smart money) coordinating all this (together)?
thankyou
Hi Ann
Please i want to beging byu saying thank for all the free educational mateials concerning vsa.
I am a regular visitor to your site and i would like to know when is this ebook going to be ready and please do add me to the list of members interested in your book.
Thank you
christian
hi anna,
your site is excellent – i wish i had found you sooner!! thank you for sharing such valuable
information – it really is priceless, well written and comprehensive – i too am interested in your
book. ann
Dear Ann
Thank you for your kind words – you will be added to our ever growing list for THE BOOK!
Good luck & good trading.
Hi Anna, I am interested in your ebook on VSA,please advise once ready.Thx.
Great work
Hello Anna
I am enjoying your many websites and wish that I had found you a long time ago. I appreciate your writing style and content. Please include me on the list for your book. How often do you publish your newsletter?
Best wishes
James
Hi Ana,
I was doing a reserch on VSA and came across your website. I would like to read your book on VSA. I use Hawkeye VSA indicators (outstanding) and hopefully your book help me to go one more step in my trading career. Thanks and look forwarding to hear from you.
Regards
Bill
Hi Anna,
Many thanks to you for the free information available on line. You have opened my eye into new perpestives in trading especially on the subject of choosing a boker- (select an ECN broker instead of a market maker), the strategy of VSA (how the proffessional manipulated the price).
To participate in VSA strategy, I have a question that you may help me out;
1) How do you find out the particular stock out of so many stocks, that give the VSA signal i.e. high volume with up/ down thrust.
Do you select the stock by viewing its chart one by one or through stock screener? etc.
Awaiting for your reply.
Thank you.
Anna,
I see that there at least three different trading methods that are similar and I was wondering how you would rate them. They are: Wyckoff’s Trading Method, Tom William’s “Volume Spread Analysis” and Todd Krueger’s Wyckoff “Candle Volume Analysis”. They all seem like successful trading methods, but I can’t find a comparison of their pros and cons. I know that Todd Krueger used to be the CEO of TradeGuider, but now he has a different method. Also Wyckoff used Point & Figure charting, but most trading platforms don’t have that. What are your thoughts about these methods?
Regards,
StockJock
Hi Anna,
Have you heard of the MACD ? It’s a momentum Indicator & works better then volume. You buy when 2 lines converge. The problem I have with volume is that it that it seems pretty silly. I mean why do I need volume or want to know how many trades ? I have been doing this for awhile with 100% gains & no losses. I don’t use volume much. If you ask me it has nothing to do with trading & just some pretty bars to look at. Personally I think all you need on a chart is candles. What do you think ?
Universe
Hi – Many thanks and yes I have come across the MACD indicator, and you are correct – it is a momentum indicator but not one that I use myself I’m afraid. There are so many and all these indicators have one thing in common – they are all lagging – so in my view not a great deal of use. Personally I use a combination of technical, fundamental and relational analysis to forecast future price movement, but of course everyone has their own opinions and ideas about which are the best. For me I use one guiding principle – KISS – Keep It Simple and Successful !! – hope this helps and many thanks for getting in touch – regards Anna
Hi Anna,I like to buy your book.Please tell me how to get it?
Also would like to registered for your Live Trading Room.
Thanks