Saturday, February 16, 2013

Trading Plan: VSA volume spread analysis

The VSA (black volume bars) indicator helps me to identify 3 min bars that will cause a strong move, so I usually place a buy or sell stop order above/below the bar. In a trade I try to use the ATR trailing stop to not exit too early but if 500 tick chart and 3 min chart give me an exit signal I might also exit earlier:







A higher cyan bar or a lower red bar are also good entry and exit signals but real fundamental moves always require a VSA bar as volume plays an important rule:

its better to short a market with fewer support levels:


but with all this clues whats really important is that there is a real trend change:
rally then 50% pullback, or double bottom or trendline breaks, so the VSA entry is mostly a good trend continuation signal:




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