Often people learning VSA or using our own Volume Spread Analysis Software SMART ask questions about trades that didn’t work out and why.  Obviously not everything is 100% but understanding an often overlooked and simple concept (Dead Zones) can have a dramatic effect on your Volume Spread Analysis and nine times out of ten is why a pattern (even very strong ones) fail. 

Take a look at the following chart (used earlier as well to identify hidden selling and hidden buying) for some quick examples.  (If you use SMART simply scroll back through your charts and looks for these dead zones and how the smart signal behave in those areas)

 

 

Text from screenshot:

 

VSA Dead Zones And How To Interpret Signals Ouside and Within These Areas:

 

A Dead Zone is any area on your chart where volume is significantly below normal or below average.

 

Volume Spread Analysis and SMART VSA patterns should be used with caution within these areas.

 

0. Various VSA Signals Both Inside and Outside of Dead Zones

 

1. SMART Blue Bar (Reverse Upthrust – Strength) The signals happens within a dead zone and you can see price meanders for quite a while (H1 Chart)  It does generally go in the direct you would expect but it takes a while for any significant movement.

 

2. SMART Orange Bar (Supply Coming In – Weakness) Here the signal happens outside of the dead zone area and you can see the expected movement as a result is much quicker.

 

3. This is the same signal as #1 (Strength) but happens during healthy volume.  You can clearly see the difference.

 

4. Advanced Spinning Rowboat as well as a standard Upthrust (Weakness) during a Healthy Volume Area.

 

You can see from the examples Volume Spread Analysis is a very powerful trading method but you must be aware of, and use caution trading in low volume (dead zone areas) if you want to trade VSA successfully.

 

A Dead Zone Module for SMART is planned for a future update as is our SMART Volume Module.

 

Please keep in mind SMART Trader itself is painting these bars which makes these patterns and setups much easier to spot and act on.

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Many people in the live chat and pm’s ask how to correctly identify hidden selling and hidden buying and how to distinguish these patterns from similar patterns such as market top (which looks like hidden selling if not using SMART).  The following screenshot is from the H1 Globex GBP and is illustrated in Real Time perfectly using SMART.

Text from screenshot:

Identifying Hidden Selling/Buying Using Volume Spread Analysis with SMART VSA

1. Valid Reverse Upthrust or Blue SMART Bar (strength)
2. Valid Upthrust or SMART VSA Spinning Rowboat SMART Firebrick Bar (Weakness)
3. Hidden Buying*
4. Looks like hidden buying but is actually a Market Top Indication or SMART Crimson Bar. (easy to see the differences using SMART just roll over it with your mouse)
5. Hidden Selling (Weakness)*
6. Hidden Buying (Strength)*
7. Hidden Selling (Weakness)*

Hidden Selling or Buying is seen as a Pseudo Upthrust after a widespread Downbar bar (Strength) or a Pseudo Reverse Upthrust following a widespread UP bar.

For the purposes of this example only the modules needed to illustrate hidden selling and hidden buying and the difference between those signals and other similar looking signals are shown.

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I haven’t posted in a bit as we have been busy planning out some updates.  A person in the live VSA chat asked that I post up a quick AUD CAD.  Analysis is during what I call a dead zone (SMART Module coming soon) but I figured I would post it up here as well for those not in the chat. .

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Hi all I am still on vacation (Back on Sunday or Monday) but have been trading very casually this week.  Here is the requested chart on AUDJPY based on some private messages.  Even though I was trading casually I was still able to pull in a very nice amount of pips on AJ alone using SMART VSA (Volume Spread Analysis) and Standard VSA.  I am on my mini so annotation is light and the background and color guide areas are a bit jumbled… but take a look at the following chart.  This chart is the Hourly AUDJPY

 

1. Weakness and Supply Indication on our SMART Advanced Stength or Weakness Module. Extreme Weakness

2. SMART Green Bar (Standard Effort To Rise on high but not excessive volume) Also The Strength Indication (Blue Square) on our SMART Advanced Stength or Weakness Module. Strength

3. We have a standard Volume Spread Analysis Signal (Upthrust) SMART Red Bar (Very Weak. Normally this is a weak signal but because it is following a Climatic Effort To Rise or if you are using SMART the Green SMART Bar, it is stronger weak signal)

4. Strength and Demand Indication (Blue and Green Square) on our SMART Advanced Stength or Weakness Module. Extreme Strength.

5. Candle didn’t close when I started writing this but we do see a Supply Indication which is a sign of weakness.  Caution but I am done for the day likely as we are heading into the friday DZ

 

Please keep in mind SMART Trader itself is painting these bars which makes these patterns and setups much easier to spot and act on.

 

These patterns repeat themselves day in and day out and using SMART you can clearly see not only standard VSA signals but our advanced multibar SMART VSA patterns as well.

 

Trade setups are verified using our proprietary background scanners (included with the system).

 

For more information or if you have any questions about SMART Trader Volume Spread Analysis (VSA) Software please visit

SMART Trader at pipbuilders.com or visit our Live and Free VSA (Volume Spread Analysis) Chat and Trading Room at http://vsa.pipbuilders.com

 

When I am back to my main machine (curses Mini) I will be back to trading baskets as well for those that miss those charts.

 

Good luck trading and see you in the chat

 

PS The copy of SMART on my mini is not the most recent version so certain advanced signals are not appearing for those of you confused by the lack of advanced indications.

 

 

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As many of you know from the live chat I have been away for a few weeks on vacation (hence the lack of updates).  I will be back on Sunday evening and ready to roll.  If you have any questions or need anything in the meantime just let me know via our ticket system or in the VSA chat.

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As many of you know from the live chat I have been away for a few weeks on vacation (hence the lack of updates).  I will be back on Sunday evening and ready to roll.  If you have any questions or need anything in the meantime just let me know via our ticket system or in the VSA chat.

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