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Forex trading is the best job in the world.

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Volume Spread Analysis (VSA)

This article was kindly provided by Leonardo Barata of analyticalvsa.com who is an active VSA trader. VSA is a trading method that is favored by many traders. I do not trade VSA myself but you may find it interesting. If you like this article please share it. This article is for entertainment value only, and is not a recommendation to trade VSA.

What is volume spread analysis?

Volume Spread Analysis is a methodology originated in early 1900s, by Richard D. Wyckoff (1873-1934), a successful Wall Street trader and later known as the man who made a fortune in the 1929 market crash. Other very successful traders such as Richard Ney would use this methodology as well, only under a different name. This methodology, which is also called the Wyckoff method, was put in more modern terms by Tom Williams, a former syndicate trader based in London, in the 1960s. For the deep insights on the markets that it provides, and the fact that it can be applied to virtually any liquid market, VSA made a name for itself in trading communities.

Understanding VSA.

To understand what VSA is about, we must first understand who are the people who are making money in the markets, and how are they doing it. Like in any other business, there are specialists: some traders specialize in energy futures, others may specialize in the Japanese Yen pairs, others day-trading forex or stocks, and so on. And who are them? These are institutional traders, pit traders, syndicate traders and market-makers, which make a living speculating on the markets. If only we could know what those specialists are doing, then we could trade almost anything without having to do all the fundamental analysis and without looking at all the factors that influence the prices. Well, it turns out we can, and this was exactly Wyckoff’s breakthrough!

The role of volume.

The quantity that represents the activity in the market and is widely available (though not widely used impressively) is the volume. And one thing about the traders who consistently make money in the markets over the years, is that they’ve been able to accumulate a lot of it, and will make large trades to earn a significant amount of money for them. So the volume is the starting point of our analysis, and will show if there is a significant activity (or lack of) in the market, which will be very important to determine what the professionals (smart money) are doing.

Spread’s importance.

But Volume Spread Analysis as the name implies, not only uses volume but also the spread (bar’s high – low). The bar’s spread gives clues as to what type of activity is happening: for example, a low-spread up bar with high volume, indicates there was a lot of selling by the professionals and buying by the public: they prevented the price from going upper by dumping their positions in the market, which the public was happy to absorb. Another example: if there was an widespread down bar with high volume, and the next bars are up, it means there was actually buying on that down bar. Why would the prices go up if that was true selling? The smart money uses the public euphoria to dump or to open their positions, as not to turn the prices against themselves.

Charts examples:

accumulation

The end of the 2008 stocks bear market: Right before the bear market ended, there was accumulation (professional buying) evident in Dow Jones Industrial Average and other indexes. Signals of distribution were also evident before the bear market started in 2008.

The gold top: right before the bear market in gold, and after all the buying euphoria by the public, gold finally collapsed after signs of heavy distribution.

distribution

Learn more and get VSA indicators on our volume spread analysis website.

About the author: Leonardo Barata is a forex and stocks VSA trader and developer.

Free Group Forex Training Sessions Are Now Available.

Free group Forex training.

For a number of weeks i have been offering students free group Forex training sessions as a way of further developing their understanding of the Forex business. The feedback i am getting from students is very positive, so i have decided to make the group sessions a regular addition to my education program.

free group forex trainingThe group training sessions will be every week and will be held at times that are convenient for myself and the majority of students.

They are currently free of charge for anyone that has paid for either the 20 or the 40 hour Forex training course, and is a member of the live trading room.

There is no obligation to attend the group sessions, but they are there if you feel you need the extra tuition.

As with the one to one lessons, the group sessions will be during market hours, so you will be getting the benefit of live market training.

There is no substitute for live market training.

There is no substitute for HP Sauce, and in my opinion there is no substitute for live market training, but many Forex training providers will not teach in a live market, they prefer to make training videos or DVDs to educate students.

no substitute for live market trainingIt takes market knowledge and skill to train students in a live market, you have to know what you are doing, and to be honest with you most providers don’t.

Anyone can edit a video or a DVD to make the market do what you want it to do, but you have to have a greater understanding of the market to be able to teach it live.

My lessons are a professional Forex traders insight, into the forces that drive the Forex market. I will show you how you can exploit the opportunities that exist, to make money everyday from this business.

Many providers claim to be able to do this, but why are 95% of Forex traders losing money? Because they are being educated by people that do not know how to trade in a live market.

Anyone can trade on paper, but only the 5% can do it for real.

Changes to the live trading room.

changes to the live trading roomAs well as introducing the group training sessions, i have also changed the membership of the live trading room.

Anyone that has paid for the earn while you learn option, will now get free lifetime access to the live trading room.

The £195 per month subscription option is still available for people that do not wish to join the earn while you learn program.

I have decided to make these changes to my education program because i want to show my commitment to the success of all my students, new or existing. I am not interested in taking your money and pushing you out into the shark invested waters of the Forex market, i really want to help you achieve Forex trading success.

Many of my students tell me that what i offer is worth far more that what i charge for it, but now my Forex training course is even better value than it was before. So if you want to be trained by the best, and the most committed Forex training provider in the business, then please get in touch.

Thanks for visiting my site and have a great day. 🙂

How The Scottish Referendum Will Affect The Pound.

What is the Scottish referendum, and how is it affecting the pound?

Unless you have been living on another planet for the last few weeks, you will no doubt be aware of the fact that on the 18th September the people of Scotland will vote on whether Scotland should be an independent country or not.

scottish independenceA poll released last weekend saw the majority of voters voting for independence, which caused uncertainty in the pound, and saw a huge gap on Cable at the open on Sunday night.

Cable continued to sell off on Monday, but recovered for the rest of the week as various polls saw a change in sentiment giving the no vote the lead.

Cable is very close to closing the Sunday night gap now, but with more news flow leading up to the vote, we will be in for a pretty volatile week for the pound. So keep your stops tight if you are trading cable this week, and prepare to be in for a bumpy ride.

So what does independence mean for the people of Scotland? If you have ever watched the film Braveheart with Mel Gibson (which is a really great film) you will be aware of how passionate some Scottish people are about independence, and many wars have been fought between England and Scotland over it. So its pretty ironic when so many people have fought and died, that it now comes down to a simple vote, to decide the future of bonny Scotland.

Who is the man behind the campaign?

Alex Salmond is on the verge of doing what William Wallace failed to do, and give some Scottish people what they have waited for, for over 300 years, but can the man sometimes mistaken for a fish, really pull off the biggest victory in the history of Scotland. Some say he can, i say he cant.

I personally think that when push comes to shove the vote will be no, as i believe the people of Scotland however patriotic, have too much to lose by becoming an independent country, and they know that deep down in their brave hearts.

alex salmond the man behind the fishAlex Salmond is one tough cookie, and he has battled his way over many years to get to this point, and he has to be commended for that. But the day of judgement is nigh for Alex, and his political career is on the line on Thursday in this make or break vote.

Will he get the vote he so desperately needs, or will it be another Neil Kinnock moment, when victory was snatched away from the Welshman at the final hurdle, and handed to John Major, crushing Neil Kinnock’s dreams of becoming prime minister.

I feel that Alex will suffer the same fate on Thursday, and his dreams of becoming leader of an independent Scotland, and getting is hands on our oil will be left in tatters, as the people of Scotland will vote with their heads and not their hearts, and vote no to independence, and Scotland will stay a part of Great Britain, even if it is not so great anymore.

But staying part of Britain will surely be a better option than risking financial ruin, as British businesses have vowed take all their money and jobs out of Scotland, which will leave Scotland as the poor man of Europe. So a no vote has to be the only option in my opinion.

We can expect more volatility on the pound this week leading up to vote. A yes vote would see a huge sell off in Cable because of the uncertainty, and a no vote would see a large move up. I personally will be looking to add long positions on any major weakness in the pound, as i believe the vote will be no, and a stronger pound will be the result of that vote.

I would like to wish Alex and the people of Scotland good luck on Thursday, and i hope that whatever the outcome of the vote, it will be the right decision for the future of Scotland.

How Do You Assemble Flat Pack Furniture?

What has flat pack furniture got to do with Forex trading?

man with flatpackForex trading is a big mystery to many people.

Traders search high and low to uncover the mystery of trading, but the truth is, trading is not as hard as it looks, if you know what you are doing.

Every job requires you to have certain skills to be successful, Forex trading is no different.

If you can learn to assemble flat pack furniture, then you can learn to be a great Forex trader.

The rules of the market.

To be successful a successful trader, you have to understand and follow the rules of the market. How many times have you opened a box of flat pack furniture and proceeded to put it together without reading the instructions first? How far do you get before you mess something up and have to go back and read the instructions?

Trading is the same, you can jump in at the deep end thinking “i know how to do this”, and then you quickly find out that you don’t, so you have to go back and read the instructions.

Getting the correct instructions.

instruction manualOk, so this time you are going to do it right. You open your new wardrobe and start to read the instructions. But whats this, the instructions you have in front of you, are how to put together a chest of draws, not a wardrobe. So what do you do?

Well some of the instructions can be applied to both the wardrobe, and the chest of draws. So you muddle through as best as you can, and cobble together the wardrobe by using the instructions for the chest of draws. You have a few bits left over but it looks ok. Lets hope it lasts longer than the other one did.

The hidden message.

If you did not see the hidden message in the last couple of paragraphs i will explain it. Whether you are assembling a wardrobe, a chest of draws, or trading Forex, you need the correct education to be successful. Whether you are aware of it or not, 95% of the Forex trading education you receive, either free or paid is wrong, and trading based on that education, will just leave you frustrated, out of pocket, and with a half finished wardrobe.

If you want to trade like a professional trader, you have to be educated by a professional trader.

For more information on my Forex training course click here.

Unfortunately, i will not be able to teach you how to put together flat pack furniture, but i will be able to teach you how to trade Forex. So you can then pay someone else to assemble your flat pack. Or do what i did, dump the flat pack and buy a nice bit of oak. Lovely. 🙂