6# Volume Spread Analysis

was first introduced by Raghee Horner in her book, “FOREX Trading for Maximum Profit,” and we like it because of its relation to important FIB levels. Volume Spread Analysis Volume Spread Analysis (VSA) is an advanced methodology in trading that has several applications.

Also a white bar may indicate a birth of a new downtrend.

The better volume indicator

Volume Spread Analysis (VSA) looks for to determine the reason for cost actions. The actual “cause” is very this is the discrepancy in between provide as well as need on the market, that is developed by the game associated with expert providers (smart money).

Each bar in the histogram is the spread, it is shown to the right in the information display white numbers. The gray diamonds above the bars indicate the neutral situation, but green and red, in contrast, show the so-called divergence:.

In addition, the VSA WSD HISTOGRAM indicator measures the length of the candle shadows; these values are represented by green and red bars on the histogram, and the information board of the expert shows only the values for the current bar in front of the wick variable. But we do not recommend to ignore such valuable information, as in many candlestick patterns the proportions between the candle body and its shadows are taken into account, and it takes much time to measure them manually.

As for the other settings, there is nothing to tell: The other parameters are used to set colors. As already mentioned, spread analysis is an important component of the method discussed today, but it loses all meaning without studying the dynamics of volume. It makes intuitive sense, because the range of the candle on the chart is visible to the naked eye, but the most valuable information about the motives of large speculators and market crowd can only be obtained from the volume.

Better Volume indicator was specifically created for this purpose, which assigned certain colors to standard Volumes bars depending on the appeared pattern. Currently, this VSA indicator works correctly in all versions of the MetaTrader terminal mq4 and mq5 versions are created , and the most recent modification is shown in the chart as follows:.

The white color is assigned to the bar when a bearish candle appears on large volumes. Such a situation can often be seen on the decline of the bearish trend, i. Also a white bar may indicate a birth of a new downtrend. The red bar in its meaning is the opposite of the previous one, as it is formed on the bullish candles with large volume. According to our observations, the listed patterns are formed on the currency pairs with the same frequency both in the beginning, and at the completion of the trend.

If the VSA indicator painted a green bar, it means that the market saw a large volume during the flat, in other words — the appropriate candle had low spread. This is one of the most complex patterns in every sense of the word, since, firstly, false signals are not uncommon on the history, and secondly, a similar phenomenon may be due not to the activities of major market operators, but due to the usual "news chaos".

Bars of yellow color are characteristic of the candles with a small volume and low spread, they usually appear during the "night flat" a period of low trading activity , but if a similar pattern emerged during the operation of the major sites, it could signal the end of the trend even the crowd lost interest in the movement. The final pattern that the VSA indicator identifies is presented as a purple bar on the volume histogram.

The author argues that this signal appears on a series of candles with a large volume, but experience has shown that this phenomenon is so rare that it can be ignored. Before writing this article, we had plans to also review a signal VSA indicator with arrows on the patterns , but in the process of testing several algorithms it became apparent that they are useless, and instead of helping the novice they would ultimately confuse.

The significance and importance of volume appears little understood by most non-professional traders. Perhaps this is because there is very little information and limited teaching available on this vital part of technical analysis. To use a chart without volume data is similar to buying an automobile without a gasoline tank.

Where volume is dealt with in other forms of technical analysis, it is often viewed in isolation, or averaged in some way across an extended timeframe. Analysing volume, or price for that matter, is something that cannot be broken down into simple mathematical formulae Volume Up bars also called Testing. Share your opinion, can help everyone to understand the forex strategy.

Vums Monday, 05 March Hi thank you for great job I really appreciate. But can you give me the download link for the VSA rectangle S and D trend indicator thosebred and green rectangles.

Tradeking Thursday, 23 April Hi all , please can anyone who has tried this system share some of its comments here. Is it profitable or not. Joy Can you please share a swing volume indicator , where we can set the reversal value say by 5, 10, 15 pips etc?.

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