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Hi Roster It’s nice to see someone taking an interest in the VSA...

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    Hi Roster
    It’s nice to see someone taking an interest in the VSA indicators.  Back in 2011 I became interested in VSA and purchased the Tradeguider desktop software and access to their “Chart Reading Masterclass” course.  I spent a lot of time going through the Chart Reading Masterclass videos numerous times so as to try and discover and document all the rules associated with the fundamental VSA indicators.  I wanted to do this so I could implement them in Metastock and hence incorporate them in my searches and backtests.  My challenge now is to transfer these indicators over to Amibroker.  I was very enthusiastic at first but after some further investigation I found that Tradeguuider (Gavin Holmes, Phillip Friston etc) did in fact have hundreds of the indicators in different versions etc.  Then at times Phillip Friston would do a review and update the indicators removing some and adding others.  I can remember watching the Phillip Friston webinars where he explained all the different types of Tests.  It seemed to make sense to me but I really couldn’t understand why they would have so many different indicators that basically inferred the same thing, but didn’t in themselves provide compelling trade signals.  It all seemed a bit fuzzy to me.  So I decided to go back to basics and focus on what I learnt from the Chart Reading course.  So I do have my descriptions and my code for “No Supply”, “No Demand”, and the “Ordinary Test” indicators.  I am quite happy to share all this with HC readers.  So I’ll start with providing my rules and Metastock code for “No Demand” and “No Supply”.  All this info is from back in 2011 and hasn’t been reviewed or tested in backtests, so treat it as just one person’s take on these VSA indicators.  There are inconsistencies between the descriptions and the indicator code but I’ll leave that to the reader to deal with.

    Integral to each of these indicators is the definition and determination of the Spread of a bar and whether a specific bar has “Narrow” or “Wide” spread.  The Metatsock code I use to do this is as follows:

    {xSpread (20110602-001)}

    xP:=10; {30;}

    xAS:=Mov((HIGH-LOW),xP,S);
    xS:=(HIGH-LOW);
    xAS25:=xAS*1.25;

    xNarrow:=If(xS<=0.8*xAS,1,0);
    xWide:=If(xS>=1.5*xAS,-1,0);

    xNarrow;
    xWide;

    {xS;
    xAS;
    xAS25;}


    Now on to the No Demand indicator:

    No Demand (xSOW02)

    Purpose: A No Demand bar is an Up Bar, or Down Bar with a high higher than the previous bar, and that has low volume or lower volume compared to the previous two bars.  This shows a lack of demand and low commitment from the professionals.  It is a secondary confirming signal.  There is No Demand for higher prices.

    Identification: The No Demand bar must be an Up Bar closing higher than the previous bar, or a Down Bar with a high higher than the previous bar.

    The bar must have a narrow spread/range.  The Spread must be less than or equal to the fifteen point simple moving average of the value of the High minus the Low (refer to the xSpread Indicator).

      The volume of the bar must be low, i.e. lower than 75% of the average volume, or lower than the previous two bars.

    The bar should close in the middle or lower, i.e. within the middle half of the bar, but this is not a mandatory requirement.  The smaller the upper tail the better the signal.  The low of the bar must be higher than the low of the previous bar.

       The majority of the bar should be above the close of the previous bar.  If it isn’t it suggests that there was testing on the bar in a lower time frame.

    No-Demand.PNG
    Notes: The No Demand bar is only of significance after a major sign of weakness and/or when the market is in a down trend.

    Note that you can have two or three No Demand bars or even an Up Thrust prior to the
    market moving down.

    A decrease in volume as the market rises is a sign of weakness.

    The best No Demand bars close in the middle of the bar and the lower the volume the better the signal.

    No Demand bars going back into an area of Distribution are good shorting signals.  They work best when the price is approaching old resistance levels.

    Weak markets have lots of No Demand bars indicating that the professionals have no interest in higher prices.

    No Demand is a confirming signal for weakness and trend.  A following bar must close lower than the No Demand bar in order to confirm the weakness.


    Metastock Indicator Formula:

    {xSOW02_NO_DEMANDsc (20111130-03)}

    {This is the secondary VSA No Demand Indicator}

    xSR:=FmlVar("xSpread","XS");
    xSRavg:=FmlVar("xSpread","XAS25");

    xNDMsc:=If(
       (CLOSE>Ref(CLOSE,-1)
    OR
    (HIGH>Ref(HIGH,-1) AND
    FmlVar("xSOS1_NoSupply","XSOS1")=0)) AND
    ((VOLUME=Ref(LOW,-1)
    {AND
       CLOSE>LOW+(HIGH-LOW)/4 AND
       CLOSE

       ,-0.5,0);
      
      xNDMsc;
    Last edited by wilfran1pm: 10/11/18
 
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