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VSA Software Tools - Details

 

BACK

The VSA Software Toolset consists of 5 key tools:

1. The VSA Indicators

The VSA indicators are red and green triangles that appear on a chart to alert you to "Smart Money" activity. Through them you can identify when the Smart Money are buying, selling, or not participating. All of this is crucially important to a trader or investor:

If they are buying - so should you!
If they are selling - so should you!
If they aren't interested - neither should you!

The VSA Indicators are used in 2 ways

1. Identifying potential trade set ups

When an indicator appears you click on it to reveal a dialogue box giving you detailed information about the trading area you are looking at. The dialogue box is written exclusively for you by the creator of VSA, veteran syndicate trader Tom Williams. The dialogue box contains 3 key sections:

The first is Indicator description. It describes the VSA principle that has triggered the Indicator

The second section is 'The Background'. The Background is very important as it can make a difference to how the market reacts to the indicator in question. It enables you to look at the chary with greater clarity and in perspective.

When used with the other tools the VSA Indicators enable you to build up an accurate picture of a future high probability entry point

The third and final section in the dialogue box is 'The Future'. This dialogue box will tell you what VSA Indicators and other confirmation signs you need to look for, prior to actually entering the trade

2. Confirming the trade set ups

When a trade set up has been detected you need to watch out for confirmation VSA signals. When they appear it is then down to your skills as a trader to decide to take the trade.


2. Relative Volume Thermometer Tool

TradeGuider is continuously sampling the volume, looking at the relative amount of bullish and bearish volume at any particular time. The results of this analysis are shown in the top of the 2 colour bans at the bottom of the chart.

The amount of green that appears on the gauge is 'bullish' volume and the amount of red is 'bearish' volume. So, in the example shown to the far left, the volume is equally bullish and bearish, next to is the indicator is showing bullish volume and then next to that the indicator show bearish volume.

The tool provides a valuable confirmation tool to help establish the trend in volume. This helps you to more accurately define entry and exit points.


3. Short Term Trend Tool

the short term trending tool particularly useful as a simple and quick visual guide as to whether the short term trend is up (green), down (red), or about to change (white). The diamonds are an attempt to normalise and smooth the price action.

Whatever your trading style, it's a flexible indicator that can be set up to aid you in 'scalping' or swing trading on intra-day charts, position trading on daily charts, or even in medium/long term investing on weekly or monthly charts. Apart from the changing color of the diamonds, one of the great things about this indicator is the way it levels out, as prices become slow to progress. If prices suddenly surge forward, this indicator will also accelerate upwards or downwards, smoothing out the fluctuations caused by minor corrections or reactions.

 

Green circles indicate short term uptrend

Red circles indicate short term downtrend

Grey circles inidicate congestion


4. Medium Term Trend Tool

The Medium Term Trend Tool is designed to be a lot more insensitive to minor trend changes. It's a volatility-driven system which takes into account how much a market moves. The more a market moves, the more forgiving the system becomes to adverse price excursions against the trend. However, if a market isn't that volatile, the trending system becomes more responsive to movement.

Medium terms up trends are signified by blue price bars, whilst medium term down trends are represented by red bars. In both cases the bar colors can be changed to suit your preferences. This tool compliments the short term Diamond Trending system, to provide further confirmation, or to spot counter trend trading opportunities.


5. H Stop Management Tool

Once you've decided to pull the trigger and enter a trade, you'll need to manage your position so that you make the maximum amount of profit from it.

The 'H' stop is actually a pair of stops, comprised of a near and far stop. The near stop can be used by more cautious traders to get out early, whilst the far stop can be used by traders who don't mind risking the possibility of being taking out with a bigger loss, but with the potential for a far larger return. The distance between the two stops can be adjusted to suit your trading style.

The 'H' stops can separate, so that one of the stops sits above the bar, whilst the remaining stop sits below the bar. This is useful for marking off potential areas of congestion. In these circumstances you should be out of a trade.

When both stops switch from being below the bar, to above the bar, this can be seen as a potential short position. Similarly, when both stops switch from being above the bar, to below the bar, this can be seen as a potential long position.