Purpose
After trading on and off for years with varying levels of commitment, working from home during the pandemic has reprioritized trading as a long term goal.
I'm starting this journal to improve my chart reading skills, get feedback from others, structure my thoughts and work towards trading for a living. I am still relatively new to VSA, so everyone's input is welcome.
If I could break down my trading into two steps, I would say they are:
Determine what is accepted value by the markets
Use VSA/Wyckoff to enter trades when value is accepted/rejected
What is VSA
It stands for Volume Spread Analysis & is an offshoot/simplified version of Wyckoff's work. VSA was created by Tom Williams and the gist of the strategy is that markets are moved by the heavily capitalized traders, and volume shows when these traders are entering/exiting a market. Additionally, these heavily capitalized traders will always take the path of least resistance, but prior to doing so, they 'test' the market to confirm the path of least resistance.
The best analogy I heard about VSA is that it is like a weather prediction in that VSA doesn't tell you what will happen in the future, it only gives a hint at what is most probable. Also, similar to a weather forecast, the further out a prediction is, the less meaningful it is.
VSA has had its fair share of snake oils salesmen attached to it. Personally, I have stuck to publicly available free resources and personal backtesting as opposed to courses and paid chat rooms. The pivotal Tom Williams books can be found as pdfs on various websites.
Context means everything when it comes to VSA. A 'typical' bullish/bearish candle has different connotations based on the volume and what has happened to price recently (aka 'in the background')
Additional Inspirations
I have read a lot of trading books and materials over the years. Here are some of the most relevant texts that have influenced how I currently see the markets
Value/Auction Market Theory
Laurentiu Damir - I don't subscribe to everything he believes, but his book 'Price Action Breakdown' introduced me to the idea of value. He frames value by eyeballing a chart instead of Market Profile or Volume Profile, and I subscribe to this method to this day.
Jim Dalton/J. Peter Steidlmayer - I don't use Market Profile or opening ranges or any of that stuff, but reading their books introduced me to Auction Market Theory and an initial approach of the idea of efforts vs results.
Wyckoff/VSA
Originally I steered clear of Wyckoff Theory because I thought it was similar to the vagueness of Elliot Wave Theory. After digging deeper, it is a very logical approach to the markets, which I like.
Anna Coulling - Her book is the cheapest book and has the worst charts but easily explains Effort vs Results in the markets.
Rubn Villahermosa - His first book breaks down Wyckoff Schematics ( deeper than I'd seen previously. I am still relatively new to Wyckoff Schematics, but what I like about it is that it has the possibility to create an additional layer of structure to value areas, since Wyckoff Schematics are basically value areas drawn on a chart a la Laurentiu Damir's book.
David Weis - I am currently reading 'Trades About To Happen'. My limited understanding is that it is the bible for Wyckoff fanatics. I started reading the book briefly a few months ago, and IIRC, he has bar-by-bar analysis which I am looking forward to. I have high expectations.
Online Forums - Pretty much every popular trading forum has an inactive VSA thread from 10 years ago that has over 500 replies. There is a lot of unmined gold there.
Forex Markets - In my personal experience, the average (retail) trader's approach to US financial markets is more about finding the right horse to bet on while the Forex market is more about digging deeper into the cues that lead to a horse underperforming or overperforming. Forex has a much greater emphasis on practice and putting in …