How to apply VSA in trading?

VSA is a very difficult method to master. The reason is that traders often interpret the method in very different ways. And to truly understand the VSA, requires traders to observe and practice for many years.

However, the good news is that you can still apply the basic, easy-to-understand concepts of VSA to improve your current trading capabilities, including:
  • No demand - No demand
  • No selling pressure - no selling pressure
Let's take a closer look at the above concepts!

No demand on up bar

If the market is bullish but not accompanied by an increase in the real body (range) and volume, the market then does not reflect an increase in demand. And without demand, the market cannot continue to rise.

Features of the bars should "no demand":
  • The closing price is higher than the previous candlestick bar.
  • The trading volume is lower than the previous two candles.
  • Short candles.
No selling pressure

If a market decline is accompanied by a decline in candle size and trading volume, the market is no longer eager to sell, so it is not likely that the price will continue to decline.

Features of “no selling pressure” candlesticks:
  • Price closed lower than the previous candle.
  • The trading volume is lower than the previous two candles.
  • Short candles.
Examples:

In the examples below we use the MA20 as a tool for trend identification. Then use the concepts "no demand" and "no selling pressure" to find retracement points in a trend.

No demand bar - Sell potential order


We first identify a trend reversal through a sharp fall, breaking out of the previous range and penetrating the MA20.

Next, we see the appearance of three consecutive “no demand” candlesticks, indicating that the market is lacking buying power to push prices back to past uptrends.

Sell orders should be considered.

No selling pressure bar - A potential buy order


First, we have a steady upside, the price holding firmly above the MA20.

Next in the correcting price zone, we can see that the selling pressure is not strong enough through the marked “no selling pressure” candlesticks.

Buy orders should be considered.

Conclude

VSA is very valuable because this method of analysis includes both the most important factors: price and volume. However, with that said, using volume is relatively difficult and can be confusing for new traders. Perhaps it is for that reason that the author did not include the volume in two illustrative examples.

If you are really interested in this method, take some time to research it. If needed, you can comment, I will introduce some books and forums specializing in discussing this tool.