Before developing Neural Network systems for Metatrader we experimented with Volume Spread Analysis(VSA). What we've done with this trade assistant is taken the VSA trade setups that signal the largest movements in the market, simplified them for the non-VSA expert, and modified the VSA concepts into a unique and innovative trading system.
VSA is a very in depth trading system that can be used for any market; as such it takes time to master. This trade assistant is made for those who have not yet mastered the VSA setups but still want to use these powerful tools to make money.
The setups used are extremely specific but produce the highest chances for success out of any VSA bar configuration. It should be emphasized that this diverges from traditional VSA to such an extent that it should really be called by a new name. We hope that you will take this concept to maturity, create expert advisors based on these ideas and most of all test this out for yourself, your feedback is appreciated.
Failure - Basically when price tries to go up or down and is rejected to the opposite direction, thereby it becomes a
failure of buyers to make price go higher or sellers to make price go lower.
Sign of Strength - With higher volume the bar configuration confirms that buying is still winning/overcoming selling
and vice versa. It does this by simply having higher volume than the previous bar, and being at
the threshold of being a failure but isn't.
Clear Sign of Strength - With higher volume the bar configuration not only confirms that buying is not only still
winning/overcoming selling and vice versa but is dominating the other side of the market –
the winning side is by far away from being a failure and clearly buying or selling.
Directional Bias - The most advantageous direction to trade for the day. If the directional bias is up it does not
mean that the current day's bar will finish up necessarily but that the 'strongest' direction of the
day will be up (the most forceful trading will be up).
Opposite Direction of Trade – If you are selling the opposite direction is up; if you are buying the opposite direction
UP Bars - close is above the close of the previous bar
DOWN Bars - close is below the close of the previous bar
TRADING STRATEGY OUTLINE
1. I determine the directional bias for the day by analyzing the previous day's bar on the daily chart.
a. The previous day's bar must show a clear sign of strength or a failure.
I. If the previous day's bar shows a clear sign of strength the current day's directional
bias will be in the direction of the strength.
II. If the previous day's bar shows a failure, the current day's directional bias will be
the opposite direction of the failure. For example, if price tried to go up and was
forced lower (failure of the upside), the direction of the day will be down.
2. Once I know the directional bias for the day (where to trade: buy or sell) I go down to the hourly chart to
determine exactly when to trade.
a. I determine the when ONLY by waiting for a failure in the opposite direction of the day's directional
I. For example, if it's a failure of the upside and price is pushed down after making a higher high (than the previous bar) and the directional bias of the day is down then a sell should be executed after this failure.
3. Once a failure has occurred and an order opened, look for the next resistance line (created by a strong
bar in the opposite direction of your trade).
a. The next resistance line, below for a sell, above for a buy, can be a daily or hourly resistance line.
I. For example, a sell has been opened and the next green resistance line is 30 pips below.
I would close the trade just before (above) this green resistance line. If there was a red
(support line in this case because the trade is a sell) in between the open of the trade and the
green resistance line it should be ignored, price will not be rejected at that level.
II. EXCEPTION: there should be a buffer of 10-15 pips after the low of the failure bar (for an
failure of the upside) and high of a failure to the downside bar.
III. This means if there is a resistance line 10-15 pips after a failure it should be
ignored and the next resistance line ahead should be used to end the trade.
It should be assumed price will break through this level.
The Trade Assistant EA will be looking for the levels created by our support and resistance indicator to determine TP and SL and reinforcing trades.
This is not your ordinary support and resistance, it is derived from the following, which is based on the principal that previous signs of strength or weakness, based on volume and spread configuration, create levels of support or resistance, unlike the normal idea of support and resistance which is about psychological levels or trendlines.
UP Bar = the close of this bar is above the close of the previous bar
DOWN Bar = the close of this bar is below the close of the previous bar
Creation of SR lines
*An up bar that produces a green support/resistance (SR) line means that the bar exhibits a sign of buying (up movement) strength and higher volume than the previous bar.
*An up bar that produces a red SR line means that the bar exhibits a sign of selling strength and higher volume than the previous bar.
*A down bar that produces a SR line means that the bar exhibits a sign of selling (down movement) strength and higher volume than the previous bar.
*A down bar that produces a SR line means that the bar exhibits a sign of buying strength and higher volume than the previous bar.
The Deletion of SR lines
* green (up strength) SR lines are ONLY deleted when there is a down strength bar created that closes below the close of the former UP or DOWN(down bar that shows buying strength) bar that created the green SR line.
*red (Down strength) SR lines are ONLY deleted when there is an UP strength bar created that closes above the the close of the former DOWN or UP(up bar that shows selling strength) bar that created the red SR line.
Signs of buying strength for UP bars:
1. Signs of buying strength in UP bar
- the close of the bar is above the open
- the close is at or above the exact middle point of the bar (middle determined bet. high and low of bar)
- OR both open and close are at the same price level but above the middle of bar
- volume is higher than the previous bar
Signs of buying strength for DOWN bars:
2. Signs of buying Strength in Down bar
- the close of the bar is below the open
- the close is above the exact middle point of the bar (middle determined bet. high and low of bar)
- OR both open and close are at the same price level but below the middle of bar
Signs of selling strength for DOWN bars:
1. Signs of selling strength for DOWN bars:
- the close is at or below the exact middle point of the bar (middle determined bet. high and low of bar)
2. Signs of selling strength for UP bars:
- the close is below the exact middle point of the bar (middle dertermined bet. high and low of bar)
***These rules only apply to 1hr and Daily charts
***Both the 1hr SR lines and Daily SR lines should appear on the 1hr chart - Daily SR lines are solid horizontal lines and 1hr SR lines are dotted
***ONLY the Daily SR lines should appear on the Daily chart - soild horizontal lines
****The lines should update at the open of every new 1hr bar
Buy Signal generated in CADJPY at 90.75, it is telling us to set our TP at 90.86, doesn't look like a bad trade either. Interestingly, it can see that there is still significant weakness and advising to open only a partial order. Let's see how this plays out.
Also, the TA is advising to open a trade in AUDCHF H1 at .96231 on, not so sure about this one, will keep posted.
The IMMINENTE DIRECTION CHANGE warning from the trade assistant above in CADJPY has occured, got maybe a couple pips before. It is a good rule of thumb to NOT trade when it this warning occurs.
EA MetaNeural V1.0
Hi, and here i posting ea if you need,enjoy...
Man, that was fast!!!
AUDCHF is at 9653, that's 30 pips profit from the trade signaled above from the trade assistant. So far today It's made me over 30 pips and kept me out of a bad trade, doesn't get much better than that.
That was fast, I'll have to try this out, never automated this strategy before, I suspect it will be difficult and version 1 will turn into version 10 quickly, but thanks for your interest.
Got all of that EURUSD jump, the trade assistant signaled it two hours before it happened, went right up to the next resistance line, and I'd bet it will bounce off there - that's where it recommended putting a TP.
BUY on Gold
Signal just came in on Gold, looks like a great opportunity for a buy at 1576.632
After going up to 1577.786, the trade assistant is now signaling an imminent direction change in the metal - it recommends at least taking part of your order out of the market, I'm closing the trade altogether because if there was still an indication of short term strength it would recommend staying in even though gold seems to be going down currently.