VSA/Tradeguider
redislk said:
I bought the software and took their training courses. Software is full of bugs. Stuff shows up and dissappears. They are spending the money on advertising and not on fixing the code. They told us they were fixing the code and that a new version was coming out very soon. That was over 1 year ago and no up date has been done to fix the know problems. Also the software does not keep up with an active market. You need to refresh the chart every min or so. Pretty bad and I would recommend that you stay away. If anyone is interested and still wants to but it I will sell you mine for 1/2 price.
My experience with this (when it was fresh on the market in the first half of 2004) was disappointing. The trouble with it was not so much with bugs, or failure to refresh in fast markets, as with the fact that the indicators provided on a Tradeguider chart were not consistent with each other and did not in any way address the old conundrum of trend vs. oscillation.
The "Volume Spread" elements of the package are essentially playing to a mean-reversion move, but suffer from the fault of all such indicators, that the signals can occur at moments which are no more than points of inflection in a trend away from the mean. To counteract this aspect, there are trend identifying elements, which paint the bars different colours according to whether the trend is up or down. (And there are also some further trend identifyers which re-affirm or contradict the bar-colouring algorithm). Finally, there is a notion of "trend clusters" which aims to diagnose icebergs of congestion, which the savvy trader should avoid.
The people who were (and are) marketing the product responded to complaints of inconsistency by saying that it was "not a buy/sell system", and also that the indicators on the chart were just "training wheels" that could be dropped when you had learnt how to trade without them (I kid you not).
There was one particular day when the attached chart was generated. The VSA indicator draws our attention to the moment (11.40 EST) at the top of the rise from the open that had taken the market up 12 points? A red rectangle appears at the top of the chart. Volume had sparked up to 20,000 contracts in the preceding bar (up 1.25 pts). Good point for a sell signal, perhaps?
What does the commentary say? It says: "Upthrust after previous weakness". Let's have our upthrusts preceded by more weakness consisting of 12pt rises!
The point is not that this indication would be a bad signal. If taken as a signal, it could have been a good moment to short. But the underlying classification of the price/volume action is not smart. The best one can say is that it is insensitive to context, and asks the user to sort out the contextual factors (a characteristic of the comments on these information balloons). The expert knowledge should, rather, be providing expert guidance.
The fact is that this stuff is not useful, and therefore not worth the money, but can be used by skilful salesmen to spin a good yarn.
