VSA (Volume Spread Analysis) vs LRA (Locked-in Range Analysis)

[AlexaTosca]

Lets compare two cause-effect methods of analysis which help us to make our FOREX trading strategy more profitable:

Volume Spread Analysis (abbr. VSA) seeks to establish the cause of price movements, and from the cause, predict the future direction of prices. The ‘cause’ is quite simply the imbalance between supply and demand in the market, which is created by the activity of separate professional operators called "Smart Money".

Locked-in Range Analysis (abbr. LRA) seeks to determine the direction of the prevailing volume of open positions which will allow to join the further profitable price changes for all united market makers called "centralized automated market-making system".

 

[AlexaTosca]

 

[t8936]

VSA (Volume Spread Analysis) Basis is the concepts of Richard Wyckoff, a renowned trader during the 1920’s and 1930’s. VSA is an old method that correctly described the market only before the conversion of exchanges to an electronic order matching system via the Internet (CME Globex was introduced in 1992 as the first global electronic trading platform for futures contracts) and before the appearance of the market-making system which provides all market liquidity.

So for today only LRA (Locked-in Range Analysis) is the cause-and-effect analysis method arising from the basis of the market.😉

 

[t8936]

I've tried VSA, makes sense cause it's show all trader orders and position. But a key for this methode was it depend on your forex broker. If they don't have a lot of customer you can't get a valid data.

You need to use CME Group Volume Data of relevant futures to Forex Pairs.

For Example: Volume of 6E (EuroFX Futures) used for EUR/USD

Forex Volume is nothing👎

 

[t8936]

LRA:

Depending on the goals and time of holding the position, trend and flat preferences for trading are available to market participants.

Trend Preference - the probability of price reversal from the locked-in range upon return based on the availability of locked-in open positions, against the prevailing volume of which it is profitable for the market maker to quote or maintain the price.

Flat Preference - the probability of price returning back to the locked-in range after going beyond TPSL levels based on the absence / loss (triggering of stop-losses) of a significant imbalance of open positions, against the prevailing volume of which it is profitable for the market maker to quote or maintain the price.

VSA:

We have to use only "Trend Preference"

 

[Rokki]

Good day! Are there people here who practice both methods?

 

[Rokki]

Tell me how quickly the results are visible?

 

[fxstrategist]

Very interesting topic and comments from all of you. Hope to hear more details about both systems and their performance.