Trading with Volume Spread Analysis (VSA)

[anoopkumar]

Mate futures has all the information discounted along with the upcoming news and stuff better than the cash. Futures contract is the best indication of the up coming market situation. Do you know why people write calls and why they write puts? I am not talking about naked positions or in trading terms speculative positions. Also what you say is clearly suggesting whenever the smart money is ready to take a huge position they will do so by entering in the futures contract first and later in the cash that is all I am trying to say here. Futures market can give you the indication of where are market is going to head in the short term.

yeah thats why its aptly called "Futures contract"

 

[SavantGarde]

Hi Bunny,

Futures Price Is Also Adjusted Due To Increased Price Movement In The Last 30 Minutes & The Same Is Called Settlement Price...Which Is Different From LTP...If You Navigate To Any Stock Or Index Futures Quote On NSE, You Will See The Settlement Price At The Bottom.

Even The F&O Bhavcopy Has A Separate Column For Settlement Price Along With LTP Column.

Happy & Safer Trading

SavantGarde

The future may trade at a consistent premium/discount to its cash underlying. Also, cash market is adjusted after normal trading hours, but futures market is not.

 

[nimish_rulz]

Hi Bunny,

Futures Price Is Also Adjusted Due To Increased Price Movement In The Last 30 Minutes & The Same Is Called Settlement Price...Which Is Different From LTP...If You Navigate To Any Stock Or Index Futures Quote On NSE, You Will See The Settlement Price At The Bottom.

Even The F&O Bhavcopy Has A Separate Column For Settlement Price Along With LTP Column.

Happy & Safer Trading

SavantGarde

Great to hear from you Savantji Sir, Hope you are doing great and hope new year is bringing all the happiness for you.

 

[bunny]

Hi Bunny,

Futures Price Is Also Adjusted Due To Increased Price Movement In The Last 30 Minutes & The Same Is Called Settlement Price...Which Is Different From LTP...If You Navigate To Any Stock Or Index Futures Quote On NSE, You Will See The Settlement Price At The Bottom.

Even The F&O Bhavcopy Has A Separate Column For Settlement Price Along With LTP Column.

Happy & Safer Trading

SavantGarde

Thanks Savant Sir for pointing it out.

 

[bunny]

Follow up for all stocks posted here

BARTRONICS - Doing okay.
KAUSHALYA - Stop-loss has been triggered, but bullish opinion is maintained on account of volume action.
KFA - Doing okay.
MLL - Doing okay.
MRPL - Cautious.
NATIONALUM - Doing okay. Bullish opinion maintained through it was down day.
ROHITFERRO - Has advised sell, and then wait-and-watch.
Revised action: Buy ROHITFERRO with target of 60.
ROLTA - Doing okay.
SUNFLAG - Doing okay.
TULIP - Doing okay.
VIDEOIND - Slightly confused.

 

[bunny]

Shallow stop-loss

This has been my observation previously, and again this time - that the stop-losses are too shallow and are easily touched by shake-outs, etc. To over come this, I am deepening the stop-loss levels for the scrips posted henceforth. The new stop-loss will be just below the resistance line of the trading range crossed over.

I personally do not use stop-loss which is based merely on price action.

 

[bunny]

New additions for trading from 14 JAN 2010 onwards

DSKULKARNI
The stock had crossed its trading range resistance arounf 76 - 77, but retreated back to within the range. However, the last to daily bars viz. 12 and 13 JAN 2010 are down-bars with pregoressively reducing volumes attached to them. The daily bar of 13 JAN 2010 is a down-bar that closes in the middle of the spread without an increase in the volume - A successful test-of-supply.
Action: Buy DSKULKARNI with stop-loss of 71 and target of 93.

MAHABANK
The stock is trading near a well-established resistance of 52 - 53. There is some effort to cross the trading range, as seen on daily bar of 04 JAN 2010. Post that, the level has mostly been sustained. There are signs of reducing selling pressure and successful test-of-supply on daily bars of 12 and 13 JAN 2010.
Action: BUY MAHABANK with stop-loss of 51 and target of 61.

 

[Pchartis]

Anyways I still don't quite agree with you that cash decides the futures. Do one thing for simplicity take the trading volumes or turnover in futures and compare it with cash you will find out that more than 2/3 times in a month Futures volume exceed cash. Why is that so there are many reasons and the whole derivatives makes the trade so leveraged that the smart money prefers to enter futures way before they would in cash. The trading volumes in cash is much lower than the outstanding volume of the scrip whereas the Futures can register open interest of upto 90% of the underlying market value of security. Here since we are discussing volumes that gives a better picture. I agree the derivatives market are derived from underlying cash instrument but the cash instrument doesn't show you the direction of the market, futures market does. Hence we so often have premium and discount. When the futures is in premium it shows positive sentiments and overbuying of futures which cash reluctantly follows. And what you say is 100% applicable when the future diverges with its cash counter part which is close to the end of the month or very close to expiry. Anyways my idea is not to argue here I am still very young and learning and this is what I was taught when I did my masters here in the UK and also the Asset Management firm I work for. Regards
Nimish

hi Nimish,
How can one differentiate the two ie trading volume and outstanding volume. Please throw some light on it as it will make VSA journey more comfertable and profitable
Dont say your VSA software pinpoint the diffrrence.
Regards,
Panno

 

[Placebo]

Very good initiative bunny. Good Work

I hope this thread remains active and attracts more participation

Cheers
Happy Trading

 

[bunny]

hi Nimish,
How can one differentiate the two ie trading volume and outstanding volume. Please throw some light on it as it will make VSA journey more comfertable and profitable
Dont say your VSA software pinpoint the diffrrence.
Regards,
Panno

outstanding volume = open interest or deliverable volume