Hot Copper Charting and Chat, page-189

Hi Rooster,

I've been trying to find something that I had printed out years ago that had some very clear definitions of the various test type/no demand bars.

I'm not able to find it just now, and it just maybe that I've left it in Cambodia.  Unfortunately, I can't find the original electronic version either.

Do you have a copy of Tom Williams' seminal book "The Undeclared Secrets That Drive the Stock Market"?  If you don't, you should be able to find one for free in PDF format quite easily on the web. That is the starting point for all things VSA.  

On HotCopper we are very fortunate to have poster Jako8557, who is the best VSA/Wyckoff teacher around.  Jako is very humble and approachable if you want to learn, and has a wealth of info for anyone who has the inclination to study and he has posted a lot of stuff on the Education threads.    For example, follow the link below and it will take to you to some work on understanding No Demand bars -  

https://hotcopper.com.au/threads/wyckoff-trading-method.2472179/page-2446?post_id=33739747 

He has a ton of stuff there on VSA?Wyckoff principles that should keep you going for a very long time.

Below are some notes I took during a Webinar from VSA giant Philip Friston - this may help you to understand some differences.  I know when I was studying this I struggled for some time.  It just suddenly clicked into place for me - remember, learning is often difficult, even to the verge of painful, but keep reading and looking at charts till you get it - you'll ingrain a set of skills that will serve you for life.

Philip Friston on Tests (April 6^th2011)

 

3tests  Basic Test, Ordinary Test & No Supply.   low volume,

·        Basic can have highervolume.  As long as it is lower than the area it is testing it is okay.

·        Ordinary  should be a down bar and should have low volume, less than the previous two bars

·        TESTS CLOSE ABOVE THE MIDDLE

·        No supply is a down bar on lowvol, usually a narrow spread and closes below the middle, sometimes the low

·        A test should have most of itsspread below the close of the previous bar, (the tail). 

·        A very narrow spread down barwith increased volume after a test bar can indicate that there is no interestin pushing the price lower – if the increase in volume was selling you wouldexpect it to push down into previous bars

·        No Demand bars:  most of the spread should be above the close of the previous bar

·        Be cautious when you see a testat the top of the trend channel – high risk to go long

Tests work best when there is strength inthe background

Discount a test that is in a downtrend withweakness behind you, rather than strength. Best seen with strength in the background, or when you are moving up – test in a rising market

 

A failed test becomes a sign of weakness

The best test to buy is a test in anuptrend that comes in towards the bottom of the trend channel

 

Shakeouts are violent tests

When a stock comes back down into the areaof a shakeout and tests, this can provide a high probability entry

 

Tests on very widespread bars

You don’t want to see too much of the barretraced, as this shows negativity in the market for this to happen.    Take the halfway point of the wide spread bar – you don’t want to close below here on the test bar.  You want the test in the top half of the bar.

The bar after a test

Should have a wider spread or range thanthe test bar.  It should be an up bar, should close up near the high on increasing vol, but not excessive vol. 

 

Difference between a test and no supply:

A test should be a downbar with less volthan the two previous bars and must close at least in the middle or thehigh.  No supply is essentially the same but it can close on the low.

I hope this helps.

Kind regards,

Toastie.