Greetings to all forex traders tradelikeapro.ru portal.We continue the topic of analysis of the currency market with the use of volume, popularly called Volume Spread Analysis or simply VSA.This time we will talk about such concepts as Accumulation and Distribution .I hope this video will help you better understand how to enter and exit the market market-makers, as well as the fact that when trading in the forex market, we should take into account the big picture, not just the last few candles.
Firstly, if you do not know what the Volume Spread Analysis, then before you watch the following video, I advise you to read the previous lessons relating to the interpretation of the volume, otherwise you lot will not understand:
- introduction to VSA
- volumes in forex, where and how they watch
- VSA: the culmination of purchases / sales
So, what is the accumulation and distribution in the context of the VSA?
accumulation - is the process of opening major market maker position without substantial
distribution - is the process of closing major market maker positions at a certain price level.Depending on the available liquidity is happening, as well as the accumulation, in several stages.
Some terms with illustrative examples is much more convenient to explain in the form of video, so for a more detailed analysis of concepts of accumulation and distribution, I propose to see video lesson immediately following this text.
How it looks on the graph?
First, let's take a look at the distribution process, which occurs in the form of a classical picture of an uptrend.This will be most evident and clear.It should be borne in mind that the process of accumulation can occur not always as beautiful as the picture below:
It happens trend upward pullback accumulation.Again, the trend is up, rolled back, and the accumulation trend up again.
But such behavior chart may not always be.It is likely that the timetable will be uneven, will have a horizontal movement will be flat.
For example, consider another situation:
In the beginning we see the flat, then horizontal movement.Further, the market maker is included in the sale, there is a repeated horizontal movement, again there is flat.
then market maker again enters into sales, and we see that the trend is downward formed:
In fact, it is the accumulation of purchases, which began earlier.
the whole scheme of market-makers differ from time frame to time frame.They have diversity, and because of this it is impossible to establish a clear sequence of actions and to understand in advance how behaves a market maker.
We can not get into my head to the people who work in major collections.We were only given a look at the graph, analyze, and draw their own conclusions.
It is worth to remember that the majority position can not be opened just one order.It happens gradually.And if the trend observed in the graph upwards, the process of accumulation will occur on the price correction.
Do you remember the power of the market is shown in the top-down candles and market weakness in the ascendant.
accumulation for the upward trend does not always occur on the downlink candlelight.It happens that the purchase is too severe and occur on the rising candlelight.This process does not always happen on the opposite main movement of candlelight.It is worth considering.
most profitable place for a market maker to enter on an upward trend - a market correction.
On the chart we can clearly see that there was a downward spiral.
candle in the middle of its tail, and the increased volume clearly shows that the market maker took advantage of the desire of the crowd to sell, after being slightly broken the previous local minimum:
Many put orders sell stop to sell below this level, and the market-meyker use this liquidity to purchase.
After this process, the schedule went back upstairs.
As we can see obvious absorbing sale purchase:
In the picture you can see a large amount of the candles with a very narrow body.This means that orders for sale are absorbed by market makers.
After a whole sentence has been removed from the market, there was a growing up.Sellers are practically no, and an obstacle to the prices gone.She was able to go freely to the top.
So, in other words, accumulation - is the process of opening a great position.
The screenshots we have considered an example for shopping.For sales would have been the other way around.
In turn, the distribution - is the process of closing the position.
When the chart there is a strong trend, many traders try to join him and take your profit.
It is often possible to observe the culmination of purchases and sales, when there are large candles, and after them comes the end of the trend:
On the one hand, full-bodied candle, there is a large amount.It seems that everyone bought.But in fact, there is the position of the transfer of the purchase are late for traders who want to connect to the trend.This trend is very nearly exhausted.
culmination of purchases and sales may take place not only at one point, when market-maker out of the market and it is left positions.It happens that this process is gradual.
We can observe this in the form of bursts of activity in the direction of the completed trend.This manipulation of market makers seeking to attract new buyers or sellers who think that the trend will continue.
In turn, this allows them to get out of their positions.
For example, the graph in the selected place occurred the transfer position to buy for people who missed the beginning of the trend:
Next we see flat to low activity and then new purchases.
Note that these purchases may be caused by the market makers, which are slightly pushing the price up.Thus, they provide a kind of bait.People see that the price increases are beginning to buy, and they passed the position of market makers that come out of the market and fix their profits.
recall that out of the shopping - it's sale.When a market maker goes out shopping, he sells.
Exit sales - this purchase.And so if he will close the position at a big purchase at once without the presence of liquidity and want to buy him, he will open a big market.
closed its purchase, he will make an effect equivalent to more sales.Thus, the price will fall.
It should be borne in mind that if this happens, the market maker will lose profits.He is not interested in it, so it always expects the presence of traders who are willing to buy him this position.Either he creates the preconditions to attract them.
When the meaning of the concepts of accumulation and distribution postponed in your mind, spend VSA analysis will be much easier.
After reviewing the information in this article, you will begin to understand that it is necessary to assess not only the past few candles and the whole situation.What is happening now, what do market makers and what to expect next.At present, that's all.Good luck to you in trading and see you soon.