Who is this guy – Tom Williams ???
I’ve been taught a method called VSA or volume spread analysis which I’ve learned from Gavin Holmes and the Great Tom Williams, a former syndicate trader, who resides in UK. According to Tom, he learned it from another syndicate traders during his days as a male nurse.
Tom Williams had three principles as follow:
1. Following and understanding volume which shows the true activity of professionals, which matter the most because professionals move the market not retail traders.
2. Following the spread, which is the high/low of each occurring bar, this alerts a trader to the bullishness or bearishness of a particular price movement.
3. Following closing price, or price action which tells you how the price reacts to the volume and spread.
He believe that using these techniques, you can successfully trade on the right side of the market, with the professionals. Once you learn to understand these principles you will see that your decisions to enter a trade are rationalized by what your actually seeing and not a phony indicator.
Tom Williams enhanced the studies from Richard Wyckoff, another great trader in 1920s to create a conventional software program which can be used to trade, called Tradeguider.
However, I don’t suggest spending your money on this because you can take these principles you’ve learned and trade successfully without coming out your pockets.
Buying a software is not always the right solution. Understanding the reasons the market reacts in a particular way is crucial.
To better understand VSA, you can access the volume and your accelerator pedal to a car and your spread is the actual motion, the chart represents the hill your car must climb. You may have extremely high volume however your spread is low, which basically means that gas was stepped on a lot but the actual movement of your car didn’t move far.
Good luck !
