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Combining Technical Analysis and Wyckoff VSA - an Insider's View

Posted by The Tradeguider Team on Tuesday, June 1, 2021
Tradeguider Team

That smart money operators, professional players move the markets is incontrovertible, however you identify your trades.

But here at Tradeguider we would never try to dissuade a trader from using a method other than Wyckoff VSA provided they were profitable in trading the markets.

Rafal Glinicki, two-time award-winning trader with a 20 year pedigree and founder of Poland’s VSA Trader, has been successfully combining technical analysis and Wyckoff VSA for decades.

He likes the combination so much he made it a required methodology for the traders who work at his company. So if you’ve ever wondered whether technical analysis is enough for trading or whether VSA works then read on to hear about his experience of combining methodologies.



Rafal meets Wyckoff VSA

Rafal had already been trading a few years before he found volume analysis. A technology and engineering graduate, he was attracted to mathematical formulae. He started by using geometrics and Elliott waves, which were more suited to the trading environment then than to today’s algorithmic trading.

Once he understood how Wyckoff VSA worked, he realised it showed him which side of the market is stronger. “When you know that, you realise you cannot go against the stronger side. It would be like driving the wrong way down the highway.”

The result? “My trades were better. I didn’t have such a big draw down on my capital.”

VSA liked Rafal too, or at least it’s originator and our founder Tom Williams. About Rafal Tom said, “[He] is the only trader in Poland and the surrounding countries who has my personal recommendation to teach the VSA methodology... I can confidently say that Rafał is one of the best traders I have ever met and one of the top trainers who can impart the knowledge necessary to become a successful trader. "

In 2006 and 2007 Rafal finished in the top ten in the ‘World Top Investor’ competition. ‘My result was 60%’ he said, ‘but I had drawdowns on my capital which wasn’t so good.” Something must have been right about his trading strategy though.


What kind of trading does he do?

Rafal trades futures contracts on the DAX, SNP 500 and Dow Jones. He also looks at commodities and FOREX; he only trades the stock market on occasion. To locate a trade Rafal first looks at higher timeframes to identify trends and then goes into the lower timeframes where he can ensure a narrower stop loss.

He uses retracement and candlestick patterns but Wyckoff VSA is the foundation, a filter to support his decisions, helping him discard signals that won’t be profitable.

“For example, looking at hammer patterns,” he says. “You will see there are lots of hammers on the chart but the price doesn’t respond on every one. But when the hammer is on the chart in the right moment like a test or a shakeout (a very important VSA signal), this is the highest probability that this candlestick pattern works.”


So why use two methodologies?

Two methodologies means two lots of learning and practice to do. Why bother?

“It’s like poker”, says Rafal. “Let’s say the aces are VSA. But there are other cards. You can’t only use 4 aces. If you use combinations you have more opportunity to trade. You find more possibilities and do better when you find them.”

And seeing a higher percentage of winning trades is motivation enough to keep on with the learning.

But Rafal admits not everyone trading the markets will have the stomach for it.


Advice for someone already using technical analysis

“Using normal technical analysis you have to realise you are looking at the historical prices which don’t predict the future. You have to know what is going on the chart right now, which force (supply or demand) is present on the chart.”

To read more about how TA and VSA compare, read this blog 

“Technical analysis doesn’t give you this. If you are using moving averages for example you are in trend but you don’t know when it will finish. When you use VSA you can see, for example, when there is no demand and the price will collapse.”

Someone with a technical analysis background will find VSA a similar process since it’s still about using the charts.


Advice for someone already using Wyckoff VSA

The benefit is that you are strengthening your decision-making process, says Rafal but he cautions that there are thousands of technical tools, of which many are not good. If you are wondering how to use technical analysis start with back tests, he advises.

 “Start with one approach, see how it works and then add something more.”

“Using VSA you will feel comfortable because you will be trading with the strongest side of the chart. So when you are experienced and you have good skill it will give you a better confirmation and you will be more confident. If you are more confident then your emotions are not so high.”


Summary: It always comes back to you

And while technical skills, a fast computer, good scanners are important, the other key to being a good trader, says Rafal is trader psychology. Managing those emotions is just as key as chart analysis, keeping up on your trader education and setting realistic expectations.

Tradeguider is the home of Wyckoff VSA. Rafal is one of a few highly experienced experts in the Wyckoff VSA trading techniques. We are all committed to sharing our knowledge and experience of this methodology as you`ll see when you access our Resource Center which boasts PDFs, courses and videos on how to be a better trader in general as well as Wyckoff VSA principles and practice.

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