Options Flow Sentiment

– in case of green background, enter Long position

– in case of red background, enter Short position

Signals coming out of Options flow we strongly advise use it in correlation with other factors such as Demand/Supply from VSA Scanner, Gamma Levels and/or Market Structure + Volume Zones.

Gamma Bands

The key is to set the hours of the Overnight and Initial Balance sessions according to the time zone of the instrument you are using – there are different data sources on the TV and, for example, gold may be in the source time zone -4 once and at other times -2. It’s easiest to see what time the Gamma levels jump to a new level and adjust it to the appropriate times.

For example, Dax at 2 am (Polish time) should start with the Overnight session, and Gold at midnight (polish time). In turn, indices like the SPX (ES) may be at 10:15 pm polish time (closing of the Regular Trading Hours of US session).

The next key setting is the source instrument selection (Dax selected by default

– the script draws 3 levels of positive and negative Gamma, the principle of operation is similar to Pivot points – Gamma levels are key intraday levels.

– in addition, the yellow zone is the so-called Pivot zone that determines the daily sentiment

– High and Low levels of the previous day are also determined

– as an experimental feature, the so-called extreme levels for the day (Extreme High and Extreme Low) are determined, which are a bit closer than the extreme levels of Gamma + \ – 1. In general, these levels are rarely broken and you can treat them as expected range of the day.

Extreme High and Extreme Low levels with Gamma + \ – 1 levels create the so-called retreat zone. The break through the price of the extreme Gamma is treated as an anomaly in the market and after the breakout, continuation of the movement can be played (it occurs, for example, during a Trend Day when the price goes in one direction from the beginning of the session).

– in general, the larger the Gamma (further away from the Pivot zone) the stronger it is – so another strategy is to play the retreat of the earlier trend at Gamma + \ – 0.5 levels. If this level causes a reaction and we see a rebound then the price very often returns back to the Pivot zone

– rarely happening but almost always working is strategy of playing direction of breakthrough Gamma +/- 1 so the very last intraday levels. This is treated as anomaly on market, but also confirms strong pressure and domination of one side on the market. So to wrap up, breaking Gamma +1 from bottom by price means strong Bullish Pressure and in the moment of breaking Gamma +1, we enter into Long Position. The reverse is for Shorts – we enter when price breaks from top Gamma -1 level.

– another strategy is to use a supply or demand signal from VSA Scanner and use Gamm for Take Profit (TP) / Stop Loss (SL)

– a strong entry signal for the continuation of the move is breaking the Gamma level with the body of the candle on M10/15 and waiting for the retest of the broken level from the other side, SL behind the Gamma level (give some space to work, but not too much because there will always be more opportunities to enter – For example on gold recently I tried to enter 3 times and 2 times I hit the SL after breaking Gamma and the third time it was only the position came in and gave me a profit – the whole thing was positive because they were previously specific and not wide StopLoss)

VSA Scanner

– the script draws only key volume zones by default, in Settings you can enable drawing more demand and supply zones, although I prefer to set only key zones visibility by default

– the script analyzes and shows the key demand and supply signals, demand signals are below the candle and supply signals above the candle

– I use the script as a gameplay aid and I have it clearly shows which side dominates the market – supply or demand

– by observing who dominates the market and combining it with volume zones, we have a clear market analysis done 🙂

– volume zones usually work best with the first retest in the original direction of the zone – i.e. if the price has gone below the volume zone, the first retest of the zone is a good opportunity for Short (and similarly with longs)

– the breaking of the volume zones (switching to the other side of the zone compared to the original direction of the zone) is a strong signal of a change in market sentiment

There are four categories of signals now marked as below:

Cross and Diamond – major signals predicting possible trend reversal

Circle – Signals of Weakness/Strength

Triangle – Tests from VSA methodology

Flag – is displaying signals when Supply/Demand Zone were broken

Ideal scenario would be to get firstly Cross or Diamond Signal, then Circle and Triangle – but it’s not always happening. It’s individual judgement of trader what makes a difference and can turn signals from VSA Scanner into profitable trade.

Attention!! the script “jumps” when a new zone is found, but if the previous zone / (s) have not been retested / punctured, you can easily extend them manually on the chart

VSA abbreviations:

Major signals:

TR – Top Reversal

BR – Bottom Reversal

SCI – Supply Coming In

STOP – Stopping Volume

BCLX – Buying Climax

SCLX – Selling Climax

EOR – End of Rising Market

BGH – Bag Holding

CLIMACT – Climactic action identified (my own signal definition)

VOL ALP – Volume Alpha Factor (my own signal definition for identifying a lot of transactions in relatively short period of time aka High Density of Transactions)

WEAKNESS / STRENGTH – those are my own signals for identifying High Effort moves accordingly to theory  “Work vs Effort”

U – Upthrust

SH – Shakeout

Signals of tests:

TS – Test

ND – No Demand

NS – No Supply

CONF – my own signal for confirmation of Supply/Demand (but valid only after having one compatible signal earlier from “Major Group”)

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