Spread Analysis

Spread Analysis
1 thought on “Volume Spread Analysis in Trading”
© Dot Net Tutorials | Website Design by Sunrise Pixel
In this article, I am going to discuss Volume Spread Analysis in Trading. Please read our previous article, where we discussed Volume Price Action Analysis in detail. At the end of this article, you will understand the following pointers.
Let us understand bullish trend formation. The bearish trend turned into the bullish trend
Price goes through 4 phases. These are
Phase A. Stopping the previous bearish trend
Phase B. Construction of the cause (accumulation)
Phase C . Test for confirmation (testing supply after accumulation)
Phase D. Bullish Trend out of range.
We will come to this market structure later. Just understand the overall concept
Let’s understand how to differentiate different types of volumes like
Now we have four types of volume. Let’s find out in the chart
Rule -: You can visually compare Mountain Peaks to identify volume peaks structure. The key is to understand the structure of the peak clearly. Volume peak has the following characteristics:
Rising Volume — Peak (Highest Point)— Falling Volume
Average and Above Average Volume : Above Average Volume is the Highest Volume in the current session which is higher than the average volume but it is lower than the previous peak Volume. Average Volume is the volume that coincides with Moving Average 20 of the volume indicator
High volume and Ultra-high volume: high volume is volume equal to the previous pick volume. Ultra-High Volume is the Highest Volume in the current session. It is higher than the previous peak volume.
Bearish Volume is marked in Red and it shows bearish activity. Bullish Volume is marked in green and it shows bullish activity. If demand volume is greater than supply volume then overall bullish volume
In volume spread analysis few facts which we are required for chart analysis. These facts are:
Spread: Spread is the difference between the Opening and closing of the price. See the diagram below for further illustration.
Volume: Volume is the activity of the frequency of transaction of the price change during a specified period of time.
Close: Close price tells us where the balance point is at the end of the period.
Read Part1 and Part2 for a better understanding
Re call the market structure that we have discussed above
Sign of strength means. The stopping action of the downtrend
Phase A . Stopping the previous bearish trend (the sign of strength)
Again recall the volume interpretation
• Smart money has no interest in the upside – Low volume.
• Smart money is selling into the public buying – Higher volume.
Now we have found two important rules for volume spread analysis
Some volume spread analysis that suggests the end of the downtrend. These are
Now we will discuss these 3 pointers
This condition marks the end of the approaching end of a particular downtrend. This panic selling by retailers (or the public) creates an extreme expansion of the price spread and an expansion of the volume, this action may occur over one day or over several days which is matched by buying (demand) of:
Two possible outcomes after selling climax
If buying during the Selling Climax was principally for the purpose of supporting prices temporarily and checking a panic or relieving a panicky situation, this support stock will continue after a technical bounce from support. If price supply sufficiently to drive prices through the lows of the climax day and bring about a new decline, that is, a resumption of liquidation.
After a technical rally, if prices test climax low with volume decreasing and hold around or above the climax lows, then we have an indication of support and the completion of liquidation . This tells us that there is no selling pressure or no Supply, (i.e. no more sellers) an obvious conclusion that the market is going to rally as shown on the right side of the image
If the ‘ test ’ is successful, we can expect higher prices, especially if the test is on low volume and narrow spread down bar into the same area where you first saw the very high volume. This is a strong BUY signal.
If the volume had represented SELLING, how can the spread be narrow? There are only two possible outcomes for a narrow spread DOWN-day on very high volume.
This topic will be covered in the next separate article
After seeing the stopping volume. If the ‘test’ is successful, we can expect higher prices, especially if the test is on low volume and narrow spread down bar into the same area where you first saw the very high volume. This is a strong BUY signal.
Please watch the following video if you want to learn and understand Volume Spread Analysis in the Trading concept in a better way.
In the next article, I am going to discuss Reversal Candlestick Pattern Analysis in detail. Here, in this article, I try to explain Volume Spread Analysis in Trading . I hope you enjoy this article. Please join my Telegram Channel and YouTube Channel as well as my Facebook Group to learn more and clear your doubts.
Hello, Thx for your very good explanations.
I have got one question regarding the volume indicator: The bars of the standard MT4 volume indicator just tell you whether the volume was higher in comparison to the previous bar (then the current bar becomes red or vice versa.
But when I see it right, your volume indicator shows red bars for example when the selling power was higher. And the volume is displayed by the hight of the volume candle.
When I understand it right the standard MT4 indicator does not show whether the selling power was higher but only the volume quantity.
Could you please let me know which volume indicator you use,
Your email address will not be published. Required fields are marked *

Register Now

*Free gift inside

2019-08-06T12:51:07-04:00 By George |

+1 866-887-2338
info@tradeproacademy.com
67 Mowat Ave, Suite 302 Toronto, ON M6K 3E3

Learn the secret strategy to trade like a pro in our FREE upcoming masterclass.
You have likely heard the term Volume Spread Analysis before. It is often abbreviated as just VSA.
If you have heard of it, chances are you have been put off by how confusing it is.
In today’s article I will show you the simplified and practical way to use VSA.
Theoretically, you will find that mastering VSA will take a long time as it gets complex. However, always remember that theory is not what makes you money in the market.
It is only the beginning, the real secret sauce is perfecting your execution methods and risk management.
VSA is a comparison of the distance between a period high and low to the total volume traded.
That is, what is the difference between the closing price and the open price of the candle. Furthermore, how does that distance compare to the volume traded?
If you are starting to get confused at this point, hang tight as I will illustrate it with real world examples shortly.
Before you continue, it is recommended to read up on trading volume in this article if you need a refresher.
Before I show you the visual examples of VSA I want to explain the two strategies.
I will jump into each of these strategies into more details and illustrate a trade setup to help you better understand VSA.
Both of these trading strategies work on any time frame. If you are swing trading or day trading, it does not matter.
You will find that VSA is equally powerful on all time frames and especially effective on multiple time frame analysis.
This simple trading strategy will be very effective when applied to your current strategy.
Remember that not trading strategy is stand-alone perfect out of the box. Everything requires constant adjustment and this is just one tool to be combined with others for more precision and success.
Volume Spread Analysis – Short opportunity when:
In the char below you can see an example of this setup on the Apple daily chart.
Volume Spread Analysis – No demand on up bar.
But how did this trade opportunity workout?
You can see in the next chart that our VSA was followed by a 6.06% drop in just 8 trading days! This is an amazing trading opportunity.
This becomes even more profitable when you combine it with options trading.
Now let’s flip the setup and look at how to use volume spread analysis to catch long reversal trades.
As you can see on the chart below, the candle range (high minus low) is very narrow. This is a low spread.
At the same time you can see that volume was also weaker than the past two days.
This indicates a lack of selling pressure, and a potential exhaustion of the selling wave.
Therefore, you are looking for a long opportunity.
Once you get your other trading strategy qualifiers present you can try a low risk, high probability long here.
You can see that this trade setup generated a whopping 15% return in just 12 trading days. That is a great return for less than a three week holding period.
The information contained in this post is solely for educational purposes, and does not constitute investment advice. The risk of trading in securities markets can be substantial. You should carefully consider if engaging in such activity is suitable to your own financial situation. TRADEPRO Academy is not responsible for any liabilities arising as a result of your market involvement or individual trade activities.
© 2022 Tradepro Academy™. All rights reserved. Developed & Managed By ExertPro .
Notifications can be turned off anytime from browser settings.

Menu Home
Brokers
Market Data
Free Trading Webinars
Free Trading Videos
GET NINJATRADER
Search Apps & Services
Search User App Share
Spanish Trading Apps

Home > Articles > What is Volume Spread Analysis?

What is Volume Spread Analysis?
July 21st, 2021

1-click trading. Attach-to-indicator, break-even + offset, daily goal, & more
Gavin Holmes, author and CEO of TradeGuider, explained that Volume Spread Analysis (VSA) is a combination of two other analysis techniques – Fundamental Analysis and Technical Analysis. In his recent NinjaTrader Ecosystem webinar, An Introduction to SMART Wyckoff Volume Spread Analysis , Holmes defined Fundamental Analysis as being “concerned with the question of why something in the market will happen”, in contrast to Technical Analysis which “attempts to answer the question of when something will happen”. VSA, then, seeks to answer both “why” and “when” simultaneously by analyzing three main things: volume, spread and closing price.
How can Volume Spread Analysis identify the moves of ‘big players’ in the market? The key, according to Holmes, is that “Volume = Activity”. There may be low volume, ultra-high volume, or even just average volume, but each one reveals something important about the activity occurring in the market. When combined with spread and closing price, volume can tell an important story about what these ‘big players’ are doing in the market. You can think of VSA as aiming to reveal the “consensus of opinion” of Smart Money Traders.
In this short clip, Gavin Holmes defines Volume Spread Analysis and begins to explain how it can be applied to a market. If you are interested in learning more about Volume Spread Analysis, be sure to check out Holmes’s full webinar .
Includes a custom Strategy setup and Trade Review
Interested in becoming a NinjaTrader Ecosystem 3rd party Vendor? Contact Us to learn more.
Copyright © 2022. All rights reserved. The NinjaTrader Ecosystem logo is a trademark of the NinjaTrader Ecosystem LLC.
Futures, foreign currency and options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing one’s financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. View Full Risk Disclosure .
CFTC Rules 4.41 - Hypothetical or Simulated performance results have certain limitations, unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown.
This website is hosted and operated by NinjaTrader, LLC (“NT”), a software development company which owns and supports all proprietary technology relating to and including the NinjaTrader trading platform. NT is an affiliated company to NinjaTrader Brokerage which is an NFA registered introducing broker (NFA #0339976) providing brokerage services to traders of futures and foreign exchange products. This website is intended for educational and informational purposes only and should not be viewed as a solicitation or recommendation of any product, service or trading strategy. No offer or solicitation to buy or sell securities, securities derivative or futures products of any kind, or any type of trading or investment advice, recommendation or strategy, is made, given, or in any manner endorsed by any NT affiliate and the information made available on this Web site is not an offer or solicitation of any kind. Specific questions related to a brokerage account should be sent to your broker directly. The content and opinions expressed on this website are those of the authors and do not necessarily reflect the official policy or position of NT or any of its affiliates. View Privacy Policy .
Vendors along with their websites, products and services, collectively referred to as (“Vendor Content”), are independent persons or companies that are in no manner affiliated with NT or any if its affiliates. NT or any of its affiliates are not responsible for, do not approve, recommend or endorse any Vendor Content referenced on this website and it’s your sole responsibility to evaluate Vendor Content. Please be aware that any performance information provided by a vendor should be considered hypothetical and must contain the disclosures required by NFA Rule 2-29(c). If you are interested in learning more about, or investigating the quality of, any such Vendor Content you must contact the vendor, provider or seller of such Vendor Content. No person employed by, or associated with, NT or any of its affiliates is authorized to provide any information about any such Vendor Content.

Academic Courses

Business Courses

English Courses

History Courses

Humanities Courses

Math Courses

Psychology Courses

Science Courses

Social Science Courses

Spanish Courses

All Courses

College and Professional Courses

College Credit

Transfer Credit

Professional Development

Explore over
4,600
video courses

Academic Courses

College and Professional Courses

Teacher Certification

Teacher Certification

College Credit and Graduate Tests

College Credit and Graduate Tests

Nursing

Nursing

Real Estate

Real Estate

All Test Preparation Courses

Math Tutoring

Math Tutoring

Science Tutoring

Science Tutoring

Business Tutoring

Business Tutoring

Humanities Tutoring

Humanities Tutoring

Teacher Certification

PRAXIS

TExES

CSET/CBEST

FTCE

GACE

All Teacher Certification Test Prep Courses

College Readiness

CLEP

DSST

AP

GRE

Nursing

HESI

TEAS

NCLEX

Real Estate

Real Estate Licenses

Real Estate Sales

Real Estate Brokers

Real Estate Appraisal

Math Tutoring

Algebra Tutoring

Calculus Tutoring

Geometry Tutoring

Pre-calculus Tutoring

Statistics Tutoring

Trigonometry Tutoring

All Math Tutoring

Science Tutoring

Biology Tutoring

Chemistry Tutoring

Physics Tutoring

All Science Tutoring

Business Tutoring

Accounting Tutoring

Economics Tutoring

Finance Tutoring

All Business Tutoring

Humanities Tutoring

History Tutoring

Literature Tutoring

Writing Tutoring

All Humanities Tutoring

Math Courses

/

Statistics 101: Principles of Statistics
Course

/

Summarizing Data
Chapter

Spread of Data Measures & Examples | What are Spread Statistics?

Understand what the spread of data is and how to find the spread of data. Discover the various measures of spread and practice calculating spread in statistics.

Updated: 02/13/2022

You must c C reate an account to
Ma Femme Salope En Double Penetration Film
Public Jerk Porn
Done Private

Spread Analysis

Report Page