Master the signals: Absorption, No Demand, Climaxes, Churn, Effort Failures, Upthrusts, and Tests. Apply the Four Laws. Avoid low-liquidity assets.
Market opens. First 5-min bar: Wide spread up, close at high, volume = 150k (above average). Effort = Result. No signal – just continuation.
Wide spread, high volume, but the bar closes right in the middle of its range. The bar "churns." The Psychology: Battle between buyers and sellers. No one wins. Professionals are distributing (selling to the public) or accumulating (buying from the public) without moving price. The Signal: Preparation for a reversal. Stop hunting. How to trade: Wait for the breakout direction. If price breaks up from churn on low volume – go long. If breaks down on low volume – go short. Volume Spread Analysis Abcs Of Vsa
Think of signals as nouns. Laws are the grammar.
Without background, a high volume bar is just noise. With background, it is a roadmap. Master the signals: Absorption, No Demand, Climaxes, Churn,
Activity refers to the amount of volume accompanying a price move. In VSA, volume does not just mean "a lot of trading"; it represents professional activity.
—which is critical for spotting absorption or hidden selling. Automatic Pattern Recognition : The feature should flag specific "ABC" setups: Bar A (Bag Holding/Selling Climax) Market opens
In VSA, you never trade a random breakout. You wait for the "Springboard" – a test of a low volume node or a "Spring" (a false breakdown below support on ultra-low volume). This low-volume test confirms that Supply (selling pressure) has been exhausted. The cause is finished, so the effect (a strong rally) is imminent.
If you have ever looked at a chart and wondered why price suddenly reversed on a seemingly strong candle, or why a market fails to rise despite good news, the answer lies in the relationship between the range of the price bar (Spread) and the number of shares or contracts traded (Volume).