Foundations of Volume-Spread Analysis
Educational Edition — Free to Share for Learning Purposes
This course teaches the logic of Volume-Spread Analysis (VSA): how price spread, close, and traded volume reveal buying/selling pressure and professional activity. All content below is original and free for non-commercial learning.
- Module 1 — The Logic of the Market
- Module 2 — Understanding Volume & Spread
- Module 3 — Supply, Demand & Market Cycle
- Module 4 — Recognizing Professional Activity
- Module 5 — Confirmations & Cross-Checks
- Module 6 — Building a Trading Plan
- Module 7 — Trader Psychology & Discipline
- Module 8 — Integration & Live Practice
📘 Module 1 — The Logic of the Market start here
Big idea: Markets are continuous auctions. Price rises when demand > supply and falls when supply > demand. Volume shows the strength of that imbalance.
Lesson 1 — Markets as Auctions
Every market behaves like a live auction. When buyers compete harder, price is bid up; when sellers dominate, price declines. This auction logic underlies all chart reading.
Lesson 2 — Crowd vs Professionals
The crowd reacts to price; professionals act on preparation. Pros buy into fear and sell into euphoria, leaving footprints in volume and spread.
Lesson 3 — Reading a Price Bar
A bar conveys spread (range high–low), close (who won the bar), and volume (effort). Together they reveal effort vs result.
Lesson 4 — Why Volume Tells the Truth
Indicators are effects; volume is cause. Rising price on weak volume is suspect; strong volume with little progress hints at hidden opposition.
📊 Module 2 — Understanding Volume & Spread
Objective: Interpret wide/narrow spreads and compare effort vs result to detect hidden buying/selling.
Lesson 1 — Wide vs Narrow Spreads
Wide up-bar closing mid/low with high volume often signals supply appearing; narrow up-bar on low volume shows lack of interest (no demand).
Lesson 2 — Effort vs Result
Effort = volume; result = price progress. Harmony confirms the move; conflict exposes absorption or distribution.
Lesson 3 — Hidden Buying & Selling
Down-bar with very high volume followed by an up-bar = stopping volume (absorption). Up-bar with very high volume then down-bar = climactic supply.
Lesson 4 — Bar-by-Bar Practice
Write one-line “stories” for five consecutive bars: who’s active, buyers or sellers, and why (based on spread/close/volume).
🔁 Module 3 — Supply, Demand & the Market Cycle
Four phases: Accumulation → Markup → Distribution → Markdown. Confirm transitions with background and tests.
Lesson 1 — Accumulation
Quiet buying after declines. Down-bars meet rising volume but fail to make fresh lows — supply is being absorbed.
Lesson 2 — Markup
Uptrend with healthy volume. Pullbacks are shallow; tests on low volume confirm lack of supply.
Lesson 3 — Distribution
Wide up-bars fail to progress; closes drift lower; volume expands — professionals unload to the public.
Lesson 4 — Markdown
Persistent weakness until stopping volume appears again. Wait for a successful test before assuming trend change.
🕵️ Module 4 — Recognizing Professional Activity
Rule: single bars don’t decide; background does. Read signals in context.
Lesson 1 — Signs of Strength
Stopping volume, shakeouts, and a successful test (low-volume dip that holds) indicate demand is winning.
Lesson 2 — Signs of Weakness
Up-thrust (wide up-bar closing low), no-demand (narrow up-bar, low volume), and “supply coming in” expose overhead selling.
Lesson 3 — Traps & False Breaks
Breakouts on low volume or with poor closes are suspect. Look for confirmation by next bars and background volume.
Lesson 4 — Reading Background
Scan left: recent climaxes, tests, and volume surges. A bar means little without the prior 30–50 bars’ context.
🔗 Module 5 — Confirmations & Cross-Checks
Use multiple time frames and volume logic to validate signals.
Lesson 1 — Multi-Time-Frame Alignment
Trade in the direction of higher-time-frame background; use lower-time-frame for precise entries.
Lesson 2 — Volume Confirmation
Rising price + rising volume = healthy trend; rising price + falling volume = exhaustion risk.
Lesson 3 — Effort/Result Divergence
Big effort with small result warns of hidden opposition and potential reversal.
Lesson 4 — Simple Cross-Tools
Moving averages only as context; volume profile or basic order-flow to locate heavy activity areas.
⚙️ Module 6 — Building a Trading Plan
Define entries/exits from structure; manage risk objectively.
Lesson 1 — Align with Background
Only trade when the background (trend + strength/weakness) supports your signal.
Lesson 2 — Entry & Exit Logic
Enter on confirmation (e.g., successful test). Exit on opposite signal or pre-defined risk multiple.
Lesson 3 — Risk & Position Sizing
Risk ≤ 1–2% per trade. Place stops beyond logical bars; size position from stop distance.
Lesson 4 — Scaling & Management
Add only when new evidence appears; trail stops under higher lows / above lower highs.
🧠 Module 7 — Trader Psychology & Discipline
Build habits that keep you objective and consistent.
Lesson 1 — Emotional Cycles
FOMO → over-confidence → loss → doubt. Awareness and rules break the loop.
Lesson 2 — The Journal
Record context, reason, emotion, outcome. Review weekly to reinforce good behavior.
Lesson 3 — Observation Practice
Spend 15 minutes daily reading bars without trading to build pattern memory.
Lesson 4 — Non-Prediction Mindset
Trade what you see, not what you think should happen. Let price/volume evidence lead.
🌅 Module 8 — Integration & Live Practice
Apply VSA end-to-end on real sessions.
Lesson 1 — Full-Session Replay
Bar-by-bar review: where did strength/weakness first appear; what confirmed it?
Lesson 2 — Modern Tools
Blend VSA with volume profile or simple order-flow to see where business was done.
Lesson 3 — Personal Checklist
Background → signal → risk → exit. Print it; follow it.
Lesson 4 — Ethical Reflection
Use market knowledge responsibly. The aim is awareness and disciplined decision-making.
© Educational Edition — You may share or reproduce this material for non-commercial study purposes.
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