VSA MODULE 1: LOGIC OF THE MARKETS

 

📘 Module 1 — The Logic of the Market

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

Financial markets operate like a continuous auction. Buyers lift offers; sellers hit bids. Price moves toward the more aggressive side.

• Buyers bid for limited supply.
• Sellers offer into demand.
• Movement = who is more aggressive.

Evaluation:

1. Markets function as … a) Lottery b) Continuous auction c) Fixed exchange d) Prediction machine
2. More aggressive buyers → price tends to … a) Flat b) Down c) Up d) Random
3. Imbalance strength is seen in … a) Spread b) Time c) Volume d) Price only

Lesson 2 — Crowd vs Professionals

Crowd: reactive, emotional; often buy late and sell late.
Professionals (Smart Money): accumulate low, distribute high.

VSA detects professional activity through volume + spread patterns at key levels.

Evaluation:

1. Who trades emotionally? a) Pros b) Crowd c) MMs d) Algos
2. Smart Money accumulates when price is … a) High b) Sideways c) Low d) Volatile
3. VSA reveals activity via … a) RSI b) Volume + Spread c) News d) Patterns

Lesson 3 — Reading a Price Bar

Each bar shows Open, High, Low, Close (OHLC). The spread and closing position reveal who controlled the session.

• Wide up bar closing high → buyers dominant.
• Wide down bar closing low → sellers dominant.
• Narrow spread + low volume → lack of interest (no demand/supply).

Judge effort (volume) vs result (price progress).

Evaluation:

1. Not part of OHLC: a) Open b) High c) Average d) Close
2. Wide up bar + high volume = a) Weakness b) Strength c) Indecision d) Low interest
3. Narrow spread + low volume means a) Fight b) Market resting c) Pro selling d) Fast trend

Lesson 4 — Why Volume Tells the Truth

Big players can’t hide their footprints — major buying or selling always creates volume.

• Volume = Effort
• Price = Result

High effort but little result → absorption or distribution, a key VSA signal.

Evaluation:

1. Volume represents a) Emotion b) Effort c) Result d) Direction
2. High volume + little price progress = a) Continuation b) Absorption/weakness c) Random d) News
3. Why trust volume? a) Delayed b) Shows hidden interest c) Ignores big players d) Noisy

Tip: Expand one lesson at a time and review the questions before continuing.