VSA Module 2 — “The Language of Volume and Spread

 

📗 Module 2 — The Language of Volume and Spread

Big Idea: Each price bar tells a story through its spread (range) and volume (activity). Learning this language lets you see professional intent — strength or weakness — before the crowd reacts.

Lesson 1 — Understanding Spread

Spread is the distance between the high and low of a price bar. It shows the activity range within that period.

• Wide spread → strong participation, decisive move.
• Narrow spread → lack of interest, balance, or hesitation.
• Compare spreads across bars to read changing participation.

Spread alone doesn’t tell strength or weakness — it must be paired with volume.

Evaluation:

1. Spread measures the bar’s … a) Open–Close b) High–Low range c) Average price d) Volume strength
2. Wide spreads indicate … a) Quiet trading b) Active participation c) Indecision d) Weak demand
3. Spread alone shows … a) Direction b) Activity only c) Trend d) Strength

Lesson 2 — The Role of Volume

Volume represents effort — the number of transactions behind a price move.

• High volume = heavy effort, strong interest, or transfer between strong and weak hands.
• Low volume = little effort, lack of conviction, or temporary pause.

VSA looks for disagreements between price spread and volume: when effort doesn’t match result, something is happening beneath the surface.

Evaluation:

1. Volume shows … a) Direction b) Effort c) Emotion d) Result
2. High volume + small spread = a) Strength b) Absorption c) Weakness confirmed d) Indecision
3. Low volume + narrow spread = a) Lack of interest b) Panic c) Testing d) Strength

Lesson 3 — Effort vs Result

When we compare effort (volume) with result (price spread), we can judge the hidden intent of professionals.

• High effort, big result → genuine strength or weakness.
• High effort, small result → absorption or distribution.
• Low effort, large result → lack of opposition (quiet breakout or drop).

This “effort vs result” test is central to reading supply and demand accurately.

Evaluation:

1. Effort is measured by … a) Price b) Spread c) Volume d) Time
2. High effort + small result often signals … a) Trend b) Absorption/distribution c) Acceleration d) No interest
3. Low effort + large result = a) Lack of opposition b) Strength c) Weakness d) Climax

Lesson 4 — The Volume–Spread Relationship

The relationship between volume and spread reveals the market’s underlying message. Here are common patterns:

• Wide spread + high volume → genuine momentum or climactic action.
• Wide spread + low volume → false move or breakout with no participation.
• Narrow spread + high volume → absorption, professional activity against the move.
• Narrow spread + low volume → quiet zone, no interest.

By classifying these patterns, VSA traders can anticipate continuation, exhaustion, or reversal.

Evaluation:

1. Wide spread + high volume usually means … a) Weakness b) Strong momentum c) Lack of demand d) Random noise
2. Narrow spread + high volume indicates … a) Absorption b) Panic c) Strength d) Indecision
3. Low volume + narrow spread suggests … a) Quiet market / no interest b) Reversal c) Strength d) Climax

Tip: Notice how every VSA signal comes from comparing two elements — volume (effort) and spread (result). Practice reading them together until it feels intuitive.