Introduction to Volume Analysis

What is Volume Analysis?

Volume analysisis the study of volume and price to predict market direction. Volume analysis is built on the foundation of Richard Wyckoff and further developed by Tom Williams. It pays particular attention to Volume, Range/Spread and the closing price relative to it’s range.

Wyckoff explained 4 key phrases in the market. Accumulation, Distribution, Markup and Markdown. He believed that markets were manipulated by “Market Makers” or so called “Smart Money”, big investors, banks, hedgefunds and syndicate traders that were able to move the market in their desired direction by the use of manipulation of crowd behaviour and actions based on news events.

Volume Analysis is not a trading system or a strategy, it’s a complement to your existing strategy to be able to recognise when the Market Makers are active and follow their intentions. As you already know statistics say that the majority of traders are losers and the winners are most of the time the big players, at your expense.

Why does volume analysis work?

Volume analysis is based on the idea that looking at patterns and price action is not sufficient enough to be able to make correct decisions in our trading. We need to look at volume, in relation to price action to understand what market makers are doing and when they are active.

Have you ever wondered why a trade you placed, starts to go in your direction and then turns swiftly to become a losing trade? Or a breakout you planned with precision, turns around, triggers your stop-loss and then moves in your anticipated direction?

Volume analysis answers all of this.

It sounds very complicated

In some sense, it is a little bit complicated. But when you get a grasp on what we are teaching here you will soon understand the logic behind it and that markets are driven by greed and fear, not by mathematical formulas and fundemental news.

This is not the “Holy Grail” of trading but it’s a VERY powerful addition to your already existing strategy.

How do I get started?

The best way to get started is to join our community if you are already familiar with all the principals of trading, price, structure, support/resistance, moving avereges, candlesticks etc.

If you are a complete beginner we recommend that you educate yourself in price action trading, what moves price and core economic fundementals before joining us.