Closing in the indicates a transfer of ownership or a "tug-of-war." Key VSA Concepts Every Trader Should Know 1. Effort vs. Result
: The difference between the high and low of a single price bar, indicating the range of market movement.
The total amount of activity (shares, contracts, or lots) traded during a specific price bar. This represents the amount of effort the market is putting in.
The difference between the high and the low of a price bar or candlestick. This represents the price volatility or range. volume spread analysis abcs of vsa
This occurs during a corrective bounce in a markdown phase. The price drifts higher, but the pathetic volume reveals that institutional money has zero interest in buying at these prices. Without demand, the market is structurally weak and primed to tumble further. Step-by-Step: How to Apply VSA to Your Trading Strategy
In addition to the ABCs, there are several other essential concepts in VSA:
Traditional candlestick charts focus heavily on the relationship between the open and the close (the candle body). VSA, however, prefers traditional bar charts or looks at candlesticks differently, focusing on the high-to-low spread and the closing position. Closing in the indicates a transfer of ownership
VSA does not look at the news; it looks at the volume and spread to determine whether buying pressure (demand) or selling pressure (supply) is dominating. 2. The Law of Cause and Effect
: Where the price settles relative to its range (e.g., high, middle, or low), which signals the final sentiment of the bar. C: Common VSA Patterns and Signals
: Represents the total activity or "effort" of professional traders during that period. The total amount of activity (shares, contracts, or
VSA helps you see when the market is in Accumulation (Smart Money buying low) or Distribution (Smart Money selling high).
The total amount of trading activity on a specific bar (high activity indicates high smart money involvement).