๐จ Mastering Market Dynamics: Understanding "Effort vs. Result" in Volume/Price Trading ๐
๐ Volume = Effort
๐ Price = Result
In this ๐งต, I will explain how to read Volume & Price as a dynamic duo to understand market movements!
Bookmark/STUDY this Thread: ๐
$SPY $QQQ $IWM
๐ Volume = Effort
๐ Price = Result
In this ๐งต, I will explain how to read Volume & Price as a dynamic duo to understand market movements!
Bookmark/STUDY this Thread: ๐
$SPY $QQQ $IWM
In this ๐งต, I will discuss the core concept of "Effort vs. Result" in trading
Explored in "A Complete Guide to Volume Price Analysis" by @annacoull, this fundamental principle discusses the relationship between trading volume and price movements
Let's dive in ๐
Explored in "A Complete Guide to Volume Price Analysis" by @annacoull, this fundamental principle discusses the relationship between trading volume and price movements
Let's dive in ๐
Imagine an increase in volume for a particular stock ๐
Soon after, a significant price movement follows, either up or down
What does this tell us? ๐ค
1๏ธโฃ High Volume: Indicates strong market interest
2๏ธโฃ Resulting Movement: Reflects a potential shift in market sentiment
Example: Increased volume precedes a stock breakout, signaling a possible trend reversal or continuation
Let me break it down just a bit ๐
Soon after, a significant price movement follows, either up or down
What does this tell us? ๐ค
1๏ธโฃ High Volume: Indicates strong market interest
2๏ธโฃ Resulting Movement: Reflects a potential shift in market sentiment
Example: Increased volume precedes a stock breakout, signaling a possible trend reversal or continuation
Let me break it down just a bit ๐
๐ High Volume, High Impact:
When price changes are accompanied by high trading volume, it suggests a significant market shift
This is parallel to a strong EFFORT being put forth, leading to notable upward results in price
Example: $CVNA (Buyers entering the market)๐
When price changes are accompanied by high trading volume, it suggests a significant market shift
This is parallel to a strong EFFORT being put forth, leading to notable upward results in price
Example: $CVNA (Buyers entering the market)๐
๐ Low Volume, Mild Moves: (Flags)
When price changes occur with low trading volume, it indicates a lack of significant market participation
The EFFORT is minimal, leading to milder price movements
Example: $SPY (Selling pressure isn't strong enough to push price down) ๐
When price changes occur with low trading volume, it indicates a lack of significant market participation
The EFFORT is minimal, leading to milder price movements
Example: $SPY (Selling pressure isn't strong enough to push price down) ๐
๐ Levels of Interest:
"Effort vs. Result" becomes particularly crucial at transition points in the market
For instance, during trend reversals, an increase in trading volume combined with a bullish candle/price move can signal a change in market direction
Examples: $SPY ๐
"Effort vs. Result" becomes particularly crucial at transition points in the market
For instance, during trend reversals, an increase in trading volume combined with a bullish candle/price move can signal a change in market direction
Examples: $SPY ๐
Market Sentiment: ๐
By examining the relationship between EFFORT (volume) & RESULT (price), you see the market sentiment
๐ High volume with price changes = strong conviction from market participants
๐ Low volume with price changes = a lack of enthusiasm
Study/Bookmark:
By examining the relationship between EFFORT (volume) & RESULT (price), you see the market sentiment
๐ High volume with price changes = strong conviction from market participants
๐ Low volume with price changes = a lack of enthusiasm
Study/Bookmark:
Let's look at a real-world example: ๐
Imagine a stock that has been consolidating in a tight range & price breaks upwards with an increase in volume
This suggests that a large effort is being exerted to push the price higher, increasing the likelihood of a supported uptrend ๐
Imagine a stock that has been consolidating in a tight range & price breaks upwards with an increase in volume
This suggests that a large effort is being exerted to push the price higher, increasing the likelihood of a supported uptrend ๐
Another scenario: โฌ๏ธ
A stock has been in a steady uptrend, but it encounters a minor price dip with low trading volume
Here, the effort behind the price drop is limited, indicating a potential temporary setback rather than a significant trend reversal ๐๐๐
A stock has been in a steady uptrend, but it encounters a minor price dip with low trading volume
Here, the effort behind the price drop is limited, indicating a potential temporary setback rather than a significant trend reversal ๐๐๐
Understanding "Effort vs. Result" allows us traders to differentiate between meaningful price movements & insignificant fluctuations ๐ง
Personally, it guides my trading decisions by providing me with a deeper understanding of market dynamics and the sentiment driving them ๐
Personally, it guides my trading decisions by providing me with a deeper understanding of market dynamics and the sentiment driving them ๐
That's a wrap!
I hope you found value within this ๐งต on how to interpret EFFORT/RESULT in the markets, and be sure to check out @annacoull book!
I hope this simple thread helped someone, RT or like if useful, it is much appreciated ๐
Please don't hesitate to ask questions ๐
I hope you found value within this ๐งต on how to interpret EFFORT/RESULT in the markets, and be sure to check out @annacoull book!
I hope this simple thread helped someone, RT or like if useful, it is much appreciated ๐
Please don't hesitate to ask questions ๐
As always, to end this thread, I will leave you with a few follow suggestions: โ
@DBookTrading: Volume
@fabiansoss: Volume
@ThiccTeddy: Volume
@Albert_trades: Volume
@notmrmanziel: Edu
@Jake__Wujastyk: Edu
@Strat_Trades: Edu
@RockyBTrades: Edu
@Braczyy: Edu
@TSDR_Trading: Edu
@epictrades1: Edu
@MapleStax: Edu
@blakestonks: Edu
@AcetheKidTA: Edu
@FT__Trading: Edu
@KeanuTrades: Edu
@Chart_School: S/D
@poguetrading: S/D
LMK if I missed any!
@DBookTrading: Volume
@fabiansoss: Volume
@ThiccTeddy: Volume
@Albert_trades: Volume
@notmrmanziel: Edu
@Jake__Wujastyk: Edu
@Strat_Trades: Edu
@RockyBTrades: Edu
@Braczyy: Edu
@TSDR_Trading: Edu
@epictrades1: Edu
@MapleStax: Edu
@blakestonks: Edu
@AcetheKidTA: Edu
@FT__Trading: Edu
@KeanuTrades: Edu
@Chart_School: S/D
@poguetrading: S/D
LMK if I missed any!
And @SpencerParsons0! Kids a beast, follow him ๐
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