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Voulme Spread Analysis

Volume Analysis along with price and price spreads is becoming popular due to its simplicity and logic. This is more popularly called Volume Spread Analysis. This involves study of price action and volumes without any derivatives like Indicators. This study is a combination of candlestick analysis and volume analysis.

The basic premise behind the volume spread analysis is that the market is basically moved by the “Smart Money”. The smart money accumulates the stocks at low prices. Then begins a process of marking up the price. Then the “Dumb Money” starts entering the smart slowly. The smart money starts passing the ownership of the stocks to the dumb money. This process is called Distribution. Soon more and more dumb money starts rushing into the market not wanting to be left out of the big rally. Unfortunately the retail traders are the last to get in.

Once the process of distribution is complete the smart money starts rapidly marking down the prices and the dumb money are left holding the stock which was bought at high prices. At the end the smart money is much richer and they can again start accumulating the stock at lower prices. The cycle continues.

involves smart money and dumb money. The smart money will include market movers, Trader syndicates, brokers and institutions. The dumb money would include retail traders and newbie traders. The smart money also called strong hands accumulates stocks from weak hands. This process is called accumulation.

Here we are providing Volume Price Analysis based on our own Volume Price Analysis algorithm.

http://www.tatechnics.in/vpa/vpa-afl

The VPA afl

We are providing an Volume Spread Analysis AFL for the Amibroker platform. Following is a brief description of the functions in the VPA afl.

The VPA provides a price chart with VSA signals for the various bar. A top Title sections has an Information area. A commentary for each VSA signal is also provided. The commentary appears as and when the signal appears.

Information Area

The top Title Area provides the basic information about the Stock. It also provides information about the Volume, Spread and the close position of the current Bar. In addition it provides the information about the short term trend status, intermediate Trend Status and the Long term term trend status.

Price Chart with VSA Signals

The price chart provides the indication of the VSA signals for the various Bars. The signals include the standard signals like the upthrust bar, Pseudo upthrust bar, Stopping volume Test etc. i also includes derived signals like strength returning and confirmed weakness which are derived from the previous bars and background. When a signal appears the information area provides the description of the signal and the the at the same time the commentary section provides more details of the signals.