As technical traders, analysis is a major part of what we do.
But there’s a lot of data to go through, and it can get confusing.
Today I want to share with you how to make the analysis process easier…
By focusing on what I call Forensic Analysis.
In the 1930s, stock market wizard Richard Wyckoff used volume to develop a predictive indicator he called Volume Spread Analysis (VSA).
That’s what he used in his trading, and he was very successful with it.
Well, Hawkeye takes VSA and compares it to price, average true range (ATR), standard deviation of price, and other key information to create our own unique spin on Volume Spread Analysis…
Something that we call Volume Price Analysis, or VPA.
The end result is an insanely accurate prediction of market direction and sentiment.
Standard Volume is the total number of shares bought and sold during a specific time or tick interval.
It takes no account of the open and close.
It just accumulates and shows you how much volume was transacted during a certain period of time.
VPA takes that volume bar and looks at the open, the high, the low and the close to determine the distribution.
This distribution is studied and analyzed to determine whether the volume bar is red or green.
In other words, we can tell if there’s buying pressure (green) or selling pressure (red) coming in.
Hawkeye performs over 300 calculations per bar in order to determine whether the volume is buying or selling pressure.
Using Volume Price Analysis is the most sophisticated way of trading there is.
It’s a step beyond technical analysis…
And it’s what we call Forensic Analysis because it helps you do so many things, including:
- Understanding the structure of the market you’re trading in a better way
- Seeing trades more clearly
- Keeping more of your profits
- Helping you protect your positions
If that sounds like it would be useful to you…
P.S. Next time we’ll cover the actual application of volume spread analysis and how you can use it to win more trades…
So stay tuned!