Volume spread analysis for retail investors

Volume spread analysis for retail investors

To analyze the volume in the stock market we need to understand our perspective. There are two types of perspective while analyzing the volume data. These perspective are:

1. Wholesaler perspective
2. Retailer perspective

If you need to make money in the stock market change your viewpoint as a wholesaler, not as a retailer. To make money in the stock market you need to follow the wholesaler idea. We as retail investors should do whatever the wholesaler is currently doing.

1. Whenever the market moved sharply down with high volume and the market is in a bearish trend this is called buying climax. Why it is called a buying climax? Because the market is in bearish trend retail investors are already in fear due to the loss of 10%  because they purchased the stocks when the market is in an all-time high. Media create the hipe the market will rise 10% from here. If you want to understand the logic of price correction read this blog 
2. If buying climax happens in a bearish trend, selling climax will happen when the market is at an all-time high and huge volume appears on the chart. The wholesaler is selling the stocks and retail investors are buying the stocks because the retail investors think the market will touch the moon after they buy any stock.
3. Price and volume is the leading indicator of the stock market
4. No other indicator is used to predict the future price in the stock market

1. In the electronic world of trading, the price action is reflected in the candlestick chart
2.  To visualize the price action the best way is to analyze the candlestick formation.
3. To study price volume action look at the four elements that create the formation of the candlestick. These four elements are open high low close. The importance of volume is much more relevant now for the validation of candlestick formation
4. Many of the retail investors not able to decide the time frame for candlestick analysis
5. Candlestick works in all time frame but the strength after the breakout will be decided based upon the time frame
6. Small-time frame analysis and breakout lead to the small duration strength
7. Larger time frame analysis and breakout leads to the large duration strength
8. The volume price action analysis contains high close open low lower wick upper wick price spread as shown in picture
9. The wick and the spread are the most important part of the analysis with volume
10. The wick and the price spread analysis help us to find the sentiment in the market and volume help us to validate the wick and the price action.

1. Lest discuss the price spread which helps us to find the sentiments in the market
2. Wide price action spread suggests us a strong market sentiment and narrow price action spread suggest to us a weak market sentiment on either bullish or bearish.
3. The upper wick and the lower wick are the indicators of change in sentiment
4. If sentiment has not changed in the market there will no wick on either on the lower or upper side.
5. Candle with no wick and wide price action has suggested us a strong market sentiment
6. The sign of reversal happens when these conditions follow
7. The market in a bearish trend and when it opens bears took the price to the days low 
8. After touching the day's low price took a pause at days low 
9. After the pause buyers see the price level attractive to them
10. They start buying at a lower point of the days as the price rises bears started to cover their the position to cut their losses and bulls retraced the stock price at the opening price at the end of the day with high volume
11. The price movement at the end of the day with volume is the true picture of the reversal sign. 
12. Let say you have a water pipe with a water sprinkler attached to it.
13. In this case, water is our price and the sprinkles are the volume 
14. If we open the tap water will leave the sprinkle with no great force
15. But if we open the tap and hold the one end of the pipe and store the water in pipe and then release the water the water sprinkles will leave the pipe with high pressure
16.  In both cases,  water is the same but the time is a factor  which causes the high pressure 
17. So if the stock price is holding a certain level for a few days and when it breaks the level if will move fast this is called the breakout or breakdown in stock prices 
18. Stock market educators or institute vs retail traders
19. How professional traders trade?

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