What is Volume Spread Analysis?

July 21st, 2021

Gavin Holmes, author and CEO of TradeGuider, explained that Volume Spread Analysis (VSA) is a combination of two other analysis techniques – Fundamental Analysis and Technical Analysis. In his recent NinjaTrader Ecosystem webinar, An Introduction to SMART Wyckoff Volume Spread Analysis, Holmes defined Fundamental Analysis as being “concerned with the question of why something in the market will happen”, in contrast to Technical Analysis which “attempts to answer the question of when something will happen”. VSA, then, seeks to answer both “why” and “when” simultaneously by analyzing three main things: volume, spread and closing price.

How can Volume Spread Analysis identify the moves of ‘big players’ in the market? The key, according to Holmes, is that “Volume = Activity”. There may be low volume, ultra-high volume, or even just average volume, but each one reveals something important about the activity occurring in the market. When combined with spread and closing price, volume can tell an important story about what these ‘big players’ are doing in the market. You can think of VSA as aiming to reveal the “consensus of opinion” of Smart Money Traders.

In this short clip, Gavin Holmes defines Volume Spread Analysis and begins to explain how it can be applied to a market. If you are interested in learning more about Volume Spread Analysis, be sure to check out Holmes’s full webinar.

If you enjoyed this clip, be sure to watch these other market-analysis webinars Analyzing Candlestick Patterns and Combine Analysis Techniques: Gain Confidence in Your Entry Points!

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