Volume Expansion: An

edge for a low risk entry

By: Anand Rathi

WHAT IS VOLUME PRICE ANALYSIS (VPA)
• Volume Price Analysis (VPA) is a technical analysis tool that combines both price and
volume and attempts to confirm price action or warn of potential weakness or lack of
conviction by buyers and sellers
• According to Anna Coulling: “There are only two leading indicators in trading. One is
price, and the other is volume. In isolation, they are weak and reveal little, but put them
together, and just like gun powder, they become an explosive combination.
• In short:
• Volume Price Analysis reveals the DNA of the Market, and places this awesome power
in your hands
• You can become a confident and assured trader, removing emotion and stress from
your trading
• Also, will start to enjoy your trading, as you will know where the market is going next
based on simple logic and the power of Volume and Price
Basics important points of VPA & Markets

• what is a volume: A transaction of buy and sell

• Market is all about supply and demand

• Buyer test supply & Seller tests demand

• buyer looks to buy low & seller looks to sell high

• 4phases: Accumulation, Mark-Up, Distribution,Mark-down,

• Additional: Re-accumulation, Re-distribution

IMPORTANT POINTS TO REMEMBER

• Always give Importance to Price levels (range)

• If the volumes are conflicting with price, then price levels take precedence

• Mid-point of high volume candle gives an Indication with respect to aggressiveness

• when ever vols very high or very low at not so imp lvl we need to be cautious..

• Low/High of Breakout / Breakdown candle can be good indication about a false move

• Trading is all about probablity of an outcome, imp of all is money management accordingly.
 I WILL BE TALKING ABOUT VOLUME
EXPANSION TODAY, WHICH IS PART OF VPA
THAT I FOLLOW
DISCLAIMER

• I have learned this overtime and is totally based on my learning's from the market

• I haven't gone through any books so u may or may not find these details in any books

• This is what I have been following since few years and has been working for me fine. I have my
Right to be wrong.

• Any stocks / index views discussed here are just for learning purpose, do not consider it as buy /
sell recommendation.
 UNDERSTANDING
VOLUME EXPANSION
WHAT IS VOLUME EXPANSION

• What is Volume Expansion (VolExp)

• Whenever higher volumes are observed than in the recent sessions with or without
major change in price behaviour we consider it as Volume Expansion

• Advantages of following VolExp

• VolExp helps in identifying trading opportunities right near the inception of a trending
move providing a low risk-high reward trade entry

• VolExp helps to get very gud ROI in very short time period.
DIFFERENT TYPES OF
VOLUME EXPANSION
 TYPES OF VOLUME EXPANSION
“PRAKAT” VolExp

• When we get a candle

whose color is opposite to
recent trend with positive
/ negative close
compared to previous day
&
• Volumes are highest when
compared to that of
recent full leg of move
 TYPES OF VOLUME EXPANSION

“GUPT” VolExp

• In this case the candle color

and close are as per ongoing
trend but occurs after a good
trending move &
• Next day high/low of this
candle gets crossed without
breaching low/high of
previous day
 TYPES OF VOLUME EXPANSION
“KAPAT” VolExp

• A very high vol candle with

close in the direction of
present trend
• Generally seen after end of
major trending move.
• In subsequent sessions
price trades mostly within
this HVC range.
• Post this earlier trend or
opposite trend may resume.
How to trade using VolExp

• Entry: Candle close above or below high or low of HVC

candle.

• SL: Low or high of HVC

• Target: Minimum target- Range of HVC, Probable

target - Recent swing high/low or major

supply/demand zone having next comparable vols.

Examples
Nifty Bottom VolExp
DHFL
Yes Bank
Vakrangee
ICICI Bank
Nifty VolExp Failure
Dish TV
State Bank Of India
Nifty VolExp- Voltaile
Move
 Nifty VolExp-
midpoint of HVC
 Nifty VolExp-close
not +ve and false buy
trigger
 Few Tips on Money/Risk Management
• Trade Entry : Wait for entry signal & then enter with proper sl, never run after the trade with risk
at stake in mind

• Position Size : never bet more than 2% of capital per trade & so have to manage postion size
accordingly can find alternative like cash buying or ignore trade

• Exit Strategy : whenever sl gets hit exit is must without any hope on reversal or so, have to exit
if any reversal is also seen .

• Trailing Position : Once positions gets in gud profits as per R:R, keep booking partial profits and
do trail with TSL.

• Hedging Position : Options are best available instrument to hedge our position so as to
minimize risk or protect profits.
Intraday Trading

• Wait for some time post markets open before entering a trade.

• Proper trade plan(lvls/view etc) is must everyday for trading.

• Intraday trading always book atleast partial profits on 1:1 risk reward and trail posn.

• Setups on 5/10/15 TF can be used for intraday.

Phycology or Behavioural Ananlysis
• too much noise on BO/BD is not gud. It may cause false move or a pause.

• lot of expectations/noise on an outcome of event generally leads to non event.

• whenever lot of -ve news flows occurs but price resists to go down tht would mean major reversal is
around and Vice versa.

• tops are formed on +ve news and vice versa

• post fresh breakdown if there is a +ve news flow then expect more downside in stock, that bounce due
to news flow is used to dump more by operators ex: DHFL/yesbank /jet-airways recently

• Generally for index based on period of consolidation and then BO probable short term & medium term
tgts can be calculated.

• For smart money Rate of interest based return is imp so can calculate accordingly.
DOs & DONTs
• Stop trading too much & too big

• Trade what you see and not “What you Want o See” (hope)

• Never fight with trend , Always remember “Trend is Best Friend”

• Do not look to do bottom fishing, let mkts show some signs

• Cut your losers fast but never exit winners completely soon

• Never Trade based on so called “Insider Info”, always follow charts, charts knows everything

• Always Remember “ Trading is More about Discipline and Emotional Balance”

Have Conviction on your charts and Follow your charts
“RELIGIOUSLY”

THANK YOU
m: 9885392011

@anandrathi12