Volume as effort, the candle as result: why a huge-volume candle that barely moves at a low can mark a big buyer, how to trade it with a defined stop, and why US30 volume is tick volume. This free lesson covers: Effort vs result, Which one is odd?, The wall at the low, How big is big?, Where it matters, Don’t buy the wall, When do you enter?, Where to take profit, Work it out, Your US30 volume is tick volume, What does the number mean?, When there is no wall, Put it together.
Going deeper
This lesson is the long form of The Candle That Didn't Move Reel. Its chart is illustrative 5-minute bars: support at 107.5 broken by a 3.6-point candle on about twice the usual volume, then a wall candle at the low with 3.5× the average volume of the bars before it and a 0.3-point body. Entry 101.8, stop 99.5, target 107.5 — the 1 : 2.5 in the steps is recomputed from those prices.
Effort versus result is one of the principles Richard Wyckoff taught in the early twentieth century, and it is the basis of most volume-spread reading today. Absorption is the usual name for big volume that fails to move price.
Tick volume counts price changes, not contracts. It tends to track real activity because busier markets change price more often, but different brokers' feeds give different counts. If you want real volume for the Dow, exchange-traded Dow futures (YM) report it.
Yes, mirrored: at a high after a strong rally, a huge-volume candle with a tiny body can mark a large seller absorbing the buying. Enter on a break of its low, stop above its high, target the level where price broke out.
For comparing bars on the same chart, usually yes. For anything that depends on the actual size traded, no — use an exchange-traded instrument that reports real volume.
Not here. The numbers in the lesson come from an illustrative chart. Test it on your own market and timeframe before trading it with real money.
Strategy Playbook · Learn · Step 1 of 13
An idea from Richard Wyckoff, who studied markets in the early 1900s: volume is the effort, and the candle — how far price actually moved — is the result.
Usually they match. A lot of volume moves price a lot; little volume moves it a little. The bars worth noticing are the ones where they do not match.