Volume & Delta Waves
π OVERVIEW
The volume wave indicator was designed for VSA, SMC, Wyckoff, and Supply and Demand strategists to establish whether either buyers or sellers are running out of steam near your area of interest.
π THE EFFORT vs RESULT PRINCIPAL OF RICHARD WYCKOFF STATES THAT
- Price movements (result) should align with trading volume (effort).
- When high volume doesn't lead to proportional price changes, ( high effort with poor result) this can be due to passive participants absorbing market orders (or the aggressive) and this could lead to a reversal
- Approaching an area of interest, which could range from Supply & Demand zones to fixed or dynamic Points of Interest (POIs), you should aim to identify signs of absorption (high effort with poor result) or exhaustion (diminishing willingness to move the price in a certain direction).
π‘ The Volume waves indicator uses W.D. Gann's swing chart construction rules for drawing waves on the chartΒ and calculates the volume and the delta from swing lows to swing highs, effectively measuring the amount of effort used to influence price directions.
πΆ THE SECRET SAUCE
This is a key component of our edge indicators. Before executing a trade, for us it's crucial to determine if the side we're betting against is losing strength as it approaches our Point of Interest.
Paired with the Volumetric Chart, this combination of volume-based indicators creates the ultimate toolkit for more educated trading decisions.