Welcome to priceandvolume.com. My name is Mercilee Dixon and I’m the founder of priceandvolume.com. This blog is about how I trade using price action and volume analysis. Make no mistakes, I’m not an expert or professional trader nor do I claim to be. Like many of you, I trade my own account. And the approach I used to trade my account is price action and volume analysis.
Although this blog is for beginning investors, more seasoned traders may find one or two ideas that may improve their trading success rate. My goal is to reach new traders and help them better understand how the stock market works. To help them understand that the stock market, or any market for that matter, is governed by the laws of supply and demand.
Price action and volume analysis is a form of technical analysis some time called tape reading, the study of what a market or stock is doing based on its price action and volume characteristics. This form of analysis is important because the advantages that Wall Street insiders and professional traders have is removed when you understand how to analyze the market based on price action and volume.
How did I encounter price action and volume analysis?
After losing money in the markets trading with fundamental analysis, I searched for and found a better way in price action and volume analysis. I like price action and volume analysis for its simplicity. And although it’s not easy, with consistent practice anyone can come to understand and apply price action and volume analysis. The form of price action and volume analysis I use is based on the teaching of Richard D. Wyckoff and some contemporary price action and volume traders.
Richard D. Wyckoff was one of the 20th century most influential traders and stock market teacher. He studied and recorded the trading methods of some great traders of his time. Traders like Jesse Livermore, J. P. Morgan, and James R. Keene to name a few. His trading method, call The Wyckoff Method, teaches retail investors the rules of trading and is based on three laws:
- The Law of Supply and Demand
When demand is greater than supply prices rise, and when supplies greater than demand prices fall.
- The Law of Cause and Effect
How far the stock should rise or fall given the extent of accumulation and distribution in a trading range.
- The Law of Effort vs. Results
How far stock rises (result) is directly proportional to volume (effort)
Besides Wyckoff, many other traders shaped my understanding of price action and volume analysis. Traders such as Humphrey B. Neill’s Tape Reading and Market Tactics, William J. O’Neill founder of Investor’s Business Daily, and Al Brooks’ Reading Price Chart Bar by Bar are few of my favorite. I hope you find price action and volume analysis helpful in your trading evolution.