Volume Spike Trading Strategy

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Volume Spike Trading Strategy

In this article, I will discuss the Volume Spike Trading Strategy with Real-Time Examples. Please read our previous article discussing the Volatility Contraction Pattern (VCP) Trading Strategy – How to Trade the Volatility Contraction Pattern with Examples.

Why Volume Matters in Trading?

• Market Interest price move on large volume shows something might have triggered the move. This could be news or earnings fundamental change, or economic releases such as the non-farm payrolls or an interest rate decision.
• Momentum- Rising volume with price increasing suggests bullish strength increasing. Falling volume with price increases suggests that momentum is waning, and there could be a reversal. For more details, please check our Volume Price Action Analysis article.
• Confirmation – Traders also use volume to confirm chart patterns breakout or breakdown any breakout or breakdown for more details about the breakout trading strategy.
• Climax- In a strongly established trend, large price and volume spikes often precede a major reversal: the security has either been substantially overbought or oversold, and market professionals step in and buy/sell against the trend. Check Volume Spread Analysis.
• Spike within trading range- In a trading range, large volumes on a wide-ranging day will signal the likely direction of a breakout.

What is the Volume Spike in Chat?

The high volume suggests that something happened to the instrument. may be due to news or earnings TECHNICAL or fundamental changes or economic releases such as the non-farm payrolls or an interest rate decision, or any other reason. This can cause a rush of both retail traders or investors and institutional buyers or smart money into the stock, which creates demand from both retailers and smart money and moves the price up. Align yourself with the volume spike to ride the big gains.

Identifying Volume Spike Entry

What to check after Volume Spike?

VOLUME SPIKE CAN OCCURS at

1. BREAK OF MARKET STRUCTURE
2. AT demand zone FOR BULLISH REVERSAL (IGNITING VOLUME)
3. CLIMAX (ENDING VOLUME)
4. ACCUMULATION /REACCUMULATION BREAKOUT
5. Spike within the trading range. Trade direction of the breakout

These characteristics show clear INSTITUTIONAL DEMAND. One more follow-through of volume spike within 3 to 4 days confirms the move behind smart money

BELOW STOCK AFTER VOLUME SPIKE PRICE MOVE from 330 to 900 (160% up move)

Here is another example of a volume spike. Each volume spike price doubles the last volume spike 50% up

CHECK Overhead SUPPLY ZONE BEFORE LONG ENTRY

Suppose there is a significant supply zone, immediately overhead. It might be best to disregard the trade. If the supply zone is high enough above the current price to allow for a significant gain, then it can take entry.

How do I find it?

You can find it in 2 ways

• End of day (EOD)
• Real-time (during the day)

End of day (EOD)

Here are the main things I look for:

IF MISSED THE REAL-TIME HIGHEST VOLUME ENTRY

Entry: above volume spike candle high. PART ENTRY ACCUMULATE BUY ON DIPS UNTIL VOLUME BREAKOUT CANDLE LOW BREACH

Exit: end-of-day close below the volume spike candle low.

Basic Criteria I am using for Finding Volume Spike

• Highest volume ever or in a year or since IPO day o
• Volume spike day close > vwap of that day
• It is best if there is through volume within a few days after the volume spike day.

Scanner for the above criteria

Below are some examples of volume spike trading

Price reaches the demand zone by making a falling wedge pattern. Then, the trendline breakout with a volume spike in 6 months, and the price doubled from there.

The below example shows Spice in the reaccumulation stage.

Volume spike breakout and confirm the move behind smart money

Realtime

To be alerted in real-time to the volume spike signal, you need to choose a real-time scanning and alert Logic of volume spike intraday trading.

What happens is some significant catalyst occurs in the instrument. This can cause a rush of both retail traders or investors and institutional buyers or smart money into the stock, which creates demand from both retailers and smart money and moves the price up. Align yourself with the volume spike to ride the big gains.

In the next article, I will discuss the Fibonacci Trading Strategy – a Complete Tutorial with Real-Time Examples. Here, in this article, I try to explain the Volume Spike Trading Strategy with Real-Time Examples. I hope you enjoy this Volume Spike Trading Strategy article. Please join my Telegram Channel and YouTube Channel as well as my Facebook Group to learn more and clear your doubts.