Page 28 - A Complete Guide to Volume Price Analysis: Read the book then read the market

The same argument applies to tick data in the spot forex market. I do accept it is imperfect again, but we are only comparing one bar with another,
and provided it is displaying activity, that's fine. It's an imperfect world and one we have to live and trade in. The free tick volume feed on a simple
MT4 platform works perfectly – trust me. I've used it for years and make money every day using it. Furthermore it is provided, for free, by the broker.

Principle No 4 : Practise Makes Perfect

It takes time to become proficient in any skill, but once learnt is never forgotten. The trading techniques you will learn in this book work in all time
frames, and are equally valid, whether you are a speculator or investor. As an investor you may be looking for a buy and hold over months, so will be
considering the longer term charts of days and weeks, much like Richard Ney for example. Alternatively, you may be an intra day scalping trader
using VPA on tick charts or fast time charts. So, take your time and don't be impatient. It is worth the time and effort you invest, and after a few
weeks or months you will be surprised at how quickly you can suddenly start to interpret and forecast every twist and turn in the market.

Principle No 5 : Technical Analysis

VPA is only part of the story. We always use a variety of other techniques to confirm the picture and provide additional validation. The most
important of these are support and resistance, for the reasons that I outlined in Principle No 2. This is where the market is pausing and executing its
'mopping up' operations, before reversing. Alternatively, it may s plly, it imply be a pause point in a longer term trend, which will then be validated by
our volume analysis. A breakout from one of these regions of consolidation, coupled with volume, is always a strong signal.

Trends are equally important, as are price pattern analysis, all part of the art form which is technical analysis.

Principle No 6 : Validation or Anomaly

In using VPA as our analytical approach, we are only ever looking for two things.

Whether the price has been validated by the volume, or whether there is an anomaly with the price. If the price is validated then that confirms a
continuation of the price behaviour. By contrast if there is an anomaly, then this is sending a signal of a potential change. These are the only things
we are constantly searching for in VPA.

Validation or anomaly. Nothing else. And here are some examples of validation based on single bars, before moving onto multiple bars and actual
chart examples.

Examples Of Validation

Fig 4.10 Wide Spread Candle, High Volume