Page 50 - A Complete Guide to Volume Price Analysis: Read the book then read the market

manipulate the markets. Whilst the books primarily focus on stocks, the principles are identical and relevant to all markets. In equities it's the
specialists, insiders or market markets, in futures it's the large operators, and in spot forex it's the market makers again.

This is what he says about time frames :

“The specialist's objectives can be classified in terms of the short, intermediate and long term. Thus we can see that there are three broad
classifications into which we can place the market's price movements.

He then goes on to say

“The short term trend. This can last from two days to two months. Within this trend there can be even shorter term trends lasting no more than
several hours. The importance of the short term trend is that it is within this context that the specialist resolves his day to day inventory problems
with his intermediate and long term objectives always in view. It is as though the short term trend is the spade with which the specialist digs the
investor's intermediate and long term grave.”

“The ticker tape provides us with a microscopic view of the techniques of big block distribution at the top and big block accumulation at the
bottom on behalf of the specialist's inventory.”

“It is impossible to look solely at the tape as it passes in review and hope to determine longer term trends in the market. One can understand
the tape and decipher its code of communication only when experience is shaped through memory – or through the use of charts. In a manner
of speaking short and long term charts provide both a microscopic and a telescopic view of what has happened. In the final analysis, we need
both in order to make financially rational decisions.”

The reason that I have quoted this section from his book here, is that it neatly sums up the points I am trying to convey in this chapter.

Remember, this book was published in 1974, when the ticker tape was still in use, but we can replace the ticker tape with an electronic chart, on a
short time scale. The concepts and principles are the same. We use the fast or ultra fast time frame as our microscopic view on the market, and
then zoom out to our longer term time frames to give us that broader perspective on the volume and price relationship.

Now again, this is all relative, so for a scalping trader, this might be a 5 minute, 15 minute and 60 minute chart. A swing trader may consider a 60
minute, 240 minute and a daily chart. A trend trader may utilise a 4 hour, daily and weekly chart.

Therefore, regardless of the trading strategy and market, equities, commodities, bonds or forex, the point is that to succeed as a speculative trader
or as an investor, the VPA relationships should be used in conjunction with multiple time frames. On a single chart VPA is immensely powerful, but
when the analysis is ‘triangulated’ using slower time frames, this will give you a three dimensional approach to the market.

There is nothing wrong with focusing on one chart, but remembering the analogy of our three lane highway, where we are sitting in the middle lane
with our wing mirrors on either side giving us a view on the fast and slow lanes, this will help to build confidence levels, while learning, and more
importantly once you start to trade live.e f trade

To round off this chapter, I now want to focus on the the last two concepts of insider behaviour, namely the selling climax and the buying climax,
before putting the whole cycle together in some simple schematics to help fix the broad principles.

The Selling Climax

As I outlined earlier in the book there is a degree of confusion about these two concepts, so let me try to explain. In the past, most people who have
written about this subject, have done so from a personal perspective. In other words, when we buy or when we sell in the market. However, in the
context of the insiders it is what they want us to do. Their sole objective is to get us to buy in the distribution phase, and to sell in the accumulation
phase.

In terms of 'who is doing what' during these two phases, in the accumulation phase, the 'public' are selling and the insiders are buying, and
conversely in the distribution phase the 'public' are buying and the insiders are selling.

This book is written from the perspective of the insiders, the specialists, the big operators and the market makers, and hopefully like me, you want
to follow them! I hope so at any rate. As Albert used to say, we want to buy when they are buying, and sell when they are selling. Simple! Which is
really what this book is all about.

When I describe and write about a selling climax, to me, this is when the insiders are selling and occurs during the distribution phase of the
campaign. A buying climax is when the insiders are buying during the accumulation phase. To me, this just makes more sense. It may be a
question of semantics, but it is important, and I would like to clarify it here, as many people refer to these events the other way round!

Just to be clear, a selling climax appears at the top of the bullish trend, whilst the buying climax appears at the bottom of a bearish trend, and
reflects the actions of the insiders, and NOT the public!