The previous lessons described structure: trends, levels, breakouts and the Wyckoff ranges. This lesson works at two other scales. First the single bar, where volume and spread show who is in control right now. Then the trade plan, where everything in the course is written down before any money is at risk. A reading that is not turned into a written plan tends to change with each new bar; a written plan does not.
Effort versus result
Every bar carries three pieces of information that matter for Wyckoff analysis:
- Spread: the distance from high to low, compared with recent bars. Wide means strong participation or urgency; narrow means hesitation or balance.
- Close: where the bar finishes within its range. A close near the high shows buyers held control into the end of the session; a close near the low shows sellers did.
- Relative volume: volume compared with the last few bars and with the stock's own average (see unusual volume).
Effort versus result in practice means asking whether the volume bought the move it should have. A wide up bar closing at the high on rising volume is effort and result in agreement. A narrow up bar on heavy volume that closes mid-range is effort without result: someone sold into the buying. Location matters as much as the bar itself: the same bar means one thing at support after a decline and another at resistance after a rally.
Four bars worth knowing
- No demand: an up bar with a narrow spread on volume lower than each of the two previous bars. Buyers are not interested at this price. It matters most on rallies within a downtrend, near resistance, or on a rally toward an LPSY.
- No supply: a down bar with a narrow spread on volume lower than each of the two previous bars. Sellers are absent. It matters most on pullbacks within an uptrend, on a test after a spring, or at an LPS, where it often marks the entry.
- Effort without result: heavy volume with a narrow spread. At the top of a rally it shows selling into strength; at the bottom of a decline it shows buying into weakness. Read it with the close: a close near the low after heavy buying effort is a warning.
- Climactic action: the widest spread and heaviest volume after an extended move, often on news. It frequently marks the end of the move rather than its acceleration, as in a selling or buying climax, and the close (off the low, or off the high) shows the other side stepping in.
The terms "no demand" and "no supply" were popularised by volume spread analysis, a later school built on Wyckoff's ideas. On their own they are weak signals. They become useful when they appear exactly where the structure says to expect them, such as a no-supply bar on the test of a spring.
Building a trade plan
A plan combines three layers from this course: the structure (trend and stage, lessons 1 and 5), the levels and price action (support, resistance, candles in context and breakouts, lessons 2 to 4), and the Wyckoff context (the phase and event, lessons 6 and 7). It is written before entry and has the same parts every time.
Setup checklist
Wyckoff published his own lists of buying and selling tests; a modern, condensed version for a long trade reads:
- The index is not in markdown, and ideally has just turned up from a pullback.
- The stock is stronger than the index over recent weeks.
- A clear range with phases A and B complete; the cause is large enough for the objective.
- A phase C event (spring and test, or a higher low) has occurred on light volume.
- A sign of strength on expanding volume has followed.
- The entry area is a defined level: test, LPS or back-up.
- The first target is at least twice the distance to the stop.
- No earnings report or major scheduled event falls inside the expected holding period, or the size is reduced for it.
If any item fails, there is no trade. The checklist exists to stop marginal setups, not to justify them.
Entry trigger, stop and size
- Entry trigger: a specific, observable event, decided in advance. For example: a no-supply bar at the LPS, then a buy when a later bar closes above that bar's high.
- Initial stop: just beyond the low that defines the idea (the spring low, the LPS low or the back-up low), allowing for normal noise. Never moved further away once the trade is open.
- Position size: the amount you are willing to lose ÷ the distance from entry to stop, capped by a maximum position size. Most traders risk a small, fixed fraction of the account per trade; see stop-loss and position sizing.
Targets and management
- Targets: the first at the nearest resistance on the left of the chart, the second at the range-height or point-and-figure projection. Express each as a multiple of the risk (R); see risk/reward ratio.
- Management: decide in advance what happens at each target: for example, sell a third at the first target and move the stop to break-even, then trail the rest below each new LPS.
- Exit signals: beyond the stop and targets, exit early on clear evidence against the trade, such as effort without result or climactic action near the target, or a heavy-volume close back inside the range.
A worked plan
An illustrative plan (not real data). Account $100,000; maximum risk per trade 0.5% ($500); maximum position 25% of the account. The stock ranged between $40 and $46 for four months after a long decline.
| Part | Plan |
|---|---|
| Context | Index in markup, just turned up from a pullback; stock outperformed it during the pullback |
| Wyckoff reading | Spring to $38.90 recovered next day; SOS to $46.80 on twice the average volume; phase D |
| Setup | Pullback to $44.60 on 0.6 times average volume with narrow bars: a no-supply LPS |
| Entry trigger | Close above the prior bar's high: $45.20 |
| Initial stop | $44.30, below the LPS low; risk $0.90 per share |
| Size | $500 ÷ $0.90 = 555 shares, rounded down to 550 (about $24,900, within the 25% cap) |
| Target 1 | $49.50, resistance from the earlier decline; about 4.8R |
| Target 2 | $52.00, range height ($6) added to the $46 top; about 7.6R |
| Management | Sell a third at target 1 and move the stop to $45.20; trail the rest below each new LPS |
| Invalidation | A close below $44.30, or a wide down bar on heavy volume back toward the middle of the range |
Reviewing trades
The journal records, for every trade, the date, ticker, setup and phase, the checklist result, the planned entry, stop, size and targets, what actually happened, the result in R, a chart screenshot at entry and at exit, and whether the plan was followed. The last item matters most: a losing trade that followed the plan is a good trade; a winning trade that broke it is a warning.
Review weekly and again every 20 to 30 trades:
- Expectancy: (win rate × average win in R) − (loss rate × average loss in R). A positive number over a meaningful sample is the goal; win rate alone says little.
- By setup: compare springs, LPS entries and back-ups separately. Keep what works, drop what does not.
- Plan discipline: count rule breaks and what they cost.
- Rules into tests: whatever parts of the plan can be stated as fixed rules can be tested on history before more money is committed; see backtesting.
On the Trading systems page of the Clear Tape dashboard, every member can pick preset breakout, trend, momentum and volume systems or build their own from rules, and keep a watchlist. Tools and Pro members also get the screening of that watchlist after every close and backtests of any system on years of daily prices; Pro adds the AI coach, which can help translate a written plan into rules. Wyckoff judgement, such as labelling a spring, is still best done by eye; the systems help with the parts that can be made mechanical. See pricing for what each plan includes.
Common mistakes
- Reading single bars out of context. A no-supply bar in the middle of a downtrend is not a buy signal.
- Treating every volume spike as meaningful. Index rebalancing, options expiration and half-day sessions distort volume.
- Planning after entry. A stop chosen after the trade is open tends to drift to wherever the loss feels bearable.
- Sizing by conviction. Size comes from the stop distance and the risk limit, not from how good the chart looks.
- Moving the stop further away. It converts a planned loss into an unplanned one.
- Skipping the review. Without a journal, the same mistakes repeat and good setups are not recognised as such.
Summary
Volume and spread show whether effort is producing result, and four bar types (no demand, no supply, effort without result and climactic action) carry the most information when they appear where the structure expects them. A written plan joins the course together: context, a checklist that must pass, a defined trigger, a stop where the idea is wrong, a size set by risk, targets from levels and the cause, rules for management, and a journal reviewed in R. The method is only as good as the discipline with which the plan is followed.
For educational purposes only. Not investment advice.