medium · Volume Price Analysis wyckoff-laws
How does the 'Law of Cause and Effect' help a VPA trader manage their expectations for a price move following a Buying Climax?
- It states that for every buyer (Cause) in the market, there must exist a matching, offsetting seller (Effect).
- It requires the trader to wait patiently for a strict 1:2 reward-to-risk ratio before entering any climax-based trade.
- It suggests the duration of the subsequent trend is proportional to the duration of the accumulation phase.
- It predicts that a high-volume climax will always force a full 100% retracement of the entire prior markdown move.
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