The Wyckoff method, accumulation and VSA

The Wyckoff method: what Wyckoff wrote, and what came after

Richard Demille Wyckoff (1873 to 1934) is presented by StockCharts' ChartSchool, in its tutorial on the Wyckoff method, as one of the pioneers of the technical approach to the stock market. According to that page, he started at 15 as a stock runner for a New York brokerage, became the head of his firm before he was thirty, founded The Magazine of Wall Street, which he wrote and edited for nearly two decades, then opened a school in the 1930s whose course brought his method together.

His early texts can still be read. Studies in Tape Reading, published in 1910 under the pen name Rollo Tape and available on the Internet Archive, devotes its chapter V to volume. Wyckoff compares the market price to a pair of scales: the volume of stock thrown by sellers and reached for by purchasers shows toward which side the weight has just shifted (page 75). He adds at once that there is no certainty in this, because supply and demand change with every second (page 76).

The same chapter already contains the division that made his legacy. A complete operation on the long side, he writes, consists of three parts: accumulation, marking up and distribution; for a short operation, the order is reversed (page 92). He notes that accumulation may take weeks or months. And he sets down two caveats his readers often forget: volumes must be valued in proportion to the activity of the market and of the stock, and no set rule can be established (page 78), and these indications are neither always clear nor infallible (page 83).

That 1910 text, however, contains neither the abbreviations PS, SC, AR or ST, nor phases A to E, nor the 'Composite Man'. That vocabulary comes from his course of the 1930s and from those who taught it afterwards. StockCharts quotes the course for the Composite Man, credits the 'back-up' image to Robert Evans, who taught the method from the 1930s to the 1960s, and states that the schematics on its own page were created by Roman Bogomazov and edited by Hank Pruden. The accumulation schematics that circulate today are therefore a modern formalisation of an idea of Wyckoff's, not a drawing from his hand. Pages consulted in October 2026.

Wyckoff's three laws and the Composite Man

StockCharts' tutorial sums the method up in three 'laws'. Supply and demand determine the direction of price: when demand is greater than supply, price rises, and the reverse. The wording does not mean that there are more buyers than sellers, since every trade pairs the two for the same quantity. It means that one side is in more of a hurry than the other, which Wyckoff was already writing in 1910: at that moment, the buying is more urgent than the selling. The lesson on CVD and order flow describes that mechanism in the order book.

Cause and effect: the time spent in a trading range is said to be the cause, the move that comes out of it the effect. StockCharts states that Wyckoff measured that cause with a horizontal count on a point and figure chart, and derived price targets from it. The same page warns that those targets should never be looked upon as exact points where a trend will change, only as places to look more closely.

Effort versus result: volume is the effort, the distance price travels is the result. When the two go together, the move is judged healthy. When volume swells and price barely advances any more, the method reads absorption: someone is taking everything on offer. This is the law that VSA has developed the most.

The Composite Man is an image, not a fact. StockCharts presents him as a heuristic device and quotes Wyckoff's course: all the fluctuations should be studied as if they were the result of one man's operations, a man who, in theory, sits behind the scenes. The words 'as if' and 'in theory' are Wyckoff's. Nobody observes that single operator: volume says how many shares changed hands, it says neither who bought nor why. Every time this lesson writes 'the method reads', that is an interpretation, not a record.

The Wyckoff accumulation schematic, candle by candle

The prices and volumes in the diagram above are invented, and the names are those of StockCharts' tutorial. The decline takes up candles 1 to 10. On candle 8, a first burst of firm buying slows the fall on a volume of 62: this is preliminary support (PS). Candle 11 is the selling climax (SC): a range of 13 points, the widest in the diagram, on the heaviest volume, 100, with a close at 54, that is 8 points above its low at 46. StockCharts describes this moment as panicky selling being absorbed near a bottom, often with a close well off the low.

Candles 12 to 14 are the automatic rally (AR): with selling pressure spent, price climbs back to 66. That high and the low of the climax set the boundaries of the trading range. Candle 18 is the secondary test (ST): price returns towards the low, stops at 49, and volume is down to 38. Less range and less volume than at the climax is what the method expects of a successful test. These four events make up phase A, the stopping of the decline.

Candles 19 to 31 are phase B, which StockCharts calls building a cause, and which the page says may take a long time, sometimes a year or more. Price swings inside the range and volume fades: 36 on candle 22, 16 on candles 30 and 31. Candle 22 illustrates effort without result: the heaviest volume of the phase, and a price that stalls at 65 before closing lower.

Candle 32 is the spring, phase C: price dips below the range, down to 44, then closes inside it, at 50, on a volume of 28. StockCharts describes it as a bear trap, and makes two points: a low-volume spring is the favourable case, and the spring is not a required element, since one of its two accumulation schematics has none. Candle 34 is the test of the spring: a higher low, at 49.5, on the lowest volume in the diagram, 10.

Candles 36 to 38 are the sign of strength (SOS), phase D: three wide candles on volumes of 48, 60 and 66, and a close at 71, above the range. Candle 40 is the last point of support (LPS): a pullback with a range of 3 points, on a volume of 16, which stops at 66.5, on the former top of the range. Phase E is the advance that follows, up to 89 on candle 46.

The diagram reads easily because it is finished. On candle 18, nothing says whether this is a successful test or a pause before a new low; StockCharts in fact writes that a test going lower than the climax points to new lows or prolonged consolidation. On candle 32, the dip below the range looks like the decline resuming. The names are placed after the fact, and that is the main difficulty of the method.

Wyckoff distribution: the reverse schematic, at the top

Distribution is the mirror image of accumulation, after an advance. The events change names in StockCharts' tutorial: preliminary supply (PSY), buying climax (BC), automatic reaction (AR), secondary test (ST), then sign of weakness (SOW) and last point of supply (LPSY). The counterpart of the spring is called an upthrust, or a UTAD when it comes late in the range: price moves above resistance and then closes below it.

Like the spring, the upthrust is not required: one of StockCharts' two distribution schematics has none. The page adds that an advance may also end without a climax, through plain exhaustion, with decreasing range and volume. And it sets apart re-accumulation and redistribution, ranges that interrupt a trend without reversing it. A range can therefore be four different things, and its exit is what settles the matter.

This vocabulary does not say the same thing as classic support and resistance, nor as the zones in the article on supply and demand zones: it does not name a level, it tells a sequence of events inside a range. It remains a reading of shapes, with the caveat that applies to all of them, developed in the article on trading patterns.

Tom Williams' VSA: volume, spread and close

Volume Spread Analysis is set out in Master the Markets, the book by Tom Williams published by TradeGuider Systems. Its glossary defines it as a proprietary market analysis method, conceived by Tom Williams, that observes the interrelationship between volume, price and spread. The word does not mean the gap between the bid and the ask here: it is the range of the bar, from the high to the low. The book comes from a 1993 manuscript and places two works by Wyckoff, Studies in Tape Reading among them, on its suggested reading list. It is also the document of a software publisher, which sells the tool built on the method.

The reading comes down to three questions per candle. Is the volume high, low or average? Williams writes that volume taken in isolation means very little and should be looked at in relative terms, for example against the previous thirty bars. Is the spread wide, narrow or average? The book's preamble states that volume holds only half of the meaning, the other half being in the price spread: the question to ask is what price has done on that volume. Is the close at the top, in the middle or at the bottom of the bar?

From those three answers, the book derives names. One example is enough to show the shape of a VSA rule: TradeGuider defines no demand as a narrow spread bar, on low volume, that closes in the middle or low. The book sees in it a rally that professionals are not supporting. The first half of the sentence is a criterion that can be checked on a chart; the second is an interpretation, since volume does not say who stayed away. The book in fact reserves that name for an up-bar that follows signs of weakness: the same bar, elsewhere on the chart, does not carry the same name. A VSA rule is therefore always read with what comes before it.

You will also meet the acronym VPA, for Volume Price Analysis. It is the name used by Anna Coulling, who presents herself as its creator. On her website, in an article on Volume Price Analysis, she sums up the principle: look for agreement between price and volume, or for their disagreement, which she calls an anomaly, for example high volume on a tiny candle. It is the law of effort versus result under another name.

Wyckoff and ICT's power of three: two schematics, two scales

ICT vocabulary has its own three-step sequence, the power of three, or PO3: accumulation, manipulation, distribution. The lesson on the accumulation, manipulation, distribution sequence describes it act by act. The words look alike, the objects do not.

The scale. The ICT sequence divides a session: a quiet range, a brief exit that triggers stops, then the move in the other direction. Wyckoff's schematic describes a range that lasts weeks or months, between two trends.

Volume. In Wyckoff, each event is defined by price and by volume: a climax without volume is not one. The ICT sequence is read on price and on the time of day, without volume.

The word distribution. In Wyckoff, distribution is a range at the top, where the shares accumulated lower down are sold on. In the ICT sequence, it is the third act, the directional move itself. The same word therefore names a range in one and a trend in the other.

What they have in common. Wyckoff's spring and ICT's manipulation both describe an exit from a range that does not hold. And both readings share the same difficulty: the act or the event only gets its name once the next one has arrived. Neither is the correct version of the other; they are two grids, on two scales, to be tested separately.

What these readings are worth: studies, volume and forex

No study measures a Wyckoff schematic. We found no published study that counts Wyckoff accumulations or VSA signals on a sample and measures their success rate. The sources of this lesson are method texts, written by those who teach it or who sell the tool. A success rate quoted for a spring therefore has no verifiable source that we know of.

What research says about volume. The link between volume and price, for its part, has been studied. Jonathan Karpoff's survey, The Relation Between Price Changes and Trading Volume: A Survey (Journal of Financial and Quantitative Analysis, 1987), establishes two empirical relations according to its abstract: volume is positively related to the magnitude of the price change and, in equity markets, to the price change per se. Blume, Easley and O'Hara, in Market Statistics and Technical Analysis: The Role of Volume (Journal of Finance, 1994), show in a theoretical model that volume provides information that cannot be deduced from price alone. Both papers say that volume is not noise. Neither tests an accumulation schematic or a VSA rule.

The shape is in the eyes of the beholder. The study by Lo, Mamaysky and Wang (Journal of Finance, 2000) starts from this observation: the presence of geometric shapes in historical price charts is often in the eyes of the beholder. It responds by having an algorithm recognise ten patterns, on US stocks from 1962 to 1996. Wyckoff schematics are not among them. The remark nonetheless applies to them even more than to a triangle: an accumulation has around ten events, several of them optional, and two honest readers can label the same range in two ways.

On spot forex, volume is not volume. The method was written for stocks listed on an exchange, where volume is the quantity traded. Retail forex has no central marketplace, as the National Futures Association's guide to retail forex explains. MetaTrader 5's help page on the Volumes indicator says it plainly: for the forex market, it is the number of price changes within each period, whereas for stocks it is the volume actually traded. Williams' book accepts tick volume on real-time charts where no transaction volume is available. That is a choice of method, not an equivalence: on a currency pair, the 'effort' you read is the quoting activity of your broker. The article on what order flow is goes into that difference.

The only measurement available is yours. A Wyckoff or VSA reading is not an order to buy or sell, it is a hypothesis. Write your criterion down before looking at what follows (which volume, which range, which close), apply it to your market and your timeframe, and count, with the method in the article on how to backtest a trading strategy. In your journal, one tag per reading, 'spring' or 'no demand' for example, is enough to compare the trades taken on that pattern with the others afterwards.

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