What it means
Effort is volume; result is how far price moves. Wyckoff’s law of effort versus result says they should agree: a big effort should produce a big move.
When high volume produces little movement, the effort is being absorbed by the other side, which can precede a turn.
Why traders use it
Heavy buying that no longer lifts price means sellers are meeting it. Once buyers stop, price can fall quickly. The same idea appears in modern order-flow terms as absorption and exhaustion.
Chart examples
Big effort, small result at the top
How to identify it objectively
- 1Compare each candle’s volume with its range (high to low) and its close.
- 2Effort without result: volume well above average with a narrow range.
- 3Result without effort: a wide move on low volume (often weak and easily reversed).
- 4Confirm with a structure break in the opposite direction.
Bullish use
- 1At the lows, heavy selling volume with narrow candles that close off the lows.
- 2Then a bullish close: demand absorbing supply.
Bearish use
- 1At the highs, heavy buying volume with narrow candles that stall.
- 2Then a bearish close: supply absorbing demand.
What confirms it
- The mismatch happens at a level or after an extended move.
- A structure break follows.
What invalidates it
- The next candles expand in the original direction with volume: effort and result agree again.
How a hypothetical setup is built
Entry
After effort without result at the highs, on the first bearish close below the stalling candles.
Stop
Above the stalling area.
Target
The start of the last leg up.
A hypothetical illustration of how the concept is turned into a plan, not a recommendation. Practise it on a paper account first.
Related concepts
Historical testing
Not tested on The Tradeskill. Volume depends on the data feed; spot forex and some crypto feeds show only partial volume.
Limitations: when it fails
- "High" and "narrow" need fixed definitions (for example 1.5× average volume, range below 0.5× ATR).
- Volume quality varies by market.
- A mismatch can last several candles before resolving either way.
Knowledge check
Pick an answer to see the explanation. Nothing is saved.