U Coming to WA, page-35

The Volatility Contraction Pattern, (VCP) is a famous trading pattern identified and dissected by Market Wizard, Mark Minervini. The premise of the pattern is that stocks in long term up trends will pause and consolidate as some holders exit their positions and the stock is accumulated again by buyers in the market.

Small retail traders on here flipping for 10% profit when a much bigger move is about to break out. E.g those buying at 45c & selling at 50c.

These are people with small positions, happy to take a modest profit to pay for their weekly Woolies shop.


The key for this pattern is that there needs to be a contraction of volatility as the chart moves from the left to the right. This highlights that the volume available is decreasing and becoming scarce. In addition, the more dramatic in volume, the more likely that the move will be explosive.