No matter how many technicals you use,
without [music] volume, you're you're
missing a major part of the picture.
There's no one competing where you're
playing the game. Versus here, the
market's 100% going to react here. So,
it's it's really really important to
understand really what we call high
value areas and low value areas. High
value areas are literally just
>> it's time to master the volume profile.
This one indicator will show you exactly
how people are positioned in the
markets.
>> When we get to this edge, there's nobody
here above us. And so if you think about
what moves the market there are, what's
most likely to happen as a trader is
when volume comes into the market, it's
going to be a massive change in
structure because none of these prices
are sticky. All of my executions rely on
this idea of please welcome this
sevenfigure trader, Forest Knight. In
this episode, Forest breaks down his VP
strategy using the volume profile to
know [music] exactly where to be
positioned in the markets.
>> If you're looking for the candle for
information, then you have to wait for
it to close. You literally have to wait
for it to close. This price here will
never get [music] retested if you
actually wait for it to close. All of
this is really just thinking of where
people are positioned, how they would
behave in an auction. Knowing that
Forest reveals the exact mechanics of
the markets and how they operate and
then showcases exactly how to use the
volume profile in order to be profitable
and to have strong conviction in your
edge.
>> People want to buy when prices are low,
freak out when they're really red, get
greedy when they're really green. They
do the wrong thing at the exact right
time cuz they're
>> Welcome everyone back to Chart Fanatics,
the go-to channel for all the very best
trading strategies and concept
breakdowns with the best traders [music]
in the world. Talking of which, today we
have a very, very special guest. He's
actually [music] one of the co-owners of
this incredible studio, The Move, but
he's also an incredible trader, a 7
figureure trader, [music] a phenomenal
trader who uses the volume profile. It
is trading with Forest, aka Forest.
>> Yeah, just Forest. Yeah. What's up, man?
Welcome back,
>> man. How are you, man?
>> I'm good, man. It's another day in the
trenches.
>> That's it. That's it. You We've been in
the trenches together this week,
thankfully. And, uh, you know, this week
has been a it's a great week. We've been
covering some incredible episodes and,
>> you know, I got to learn the day one
that I got here that you're a trader as
well.
>> You know, one who's been full-time for a
very long time and trades personal
accounts as well, right? Up to seven
figures.
>> And you trade the volume profile. I do.
Yeah.
>> Yeah.
>> So, where do you think it's best to
begin, you know, this breakdown in terms
of the strategy?
>> So, it makes sense to let's talk about
what the volume profile is, right? So,
what is the VP? Uh, the volume profile
tells us how many people transacted at a
price. So, at the bottom, we often think
of volume across time. So, we might have
9:00 a.m. and uh 10:00 a.m., right? So,
we're looking at volume into the open.
The market opens at the the middle part
9:30 a.m., right? So at 9:00 a.m. you
might have this much volume and then at
10 a.m. maybe this is the 1 hour chart
we have this much volume right and so a
lot of people will look at this change
in volume and track volume deltas but
what if I asked a different question
right maybe we're trading in Q right
this is an ENQ chart right now that
we're looking at and I said hey I don't
really care how much volume was
transacted at 10 a.m. What if I said how
many people transacted at 20,000 right?
So maybe there's a price right here and
this is 20,000,
right? Or if I said, "How many people
transacted at 18,000
ever?" So not at 9:00 a.m., not at 10:00
a.m. across all of time. Or I might ask
a different question. maybe how many
people transacted at 18,000 from the
time period of 9 to 10 a.m.
>> So, it's a very different way to think
of volume, but what it allows us to to
do is get intuition about which prices
are stickier or more important than
others.
>> Yeah,
>> that's really really key to trading the
volume profile.
>> Another element uh of this is picking
what your time ranges are, right? And so
typically if we get rid of this bottom
part right here, right, I'm looking at
the volume profile across multiple days
and then also RTH. So RTH is going to be
that 9:30
>> to 4 p.m.
>> Okay?
>> Right? And those are that's a key time
frame every single day. And so every
single day I'm looking at the market and
I'm saying, okay, what is the volume
profile going to look like within
today's session? What is the story and
the narrative of the auction
>> uh for today? Because when it's just the
volume bars on on just time, it's just
showing every every transaction
throughout that time. So of course, if
it's an hourly chart, for example, it's
specific to that time window, so it
still has relevant information, but
because it's not specific to a price
exactly
>> or the correlation between both, it
becomes less precise of what you can do
with that information. Right. It gives
you a time window that okay there's a
lot of volume within this time period
but it doesn't really give you much to
go on after that fact when in comparison
to using both the price as well to
understand exactly where orders are
looking to at specific price levels with
specific time levels. Um so that's why
you start looking at volume profile.
>> Exactly. And so let's actually draw one
a a VP right now. I'm going to do this
sideways
>> because we often talk of distributions.
I just got a marker on my my shirt. Um,
so you don't have to be a statistics
nerd necessarily. A lot of people have
probably heard of a normal distribution.
So a normal distribution looks like
this, right? And then there's like
something called a standard deviation.
So this is where most of the stuff is
that you're measuring. And then there's
a little over here.
>> Mhm.
>> Okay. And then there's a little over
here. Okay. So imagine if what we're
measuring is volume across prices. Okay.
And let's do our 20,000. So this is our
price. This is 20,000.
Okay. And then over here we have maybe
15,000.
And up here we have 25,000.
And what we're measuring is the volume.
Let's imagine that this this this curve
here is is volume. So if we do a bar
like this and this is
volume. So just looking at it you can
see oh most of the volume is around this
20,000 level.
>> Yeah.
>> Uh and when we say volume and I think
this is a key part of volume profile as
well is these are people. So when we
talk about transactions and volume in
general these are actual people who are
positioned here. And so what we can do
is we can flip this around knowing that
most of the people are around 20,000. As
a trader we can get some really good
intuition about what importance. So I'll
actually draw this kind of how a chart
you know traditionally looks. So, we'll
have our prices on the right. Okay.
We'll have our time on the bottom and
whatever is on the left. So, over here,
I'm just going to do every 5,000. So,
we'll do 10,000,
we'll do 15,000,
and we'll do 20,000, and we'll do one
more at 25,000.
So, it's 9:00 a.m. I'm looking at the
markets, and we have a volume profile
distribution. Let's just say it's 9 9
9:00 a.m. Um, we have some overnight
activity a little bit from from EU and
we get a distribution that kind of looks
like uh across a set of prices. What
you'll get is a is a is a histogram or a
bar chart that'll look like this.
Okay, you get a bunch of bars.
>> Okay, this is our this is our
vertical volume bars, right? And let's
do it like this.
So, we've got our volume bars and we've
got our prices. And let's say that the
current price overnight is let's use a
different marker. Actually, let's use
some green. Actually, can I borrow that
black one?
>> Cool.
>> That'll work.
So, we have some prices. And I know this
isn't normal. And then it whipsaws in
here, right?
>> And the price is here. Something like
that. Kind of a weird squiggle. And if I
a if I had to ask you like what set of
prices are we most likely to be stuck
into, it would make sense for us to be
stuck around where people are, right?
That's why we kind of move quickly
higher,
>> right? This is thinly traded between the
10,000 and the 15,000 and then we're
getting stuck and we're we're
consolidating
inside of where there's a lot of volume.
Mhm.
>> Um, and what's important here is if we
have this consolidation,
it's very different if the story of the
volume profile is perhaps like this.
Let's imagine that we're consolidating
now, but now the volume, there actually
isn't a lot of volume there. It's all
kind of thinly traded, right? You just
have some bars like this.
>> Yeah.
>> So now none of these prices matter. And
what's most likely to happen as a trader
is when volume comes into the market,
it's going to be a massive change in
structure because none of these prices
are sticky. Hey guys, before we get into
this incredible episode, I want to say a
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this episode.
>> It's really, really important to
understand which prices are sticky or
unsticky. And that goes into really what
we call high highv value areas and low
value areas. And that's how we determine
that the highv value areas are literally
just where the bars are the biggest.
>> Yeah.
>> Right. And the low value areas or uh a
skinny belly is where the the bars are
the lowest. And we expect prices to rip
through low value. And we expect expect
prices to seek out liquidity and
actually seek out the high value areas
which is important as well
>> and and to get stuck there once it gets
there
>> because that's why the reason why we can
consolidate even though we have high
volume because I can imagine for a lot
of people out at home the misconception
of like high volume means movement when
really high volume just means higher
transactions. So when we're
consolidating in a high volume price and
area, it's a lot of the time because
there's a a battle going on between the
buyers and sellers. It's a higher volume
pace. So we're seeing obviously more
transactions take place, which doesn't
necessarily mean we're going to move.
We're going to see like a really big
bullish move or bearish move. Uh that
can happen too. But if we are
consolidating, it's nothing to say, oh,
this isn't working or I, you know, I'm
very confused. It's more so to
understand that we still got all those
transactions, but they're battling it
out at the moment. Um, and that's why we
may see a consolidation alongside uh
that increase of volume.
>> Yeah, definitely. And what you'll what
you can start to kind of surmise across
the day is, you know, we have 9:00 a.m.
We'll have the open. Let's actually just
start with the open. Okay. So, the
market opens at 9:30 and it closes on
the right side of our chart at 400 pm
Eastern Standard Time. of course we're
talking about.
>> And let's try and figure out the story
for a day. And let's imagine
that we know that at 25,000, we could
draw our volume profile anywhere. I did
it on the left side. I might do it on
the right side this time. So, we know
that there's a massive shelf up here.
Now, the real VP tends to be higher
resolution. You have a ton of bars. It's
very jagged.
>> We have a massive
>> You can see it later, right?
>> Yep. Yep. We have a massive shelf up
here. Uh we have a some very small nodes
down here, very very very little value.
And then we have a another massive shelf
down here, right? So the market opens
today,
right? We have some candlesticks that
are forming like this. We get a, you
know, maybe a very high volume bottom
wick. Then we get another candle next to
it. Uh it's another up candle, right?
Okay, so we have up candle, up candle.
Do a little arrow for you. Two up
candles and we're here. And maybe this
is, you know, does ignore the time
frames. We're pushing up into the edge
of this node. What'll happen is when we
get to this shelf, we have a trade idea
now. And you'll see this especially, and
there's a very good example I could show
you here shortly on the weekly time
frame where it looks very, very similar
to this. When we get to this edge,
there's nobody here above us. And so if
you think about what moves the market,
there are buy side aggressors and
sellside aggressors, right? U people
often talk about buyers versus sellers,
but it's really buyers versus buyers and
sellers versus sellers.
>> And whichever competition is more fierce
moves the markets. So if the ferocity of
the competition of buyers is bigger than
the ferocity of the competition,
sellers, price goes up because there's
more the buyers are competing, right? So
what happens here is that you'll run out
of buy side. You'll just run out of
people here. There's no there's
literally no one here.
>> Yeah.
>> Okay. So, where is everybody? Well, it's
very obvious. They're all down here. And
so, what happens is is you get this down
candle back into this range. So, that
gives you a trade idea. Now, doesn't
mean you're going to stay in this range
forever. Obviously, you'll break
through, but when we do break through,
it gives you this we rip through these
low prices until we get to the next
shelf.
>> Yeah.
>> Right. So, this low value area tends to
be where we get the big kind of if the,
you know, the ICT traders, we'll call
them fair value gaps and things like
that that'll form, but they're big
candles with low volume, right? The the
the market's just moving very quickly.
It's it's racing.
>> So, in a sense, we've collected the
volume from this area to take us to the
next one, but in the intrim or in the
middle, should I say, we're not really
expecting the orders to come from there.
And that's why we're not necessarily
wanting to trade in this area versus
when we recognize that we're reaching
this area. So the bottom of this no
volume area that can present a trade
area back into the volume area and then
potentially a trade idea could come from
there to then try and take us there. But
really are you saying the higher
probable setup is to trade within maybe
the edge but within the high volume
areas.
>> So this is this is a great segue into
the to the setups, right? So, let's talk
about that.
>> Um, there's a few kind of key levels
that I look for every single day that I
want to coincide with these the the
volume profile, right? So, the four key
levels, guys, every single day are the
overnight high. I'll just do overnight
high, the overnight low. Whoops, it's
terrible. Overnight high, overnight low,
prior day high. Yeah,
>> it's really hard to write and talk by
the way.
>> I know.
>> And prior day low. So, four key levels.
Why do these prices matter? Now, this is
less volume profile. This is more
auction market theory, but they go
together.
>> Yeah.
>> So, if we look at a day, any given day,
and let's say the day looks like, you
know, uh this and the market closes
here. Okay. So, we have the low of the
day, have the high of the day, and you
have some other pivot there. The very
last person to go long went long here,
right? Someone went long here and that
person is in a lot of pain because we
see that the market went down and it
never got back to their price.
>> Yeah.
>> So, what's going to happen is on the
next day when the market moves to their
price,
they're going to want to get out, right?
Maybe not all of them. Maybe some of
them will will, you know, wait because
they think the market the market's going
to go in their favor. But a lot of these
people who are trapped are going to
become sellside aggressors. They're
going to race to get out even. So as we
get to here, as we approach this level,
we'll actually start to see sellside
competition increase. So imagine if you
combine that and you and you have
confluence with the shelf, right? And so
in terms of setups, it's looking at
where the auction has confluence with
these major shelves. And then the other
aspect of that is the candles that we
get. So if imagine that the market moves
here and we get a massive candle
with a top wick.
>> Mhm.
>> Okay. So we get a lot of volume here.
Top wick. So we crack this price. The
last trapped long. I call it the last
man. It's at a shelf. A ton of volume
comes in once we touch this shelf.
>> Yeah.
>> To the to the downside. I know this is a
green marker, but imagine that this is a
down candle. We get a down candle at the
edge and we sweep. That's a trade idea.
So all of all of my executions rely on
this idea of a high volume signal candle
that has confluence with an edge and a
higher time frame volume profile. So I'm
basically combining techn a little bit
of technicals with what the auction is
telling me of where people are actually
positioned. The volume profile is
telling us where people are positioned.
>> What time frame would you be looking at
your volume profile?
>> So there's two major time frames. I
would consider this to be like the
weekly,
>> right? Or a higher time frame. So the
weekly or the daily.
>> And then my key levels are going going
to be on like the 4 hour.
>> Yeah.
>> Um weekly time. It comes out to WTF.
Yeah. Uh so the weekly time frame or
>> um 4 hour.
>> Yeah. Most of my executions are the 4
hour down to the two.
>> Yeah.
>> Yep. Um, so this the very best setups
would be like this is a 4 hour candle.
>> Um, there was a good trade and we'll
talk about it in a second where this was
uh on the one hour chart.
>> Yeah.
>> But what's really really important here
is higher is better. What'll happen is
>> okay if we get a bunch of candles okay
and maybe like this like this we get a
really high volume bottom wick green
candle but let's say that this is the
one minute okay and we're we're talking
about volume. Mhm.
>> So intuitively we can imagine even if we
see a relatively higher volume spike
here or even looking at the volume
profile, we get a really big bar in the
volume profile on the one minute here,
>> it's still a one minute time frame,
right? The very next minute
>> could be like this, right? There's just
there's there's too much that could
happen in that time frame. Yeah. Where
the inverse is is very very true as
well. If okay, we have an auction and
let's do let's do a really high time
frame. Let's say we get a nice the
market comes down like this and then we
get a huge
high volume bottom wick on the weekly at
an edge. Okay,
>> and this is actually what happened in
the market right now. And then the
market comes out of it like this. This
market comes down high volume bottom
wick comes up at the edge of a VP that
gives us that that weekly kind of
reversal that we're in right now.
>> Yeah.
>> And that's an exact type of signal
candle. A lot of people aren't looking
at weekly candles for signal candles for
trades.
>> Very true. Yeah.
>> But what's cool about this is you don't
have to trade the weekly. You look at
the weekly. I know, oh, the market bias
is up. So now all of my executions, I
should be looking for the long side,
>> right? And I can still trade the 15 or
whatever time frame people want to
trade, but I'm using the volume profile
to give me bias. Yeah. Right. And so if
I literally if you hold held long after
this weekly candle close long enough,
you're green right now. Right. Really
simple. Yeah. Within this candle though,
if you've identified, you know, so
you're at the edge, you've identified
your high value areas. Are you looking
to execute within this candle or once
this candle is printed, you're then
looking for executions to then take you
into this direct continuation.
I am looking for candles to close. So
this is a really important concept
>> because what'll happen is let's do let's
do an example of what happens if you
what I call front running a candle,
>> right? And so we have a candle and let's
say it looks like this. And it's this is
just a full body candle. It's green,
right? And this is we're trading the 4
hour chart.
Okay. And right now we are at 3 hours 3
98 hours. It's about to close. And I'm
like, hey, this is a signal. I should go
long. Now
>> what happens in those last few minutes
is this candle like right here turns
into this candle. It gets smashed,
>> right?
>> So
>> it's crazy, right? The last few like
literally minutes.
>> And this happens to a lot of traders,
not just on the 4 hour, it happens on
the 15 minute, the 5 minute, whatever
your time frame is. If you trade, if
you're looking for the candle for
information, then you have to wait for
it to close. You literally have to wait
for it to close. It's a mistake that I I
made when I started. I see I see it in
my community. I see a ton of people do
it. They try to preempt the candle.
>> Um, and there's there's actually is some
edge here. This kind of gets away from
VP.
>> If you watch how fast this candle
changes in the last few minutes,
>> yeah,
>> the next candle is probably going to do
the same thing as like an FYI. Like it
the market repeats itself. And so you
can start to anticipate these fast
changes in the candle formation. But
generally, if I'm looking for a signal,
>> you have to wait for the signal. Imagine
the literally the candle has not
finished printing yet. Yeah.
>> Um, and you know, one thing you can do
is there's you can actually turn off the
candle or indicators that you can you
literally won't see the candle till it's
done forming. Uh, that's that's a really
cool trick that you can do as well.
>> That's interesting. That is really
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funding today. Now, let's get back to
the episode. What's interesting as well
is I think what happens to people is
their assumption is I'm going to miss
the trade and I'm going to get even if
it's an extra few points or a bit more
by entering now versus waiting. Um and
the other fear is that okay it closes
here I want to say enter here ones if it
doesn't pull back so let me just enter
now so I don't you know don't have to
worry next minute closes like this whole
trade idea is actually not valid then
>> yeah down
>> and then you miss out and I'll tell you
something else in terms of draw down
with this if you wait for the signal
candle you'll get something like this
right so you'll get let's say we have a
candle that closes
like this this is our weekly candle
weekly time frame. We get a ton of
volume. The market came into it like
this.
And we're expecting something like this.
Okay. If I wait, it's very unlikely with
for if this is a signal candle, an up
candle, high volume up candle at the at
an edge, this price here
>> Mhm.
>> will never get retested.
If this is if you actually wait for it
to close. Yeah.
>> It won't get retested. Now, these prices
might get retested, right? We'll even
see like 80% retest, especially on ENQ.
I trade ENQ a lot. You'll see 80% retest
of the wicks. And that's even a trade
idea. Get really in the weeds. But if
retest of this can become a trade idea,
even though you're long biased, you you
know, this is going to get retested. But
this bottom price will never get
retested. So, what happens is is your
bracket is literally just I go I go long
here because I I get the signal. I go
long here and my stop is just here
>> and I'm willing to eat all of this as
draw down expecting
us to go way up here on the weekly time
frame. I mean, this is thousands of
points at this point.
>> Um, so you can trade it like that. Like
you said, you brought up a really good
point. Some people might want to, you
know, get in down here long instead
expecting the retest. But what you'll
see sometimes is a very bullish
immediate reversal. I'll see on the 4
hour time frame this candle closes the
very next candle it just goes and then
the ne like it's it's out of here and
you're like whoa even though it's a high
time frame like it's it's gone. You have
to
>> especially when it's higher time frame
as well. And if that happens and you've
waited for say you know a few weeks
>> for that to to position itself. Yeah.
Then you
>> hesitate looking for a perfect trade or
a better trade um for that pullback and
it just goes because that's why I think
the characteristics of the you know pair
or or side of the industry that you're
trading. So whether it's in this case
say your your indices or your indexes or
whether it's gold or whether it's forex
like knowing the characteristics of that
pair. So, like you said here, you've
noticed that ENQ will just run.
>> Yeah.
>> So, when you notice that, being able to
make sure you trade alongside those
characteristics versus doing what you
want price to do or how you want your
trade to look. I think that happens to a
lot of people. And a lot of it is based
off like emotion in terms of I've waited
so long for this trade. I want to make
sure I get the maximized results from
it. um you know I don't want to have an
entry here for example versus an entry
here because this is I don't know let's
say a 100 points right
>> on the grand scheme of things as you
said this could be thousands of points
so what is it just a 100 point
difference you know of looking for
perfection versus being in a profitable
trade
>> and a lot of people I mean a lot of
people struggle with the the concept of
of accepting red um and I've heard
traders too that trades will good trades
should work out you for you immediately
I like those trades It's better. I also
know though, at least in my system, if I
have a signal candle, there's an
acceptable amount of draw down. Yeah.
>> Again, I know that this price will never
get retested or my thesis has failed.
Yeah. So, I always trade my thesis.
Anything in here, I'm accepting the
weight. I will go to the lowers, right,
with
>> I don't have to draw everything, but we
could drill in to find a more optimal
entry. I don't necessarily worry about
having a perfect entry though, so long
as I I get in when I see the signal and
the price is is going to race for me.
>> Do you have a specific scenario where
you might look for a a sort of retrace
entry?
>> Uh, yes. So, the classic example is
really
get rid of all these is really anytime
you have a really long wick on in on NQ.
This is kind of subjective, but let's do
a few different types of candles. We
have a candle like that, right? It's
like a widebody dogee. You can get a
small body dogee, some long wicks, get a
shooting star candle, or we might get a
hammer candle.
>> Right. Got you.
>> So, a few of these are different types
of candles that we'll get you. Anytime
you get a really extended wick like this
in the market, intuitively you should
think about the fact that within this
time frame, the market Oh, let's imagine
that this is an up candle. Okay, this is
an up candle. So the market opened here.
>> Yeah.
>> Okay. At some point in opening, it raced
all the way down here and closed up
here. That's crazy. That's nuts, right?
There was so much volatility versus the
story of this candle to say this is also
an up candle. The market opened here,
>> it went down, it went up, and it closed
here. Right. Very very different stories
about the volatility
>> calm and sort of not not much emotion
behind and all volatility.
>> Exactly. So, this is a very volatile
candle. And so, if we think about the
fact that that's volatile, what we can
expect to happen in this next candle,
even though this is an up candle is
we'll probably get something
>> like this, right? It's going to retest
this. And the VP, by the way, at the
same time,
>> I'll do a little VP for this is you'll
see that this is like low value and then
it'll be like higher value over there.
And so we have our our histogram here.
These are bars,
>> right?
Get our histogram and you can literally
see how people are positioned. And so
the price will race through low value.
It'll come back up to where it's sticky
and then it will continue higher.
>> Okay. So that's how you'll then start to
filter. Okay, this is where this
particular candle close means I should
look for a retracement entry versus just
entering after the close versus the
original example to the left for example
might be one where you go okay this is
where I'll enter and you know not wait
for a retracement because we can
probably look to continue. It's
interesting how that works though right
with the volatility the interesting
thing is no doubt that's the candle
where most people think this is going to
go without me I need to get in.
>> Exactly. when in reality that's the one
that pulls back
>> and then they face the immediate red on
a candle like this you're almost always
if you long it you're going to face
immediate red
>> and then if you just have a a lot of
times we'll use like a 50 fib and I
eyeball this I never use the fib tool by
the way I'll just eyeball the middle
>> and then I know that it's going to go
between 50 to 80% so I'm like I'll just
long inside this box good
>> and I'm good now sometimes and the
market doesn't always behave the exact
same way sometimes it gets away from you
and you just don't make money or you
miss out and that's fine. Um, but yeah,
I know it's going to test 50 to 80% of
this and I'll just put a limit long and
either I'll tap it to the tick. Like
I've had some pretty cool days where
it's like you get a tick perfect entry
at the 50 or it comes down here a little
bit. You do a little red and then you're
just green for the rest of the day or
the trade
>> because when you are just you straight
into the red, what ends up happening is
you hold it.
If you're lucky, you hold it and you
keep holding it. You don't close it.
Yeah.
>> But I say if you're lucky, it comes back
to break even, then you close it.
>> Yeah.
>> And then it goes without you. And then
normally what ends up happening is you
either start chasing prices and longing
higher up with a very skewed
risk-to-reward. And more than likely,
you're probably not putting your stop
here. You're probably putting it under
some uh lower time frame low, which gets
swept. Um or worse is that because you
then have missed the long, you start
trying to short to long, meaning you try
and short here, but price keeps pushing
through and you short here and it keeps
pushing through and that's how you end
up blowing out an account.
>> And that's what happens to most people,
you know, they they they do the wrong
thing at the exact right time because
they're they're not thinking intuitively
about again, all of this is really just
thinking of where people are positioned.
>> Yeah.
>> Right. And how they would behave in an
auction knowing that people want good
prices. Exactly.
>> People want to buy when prices are low.
They freak out when they're really red.
They get greedy when they're really
green. Or they they want to race to
exit.
>> Exactly.
>> And so that's that's really core to uh
my system.
>> Is there anything else you look for
here? Is it simply that the 50 to 80% a
fib you mark it out or is there anything
specific that you need to see or would
like seeing maybe as an additional
confluence whether it's a lower time
frame uh VP or or you know particular
candlesticks or particular level. Is
there anything in that area that you
look for? So really if and this this is
like one type of setup. So really what I
would prefer to see is let's if we
modify the scenario a little bit.
>> Um I'll see if I can draw this out well
enough. Let's imagine that um I use
what's called a session VP which it'll
in real time draw the volume profile
during uh as volume is coming in during
the day.
>> Okay. So, let's imagine that in our VP
we have um some high value up here,
okay? Or maybe even a ton higher up
here, right?
And then we have some value down here.
Okay?
So, what I want to see is then we have
some other bars like you know, whatever
throughout the day.
>> So, we've extended this long kind of bar
into this shelf. So all of my trades,
like this was more of like talking
technicals, but my actual trades that I
would take full leverage on have to have
confluence with a volume profile, what I
call the edges, right? So these major
nodes
>> in the higher time frames. That's really
what I'm looking for. Or what's likely
to happen is I'll get some type of
reaction, but because I'm in low value,
technically there's no one here. Yeah.
>> And where there is aren't people is
where you get the really weird barcoding
and people really get chopped up.
They're like, "Wait, why isn't my system
working?" And it's like, "There's no one
here." So, the price is just it's the
market's doing true price discovery
because there's no one uh competing
where you're playing the game.
>> Yeah.
>> Versus here, the market's 100% going to
react here. It's 100% going to react
here every single time. It has to,
right? There's a massive amount of
people there waiting. They're waiting to
take action because the price finally
came back to them because they're super
green, right? if they long down here or
if they're trapped, they got to get out.
Like it finally came back to them, they
got to get out. So that's that's really
key for no matter how many technicals
you use without volume, you're you're
missing a major part of the picture.
>> I love that. And in terms of the volume
profile, I know you trade uh ENQ as you
say, but is this something that is
universal like you could trade it across
I would say more the sort of futures
side, maybe options side versus
example because forex isn't has doesn't
have a centralized exchange. Yeah,
that's
>> a bit difficult to rely on the volume
and the data.
>> It becomes pretty impossible actually.
So, I was I would say like I I trade
this with with option and I can I can
actually show you how what this looks
like across the options chain. So, let's
get rid of this really quickly. But
that's a good point. Like if you're
trading something that doesn't have
volume,
>> yeah,
>> this fails miserably, right? You have to
do something else. I don't trade forex,
right, for that reason.
>> Most people don't.
>> Um but let's imagine you have some
strikes. We'll assume we're trading SPX.
Okay. And what's cool is the most
brokers, if you look at the option
chain, have almost a volume profile
built in for each strike. So, we'll just
do 5,000.
>> Okay. And then I'm going to skip some
prices. Let's just do uh 5,50.
>> Mhm.
>> 5100.
And then we'll do 4950.
And uh what am I doing? 50. Uh so 4,900.
Thankfully, I understand this better
because we did an options master class
here on Chanatics.
>> Nice.
>> So, now I understand you strike prices
and everything, which is great.
>> We'll do one more. So, we'll do 4850 and
5150. Check that out by the way.
>> Um, so most broker tools there's there's
all these options Greeks up here. So, we
have the Greeks, okay, for both sides.
And these are calls. You call Greeks.
So, then you have put Greeks.
>> Yeah.
>> Okay.
And you'll also have this this
interesting co column called open
interest or oi.
>> Yeah.
>> And oi. Cool. And so the way that I like
to visualize OI is as a bar, a volume
bar. And so at 5150 we're going to have
a huge amount of OI. Okay. At 5100 we'll
have half of that. At uh 5,50 we've got
like a sliver a [snorts] sliver. Uh, and
then on the put side, we're going to
have a sliver, a massive bar, and a
massive bar.
>> So, we're trading S&P. We're looking at
the options interest. If we go up, okay,
if the price starts to come up,
okay, price is here. Price comes up, we
could we should expect the underlying to
react at this shelf.
>> And that happens, especially when these
are expiring. I ignored it. I didn't
talk about expiration. Let's talk about
we're talking about today. There's every
strike across all the different
expirations. But if this is expiring
today, I have to ask myself if this is a
100,000 open interests, that means that
if this price goes through this, a h
100,000
people
>> are going to be in the money. And you
got to ask yourself who is getting
screwed in that situation, right? So
what happens tends to happen and that
does happen by the way. Sometimes the
market will move and it'll squeeze
through um these shelves, right? We
might have another price higher here and
it'll it'll actually race across the OI.
It'll it'll do this and it'll bounce at
the edge of the OI, right? But what'll
also happen is if say it's 3 p.m. It's
the end of the day.
>> Okay, it's 3 p.m.
>> We get to this edge. What happens is all
those premiums get killed. They get
crushed. Yeah.
>> Because there's too much incentive for
people holding the underlying, right? or
it doesn't matter on the call side or
the put side. There's too much incentive
for this to not go in the money at the
end of the day. And so you'll see this
get killed and then what'll happen is
after settlement open after all these
are dead then your then your trade that
you got crushed on completes, right? Um
so it the same concepts 100% apply on
the the OI. Um but the one thing with
options is that you really have to look
for exceptional levels of interest. A
mistake that people make, especially in
my community, is we we'll end up with a
day that kind of looks like this, and
you'll get one that's like slightly
higher.
>> Yeah.
>> But it's like the delta between these is
not extreme enough for any of this to
matter. I need a if if these are the
bars,
>> need like an outlier.
>> I need like this.
>> Now, we're going to react at 4950 right
on the downside because there's a
massive amount of interest here. Okay.
So, don't get tricked into thinking just
because we have an increased volatility
across all prices, that's edge. In
reality, the edge is actually found in
having an outlier and having like a
unique observable amount of volume in
comparison to everything else.
>> Exactly. Exactly. Um, and you did
mention volume. So, open interest is
basically at open um what the open
positions are, but intraday you want to
watch the volume as well. And you can
also plot that as as a histogram or a
bar chart. Got it. Um and it's the same
thing. But yeah, you really want to
watch those deltas. So, uh the main
thing would be on like Friday, right? Um
when it's OPEX, watch this. A lot of
people over
fixate on this um because they learn
about it from me and I'm like, guys,
it's unless there's a a large amount of
contracts expiring or motivation, the
market's not going to just reject every
strike with interest. Like there are
plenty of days where the market comes
down and all these are just in the
money.
>> Yeah. Yeah.
>> And those people just made money. But we
don't know
>> what like this could be a hedge, right?
We don't necessarily know what the net
result is.
>> All I know is that 100% this happens,
right? So you want to look for the
outlier edges. Yeah.
>> In the volume, right?
>> Definitely.
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the episode. So, if we do pros and cons,
we do pros on one side, cons on the
other. And again, just for everyone at
home, cons is just simply stating things
that may be hurdles or things that you
need to be aware of when trying to apply
uh the volume profile and the concepts
we've covered so far. It's not
necessarily a bad thing. Um, but in
terms of pros, I think it really gives
you a true insight into the auction,
right? The buyers and sellers versus
just relying on candlesticks uh and the
technicals alone.
>> Yeah. So, I would say the first pro is
it's not really a a derivative
indicator. So, like if you think of what
a candlestick is, it tells you where
price was in a time frame and it tells
you how many
at
right for sure 100%. Right? Um there are
other types of like cumulative like
volume indicators that are more
derivative, right? Um they're time
based. Even like VWOP is like
accumulating averages. This is just like
how many people transacted at 5,000.
Yes. How many? I want to know. Right. It
tells you that. Um the other pro for
this is that it's easy
to see deltas.
>> Yeah.
>> Right.
>> And so if we talk about, you know, this
bar versus this bar, like you don't even
have to know. Yeah. You have never
spoken to me and you like, hey, there's
something happening at this point.
>> Yeah. What's going on there?
>> What's going on there? like there's a
lot of people at this price. Maybe I
should pay attention and you you'll
probably arrive where I've arrived
eventually.
>> Um so those are the two major pros. Um
what's the third kind of
>> you say it's fractal? So like you can
use it you're using on a higher time
frame but you can use it on lower time
frames as well.
>> It is fractal and the
edges like on intraday will have
confluence with higher time frame. So
you'll see a maybe within the regular
trading session you'll see a a shelf and
then when you zoom out to like the daily
you're like oh that shelf is al is also
the edge of the weekly shelf. I thought
there was a lot of people here.
Actually, turns out there's a lot of
people here and that can give you extra
edge and maybe you leverage up in that
trade, right? I believe in variable
position sizing. So, leverage.
>> Would you say it's simple as well? In a
sense,
>> it is simple um in terms of like what
we've covered in terms of like here's
what you look for and here are your
edges and you know these are where you
trade within and and where you target
and then here's the no trade zone. So it
kind of creates a very systematic
approach in terms of where you're
looking to enter, where you're looking
to execute, where's of interest versus
where's not of interest.
>> And of course simple doesn't mean easy,
right? That's I know that can be a
misconception.
>> I can think of the other side of this
immediately. So the con.
>> Yeah.
>> Um it is simple, but the thing with the
volume profile,
>> and I don't know if I can, we don't
really have to match it, but the first
con is that it's slow.
>> Okay? Even if you're trading the volume
profile on a lower time frame, it's slow
because you need to by definition I need
to wait for it to form to have some
intuition.
>> Yeah.
>> And I can't have a full distribution
with one candle. Yeah.
>> I need like multiple candles, right?
>> So, it's slow.
>> Um, another con that I would say is you
could have infinite overlapping. So,
kind of like you can it's fractal, but
it's like
>> it's easy to
>> how many?
>> Yeah. you know, it's like, wait, do I
use the the
>> Is that part of your to only have
specific time frames? As you mentioned,
>> I use Yeah, I try to get two time frames
as far apart from each other. For
example, you wouldn't want to trade on
the 30 and then use the 1 hour for
confluence. If you're trading on a 30,
yeah, go to like
>> I know most people don't trade the
three, but go to the three hour. Like
try to get as far away as possible so
that you actually have some like the big
ship moving the [snorts] small ship.
This is the problem that if you go let's
say you know weekly, daily, 4 hour, 1
hour, 30 minute, 15 minute, 5 minute,
you're going to have conflicting
within there, you'll find maybe four
that are bullish, two that are bearish,
one that's neutral. And the problem with
that, one is very confusing. You don't
know which one to go for. Two, if you
have a bias that you have personally,
you're going to try and align with
whichever one matches that bias versus
which one makes the most sense and the
market's telling you.
>> Uh because, you know, I think I've been
guilty of that. know so many times where
I want to see price go up every you know
all out of I don't know 10 time frames
majority say it's going to go down but
whichever one says it's going up that's
my that's my word that's like yes this
is why I'm doing this because it makes
sense
>> I'm right
>> yeah um yeah it's it's tough because
it's slow and you can look at a lot but
if you're doing it the right way there
is a low number of trades and I think
this is the thing that kills
>> good and bad this one Yeah, it kills new
traders because like especially across
different
>> Yeah, it's not exciting, you know, and
I, you know, I live stream in the
morning. Everyone's like, "What's the
trade right now?" Right. And I'm like on
like I don't have anything for you. Like
I would be I would be making like I'm
always willing to give like what I think
will happen next, but I always get the
disclaimer like this isn't a trade I
would take because there's no signal
candle. Like it doesn't meet all of the
executions. You can get good. I I would
say another pro though.
flip side of that is
>> um you'll get good at predicting
chop.
>> Okay.
>> Yeah.
>> Which is a con as well because I I I can
predict chop pretty well kind of what
the next chop is going to be, but it
doesn't mean it's a good trade because
chop tends to be less sticky and you get
it's it's more variable. But you can get
better at predicting chop because you
know,
>> right? If you're say you're chopping
down here and there's a big bar up here,
it's like it's gonna chop into that.
>> Yeah.
>> Right. It has to. I don't know how long
it'll take, but it's going to chop up to
that next shelf.
>> Gotcha.
>> Right. Um, so that's that's definitely a
pro. Um,
>> that's perfect. I think we can jump onto
the chart and see some examples. Right.
>> Let's do it. All right. So, let's look
at some examples that have played out
recently.
>> Uh, today this morning is a really good
example. So, uh, I was talking about
this morning how we would likely grind
up higher due to the way that the VP was
developing. So, let's just go to the
15minute. Uh, by the way, guys, use a
replay tool if you haven't used Trading
View before. It's super simple. Um, it's
it's it's a great tool. So, let's just
go to 9:30 a.m. and let's see what the
volume profile look like. So, the
indicator that I have on is called the
session volume profile HD. Uh it is from
settlement open which is 6 pm Eastern
Standard Time to you know the the close
which is 5:00 PM Eastern Standard Time.
So 23 hours in the day. You can see here
we had this strong green candle here at
8:30, right? And then we start to build
value higher. We build this node here at
the highs which is very different than
we can even see yesterday's high, right?
The distribution here ended up being
weighted very very into the middle of
this day. Yeah.
>> Right. So, there's an immediate
difference in the shape of the auction.
So, these prices for whatever reason, it
doesn't matter if they're long or short.
I don't really think about that anymore
to be honest. I just know that there's
people here.
>> Yeah.
>> Because there's people here, um they're
going to be uh playing the game. So, my
first question at this point in the day
is will this continue to build or is it
going to quickly reject? Because if this
node gets big enough, it's a bullish
signal. We're going to continue this way
because the auction is literally it's
moving away. Even though there's a large
amount of people down here,
>> right at these prices, the market's
basically saying, "Hey, we're never
coming back. We're just going to build
enough value here. It's going to start
to go higher."
>> The auction moves.
>> Yep. And so what we can do is, and this
is, you know, pre-market, we watch the
candlesticks and the node gets bigger.
So at this point, I'm thinking, yo,
we're it's 100%. We're going to go
higher today.
>> Yeah. And if I'm taking any longs, my
stops are, you know, down here at the
edge of the node, right? You could do
right at the edge of the node. And then
your TP is going to be, you know,
wherever wherever it is. I need to go to
a higher time frame and see where the
shelf is.
>> But we could play this out.
>> You're looking for the same way you set
your stop. You're setting your TP to a
shelf, like to an area where the nodes
are reducing, the auctions leaving
>> or dying off.
>> Edge to edge. That's why I call it the
volume profile edges. Yeah. For that
exact reason. I'm literally just
expecting it to traverse all of the
players in a node and once you run out
of people, it's likely going to reject.
>> Um and then specifically today because
it's it's a Friday, um I wasn't
expecting a I was looking at we talked
about OI earlier. Yeah.
>> Um there wasn't enough really juice. So
this this ended up pinning or what we
call pinning uh kind of higher. So
that's an example just from today what
we call a it's not really a P-shaped
volume profile, but looking at trending
price action on the volume profile. If
we go to the one hour,
there's another example I think from
Monday if I recall. Yeah, this is a an
interesting trade here. There's there's
a few here that we could talk about, but
let's let's talk about this this 1 hour
close here at at uh 1300. So, we'll go
back in time, select a bar,
and
let's talk about the key levels. So, I
mentioned uh there's four key key areas
that I care about. uh prior day high,
prior day low, overnight high, and
overnight low. So, this overnight low
got taken out here. Overnight high.
Actually, we got to talk about this
first. This is an actual trade I took.
Totally forgot about this. Sorry.
>> All right. So, uh we have overnight high
or sorry, prior day high. Let's do PDH
and we have prior day low or overnight
low. Overnight low.
Cool. two key levels. Cool. We don't
have the higher time frame VP on, but
what I really want to care about is
what's the shape of the session volume
profile here and what kind of candles
form around what the auction is telling
us.
>> Yeah.
>> So, we'll go ahead and move forward in
time a little bit.
We get a print on the one hour. We get a
high volume top wick candle
into the auction. Now I know because I
trade level to level that this at least
is going to go to overnight low.
>> Yeah,
>> we got again a signal candle at the high
at the edge alpha key level. This is a
pretty tight trade here. Uh I'm looking
at the prior day volume profile as well.
I could also overlay the this visible
range uh here and I can see that there's
a you know a shelf down here
essentially. Correct.
>> Right. So this other indicator shows me
the volume profile across whatever's on
my screen visible range. And so
>> show the any price that's on the screen.
It's going to show you all of that
volume.
>> Exactly.
>> Versus these are specific days.
>> Yep. So this is session by session and
then this is everything on my screen. So
you can see it, you know, change as I do
that.
>> Got you.
>> Um but let's imagine I go short here,
right? And I did and then I do a TP and
maybe I want a TP at the edge of this
shelf, right? Safe TP would be overnight
low, but we come down there and let's
see how close we get to that. We go
through wicks right off of this this
edge here, right? And then if we
continue to go forward in time for our
next signal candle,
we swept this price. We got a it's a
lower volume uh bottom wick, but we got
a green bar. Another key thing, this
isn't really related to volume, but just
like the story of every day. It's you're
very unlikely to sweep a prior day high
and a low
>> in the same
>> in the same session. It's extremely
unlikely unless you have like a huge
break in structure. So, because we swept
prior day high, even though we ran
lower, it's extremely unlikely we we
sweep prior day low. So, as soon as I
see this weakness and change, I know
that I can do a mean reversion back
into, you know, maybe the point of
control, right? So, I'll go back a
little bit. one bar. I go long, right? I
do my TP at the point of control, which
is in the volume profile. It's just the
price with the most amount of volume.
Yeah. Right. And so, we go forward in
time.
>> Okay. And it goes a little bit higher,
but who cares? I got my money
>> uh on my trade.
>> Um, so those are two very kind of simple
examples from the the last seven uh
seven days or so.
>> Definitely. Well, the thing I love uh as
we talked about in terms of simplicity,
not to mistake again for easy, but
simplicity meaning that this one way of
observing the market when you understand
it and you're able to then, you know,
see it in the market dayto-day provides
you everything you need from where to
execute, where not to trade, where best
to trade, where to target. And I think
those are a lot of the problems or they
solve sorry a lot of the problems that a
lot of traders face because they may
have a good entry system but they don't
have the management the target the where
not to trade for example or they have
the good target they don't have the
entry. So this you can see incorporates
all of those into one system.
>> Just one question though off the back of
it looking at it now on the charts.
>> Sure.
How much of a process would you say for
someone new looking to use volume
profile? How much of a process would you
say there is to really picking up really
training the eyes? What's the realistic
not maybe time frame but what's the
realistic journey look like?
>> I think in general for a trader like if
you're really good it's going to take
you the fastest I've seen someone get
profitable is 18 months and that's
that's just fast in general. It took me
years just to be candid like I suck. Uh
[laughter]
>> it took me it took me years to get
profitable. I think for the volume
profile, the hardest thing about this is
that it doesn't give you that many
trades. Yeah. Like I I went back days
here to show you like good examples. And
one of the toughest parts about my
system that I've been filling too is
>> because there's a low number of trades
if you're waiting if you're truly
waiting for that signal candle to form.
And I noticed in this very high VIX
environment, you don't always get that.
And so I've been trading more around
just the shape it itself than anything
else. Here's a good example of a volume
profile shape that we got here. This is
what we call Pshape, right? It's
literally just shaped like the letter P.
So, this is kind of a bullish,
>> right? The auction pushed higher and
volume accumulated higher. And so, we
expect that continuation higher, right?
Which is basically what we got. We get
rid of this uh the replay there. Uh you
can see that's exactly what we got.
P-shaped close. It did chop a little
bit. Market push higher. And then the
inverse of that is what we call B-shaped
volume profile. Mhm.
>> Um but
you can trade just with that. It's
really hard for new traders to just
trust the VP and not look at the
candles.
>> Yeah.
>> Uh I've tried even trading without the
candles and just using the VP. It's
hard.
>> Um it is much harder. But that's how you
get intuition about about the prices. So
>> would you say is there anything to the
previous volume profiles in terms of
let's say like here you know we we
pushed three four days and you can see
that the point of controls you can see
that where the auctions were for those
days and we see this push down and this
sweep if you will before seeing the
momentum kick back in. Is there anything
from those previous profiles that help
for a move like that at all?
>> 100%. So in general one of the there's
really two setups that we have. So, I
have um mean reversion trades
>> of of various sorts, but the there's
also a previous PC retest trade. And so,
this is one of the key trades uh that I
teach people is we're in an uptrend. All
right? And we know that the market
doesn't just go vertical. It always
comes back. The question is where does
it come back to? Right.
>> And so, conveniently, there is this
price from yesterday where most of the
people are positioned.
>> Yeah. Right. And so if I had to be a
betting man, which I am,
>> and I'm like, huh, what price is going
to get retested for a liquidity graph,
it's probably going to be the price with
the most amount of people.
>> Yeah.
>> And so if we look to go long
>> here, right? And then I'm just going to
TP, assuming we're in an uptrend. We're
going to crack the highs.
>> Previous PC retest is our playbook
trade, right? And it doesn't even matter
how long this takes. like this is such a
a breadandbut trade uh for me um that
you'll take it every time. What people
struggle with this with this is holding
it, right? This can take this is a one
hour chart, right? So this was
>> you know uh five hours to get out of
this trade, which you know for a lot of
newbies, they're looking for minutes.
>> It's going to be difficult.
>> It's one day, but it's still five hours,
right? But it works across multiple time
frames.
>> Not that far.
>> Okay. Okay, so we're going to look at
some examples of the volume profile and
how trading at the edges of the VP or
just the edges of the auction in
particular is such a powerful entry
model. Okay, so let's take a break for a
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to the episode. I have here I'm on uh ES
Futures. Okay, I trade uh ES and AQ
futures and there are a few key things
that I want to call out on my chart
right now. So, first and foremost, I'm
on the 4hour chart. I trade specifically
on the 1 hour, 4 hour, daily time
frames. I don't really go lower than the
one hour. For the style of trading that
I trade, I am a day trader, but I do a
lot of like intraday swings. My average
hold time is like four to five hours and
I often will hold trades even overnight.
Okay, so a lot of swing trading in this
model. There's a few things I want to
call out here. Okay, in the volume
profile, right, we can see that there's
a massive amount of participation right
here. This is where people are based.
Okay. So I am interested in folks basis.
Okay. Where people are positioned
matters. Okay. And really we want to
enter we want to enter at the extremes
of these positions. Okay. This is really
at the core of VPE. There's a lot that
we could reason about, argue about,
debate about in the middle of
participation. But at the edges of the
extremes, you can also almost think of
it like in science where we're just
removing variables. Okay, we want as few
variables as possible. Okay, on day
trades, we actually simplify this even
further. Okay, when we talk about day
trading, there's only four areas.
Where's Friday high, okay, Friday low,
cover high, and overnight low. Okay,
those are the four areas where I even
look to enter a trade and then I look
for confluence with the volume profile.
For now though, we're going to stick on
this 4hour time frame. Okay, and what we
want to do is this is an event that a
lot of you probably remember this day
coming up here. There's the edge of the
auction here. There's a low value area.
Okay, right below this thing I marked in
red down here. Okay, an area of low
value, lower participation. There's a
previous low here, previous low here,
previous low here, and then another big
auction down here. We actually have this
auction and this auction here, right? So
all of this is also kind of a shelf. So
if you look at where if we split the
volume here temporally, okay, just over
time, we can see how all this volume
above all this here really started after
this point in time here once we broke
these highs. Okay, I'll show that to you
separately. So once we passed, we do a
little cross-section here. Boom.
Boom. Okay, all of this node
happened after let's just call this
September 4th 2025. So a lot of volume
has been built since September.
September 4th in particular. Okay. Now
because we're interested in where people
are positioned when we have an event
like maybe this. Okay. The question is
where are we going to go? So let's go
back just a little bit. What makes sense
from a participation perspective for
this to bounce? We don't want to catch a
knife. Okay, we could short. Obviously,
we're at the end of an auction here. We
could see that we just range across all
this participation, right? We cleaned up
all these players here. Maybe you had a
thesis short. We're not going to even
talk about the short here. What I'm
really concerned with is where do I
long? Okay, there's a few areas where
the VP might tell us to long. Okay, I
might try a long here at Let's get rid
of that thing. I'll try a long right
here. Okay, but what I'm going to
actually do is I'm going to long once we
sweep, we clean up this entire edge
here. Once we sweep this edge, okay, in
the volume profile edges, we're trading
the volume profile edges, the VPE
system, and we are looking for
confluence with clear edges in the
market. That is where we're going to get
the highest probability outcomes. Okay,
trading is like poker.
But unlike poker, we can just wait until
we're dealt a good hand without having
to pay to play. You don't have to pay to
get dealt another card of hands in the
markets. You can just wait. You can
literally do nothing. So, I'm going to
do nothing. Market sells off. We sweep
that edge. We'll go ahead and buy. Let's
do a market buy. Yeah, we'll get in. So,
we get in now. My TP is going to be
based off of the volume profile, okay?
So, I could look for either a small
intermediate bounce up to 6721,
okay, where we traverse a node. We
always look for no traversal for our
take profits. All right, assuming we're
still in an uptrend, okay, I'm always
looking for a node traversal. Or I could
go all the way up to here. So, let's
deal with something a little
conservative. Maybe a little skittish.
Put our TP right there. And my stop
loss, we're going to do the same thing.
Okay, we're going to assume that we're
not going to traverse this other node. I
can make it tighter and put it right
here, maybe outside of there, but we
might sweep this edge
uh as well. So, I'm going to assume that
at worst case scenario, we do that. So,
this is like a one to three. Okay,
risking one to make three on a pretty
big uh time frame here. So, let's see
what happened.
Go forward. It swept this edge. Okay.
And after cleaning up that last little
bit of participation,
it dips down into this node a little bit
and eventually we hit our TP there.
Okay. So, good example of using the
volume profile for taking trades. Now,
obviously, we go back one more time. We
can see how trade management is also
key. So, I went for a sweep of this
edge. There was another key edge here
which would would be the a edge I would
I would say right in terms of confluence
we always want to ask ourel is there an
edge that lines up with a node. So this
edge is actually beyond this node. If we
look at this edge right here it's in the
low value area. So we crack it but we
crack it in low value. The edge that's
really has a very very clean alignment
with the node is actually the edge over
here. And that's where we bounced. And
so a better way to take this trade again
would actually be to wait for that
little sweep.
Okay, we got the sweep, then you take
the long.
Okay, then we can do the same thing.
Okay, we'll go for the traversal of the
node. And our stop loss now is still the
other side of this node. So now we're
really using the VP for our entry model.
We'll get in. Okay,
comes up,
make a decent chunk of change. Not a bad
little trade there. Okay, and that trade
took about, you know, what is that? Five
days. Okay, 5 days, make a couple
thousand dollars. Not a bad trade.
Pretty kind of standard trade in the VPE
system. So, that's what it looks like on
the intermediate time frames. Let's see
if we can look and find just a very
simple day trade example. So, what I'm
going to do here for our day trades, we
look for is very very simple for our day
trades. I'll I'll write the model out
for us. Okay, we look for a signal
candle at an edge
and we look for the candle to be in the
direction of the trade. Look for candle
to be in the direction
of the trade. Okay. Okay. And then the
third thing here is we hold until the
next edge. Okay. So, what I mean, this
is a trade that I took very recently,
actually. Okay. There's a short here.
So, we're on the 4hour chart.
Boom. Boom. We'll go here. Awesome. So,
there's a very apparent edge on the
chart. We have these previous highs.
Where is my arrow tool?
We have the previous highs here. Okay. I
want us to sweep these highs. So once we
sweep these highs, I'll look uh this is
this is a really key thing here. We
don't just take trades at the edges. We
want confirmation that this is actually
going to do some type of mean reversion
or retracement. Okay, a lot my playbook
trades, there's two playbook trades that
I do, um this is one that I show you.
The other one is is prior PC retest. But
nonetheless,
once we pass this, I'll just look for a
trade. Cool. So, we get a candle and I
said we want a signal candle. Well, the
signal candles in the VPE system,
they're very, very simple. And you're
all going to be surprised at how simple
this system is. It is a relatively
higher volume dogee shooting star
or hammer candle. Okay. In the direction
of the trade. So, this is a dogee. It's
higher volume than the previous candle.
Relatively higher volume. So, relatively
higher volume. This is an important
definition here. means it's higher
volume than the previous candle. It
doesn't mean it's a highish volume
candle relative to a bunch of other
candles. It means it's higher volume
than the previous candle at an edge. And
it's one of these candles in the
direction of the trade. I want to short
into the mean. In this case, when I talk
about mean reversion, we're shorting
into the auction. We're shorting into
participation. There's a large block of
participation here. Let's get rid of
this little square. Let's add another
square. Okay. We weren't short into
participation here.
Okay, that's what we're looking for. If
we add our session volume profile as
well. Okay, we'll get rid of our visible
range volume profile really quickly and
we can see where people are positioned
in session. This is really really
important because traversing this
auction where people are positioned and
then the relative strength of those
positions is exact exactly how I trade
my in my entire trading system. So,
we'll go short here. Let's just go back
a bar. Okay, we'll go short. Okay, we'll
go short. We'll just mark it in. Cool.
Now, where do I want to take my TP?
Well, we want to trade edge to edge.
There's a few different edges here.
First, let's look at our stop. Okay, the
thesis is that we're not going to break
the high of the candle. We did the
sweep, so the market should not go
higher before it rotates and traverses
the auction to a degree.
We have the overnight low and there's a
pri prior day low. Now, the four areas
that I called out for day trades were
prior day low, overnight low, prior day
high, overnight high. In this case, I'm
going to go because there's a large
amount of participation lower. I'm going
to go for that prior day low. Okay,
prior day low. It's right down here.
We'll hit confirm. Okay, this is that
prior day low level. Do an option J.
Okay, and we'll label this as it's not
going to let me label it by clicking it.
Let's do PDL for prior day low. So,
we're going to go for that priority day
low. Now, the entry on this is Friday.
Okay, it's the 10:00 4hour candle. For
those of you who follow me, you know
that I the 10, 10, and two o'clock are
like the the times I look to trade,
right? Because those are the four-hour
candles. That's the primary time frame I
trade. If I don't have a trade there,
I'm usually doing nothing most of the
time, which is great because I don't
want to be on my desk all day anyways.
Got a company to run. So, let's see what
happens. Okay, we go a little bit red.
Still red. Okay, comes down a little
bit. Boom. Look at that. hits the prior
day low. Why does this happen? Okay, the
reason that this happens is very very
novel and it's something everyone
understands but they don't think about
and use when they're actually trading.
Instead, they over complicate it. We
care about where people are positioned.
Without the volume profile, we know
where people are positioned. We know
that they're pos positioned somewhere in
this candlesticks. What we're missing is
how many people are positioned there.
Okay? Are most of the people positioned
here or are most of the people
positioned here or are they positioned
here or here and on which days? This is
really really really critical because
when we know where people are
positioned, we know when they have to
make a decision. Okay, just like you
freak out when you're 50k prop account
starts to approach your intraday
trailing or whatever, right? or your
entry, you start to freak out. The hedge
funds and all these players that you
think run the markets do the exact same
thing. Okay? The guy with the $10
million entry freaks out at the exact
same time as you. And the reason he
freaks out, I'll show you right here, is
because when he gets this candle, okay,
he goes long,
right? And let's actually
let's emulate a hedge fund, okay? So he
goes long with I don't know a thousand
contracts
and he's like cool I can't wait to do
something. Oh crap. I'm immediately red.
So he's trapped long. Okay. And he is
going to once the market comes back to
him want to do something about his
trade. Right. And when the market
finally comes back to him
they are going to be sellside
aggressors. So, all the people who
bought up here are going to become
sellside aggressors. If we go back and
we look at the low that we swept, okay,
right down here. And this is going to be
a little hard to do on the replay. So,
we'll just go to this candle.
All right. Well, we actually need a
a lower time frame. If they went short
here, okay, that means every subsequent
candle after going short here, the
market's going up. They're red. They are
red for this entire part of the trade.
And then once we get back to them after
once we sweep this price, we clean these
people up. They become buyside
aggressors. Okay? They're marketing out
of their positions. And the reason that
they're doing that is that some of them
are waiting to go break even. And some
of them are getting antsy just like you
do. And they're go, "Well, maybe I won't
get break even. Maybe I should get out
now." So they start hitting that market.
And whether it's the full position or
individual lots, tanches in their
position, they're doing that. So that
psychology exists across every single
time frame, every player in the market.
People aren't nearly as sophisticated as
we think they are. And we know that
because we can just observe the market
and see what happens around the extremes
of people's positions, right? We know
again that people have to react. We just
saw it right here. Okay, we swept this
low. Okay, we put in uh after sweeping
this the the Monday low, the market is
coming up a little bit now. It's ranging
right now,
but before FOMC, which is in about an
hour, you can basically anticipate that
it's going to mean revert back into
here. Not to mention, and I haven't
talked about it in this video, the
session volume profiles themselves.
Okay, we have two sessions PC's stacked
right here. 6857 is some change, right?
This session's PC and this session's
point of control right on top of each
other. Most of the people for these two
days exist right here. I'll say it
again. It's really, really key. Most of
the people for these two days exist
right here and that's why it's really
powerful. So, let's go ahead and see if
we can find a few other examples of high
volume signal candles at the edges of
the auction and we'll go back a bit to
where we were just very clearly maybe
uptrending or or something like that,
right? I'm look at some some previous
Val retest
uh as well. Okay, so here's here's a
good example. This is a a different
model or different entry in the VPE
model, but it's something that we we
talk about quite a bit uh in our
community. Okay, so this is the the
concept of just trading the auction and
looking for these node traversals.
So the market's in an uptrend overall.
We know through observation
that
prior day Val is a great entry long.
Why? Okay, so let's get rid of the
visible range DP
and let's just talk about what we're
actually looking at here. Okay, so the
volume profile itself, there's a purple
line, there's another purple line,
there's a red line. Between the two
purple lines is 70% of the
participation. That's where most of the
people are. At the point of control is
where is the actual price where
literally most of the people are. So 70%
of the people are between these purple
lines and then most of the people are at
the red line. Okay? So one standard
deviation is 68%. You don't have to know
statistics. Just understand that this is
essentially one standard deviation of
people. So if I had to ask myself, okay,
tomorrow
where is the market most likely to
interact? It's most likely to interact
where people are positioned. Why?
Because of what I said earlier. People
have to make decisions at their basis.
They do. They freak out. Either they're
gonna double down, they're gonna, you
know, which will be aggressive on one
side or they're going to get out and get
skddish. So, generally, you can expect
this area, okay, between the VA and VH
to get interacted with in your trending
markets. Okay, we should not see too
much interaction below because there's
not too much volume below, right? Within
this horizontal histogram, which is just
a blind profile. Cool. So, let's just
play that out. Okay. And instead of
doing 4 hour bars, let's do one hour.
Okay. So, the market does a thing, comes
up. Okay. And you can see here how if
you would have longed right here. Let's
actually just go back a little bit.
Let's imagine you go long right here.
Like, cool. I am I am super confident
this thing is going straight up
overnight. We're just going to go long.
So, we go long. Dope. We're green. We're
really freaking green. Oh no. Oh no. I'm
freaking out. I'm freaking out. But look
where it comes to. Look where it finds
okay participation. Okay, it finds
participation in this previous session
at the VA. This is where all the people
yesterday participated. Okay, but then
after
interacting with that, it continues
doing what it's doing. So instead of
just immediately taking that long, okay,
in this uptrend, what you can do is
right, you can just wait. Okay, we'll go
back to the bar. Can you say, you know
what, I know in an uptrend I want to I
want to long BAL.
This is our trade plan. Okay, I want to
long BAL or do nothing,
right? And this is how I trade in BPE.
So,
it's going. It's going. It's going. It's
going. All right. Cool. Hit my VL. We'll
go long. Okay. Okay, I'll put my stop.
It should not go really below uh
yesterday's overnight and TP. We're in
an uptrend. I should be able to go for
the highs. Okay, I should. Right, it
goes
boom boom boom boom. Easy money. So,
there's no reason, by the way, in a
trending market not to go for the highs
for your TP. If you are, right? If
you're doing something else, then you
literally don't trust what you're seeing
on the charts. you don't trust that
you're actually in an uptrend, you
should change your thesis.
Okay, so that's a very very simple
example there. Let's go to the monthly.
I want to show you some magic on the
monthly chart for the VP of why this
system is so magic. Okay, and you can
kind of see my my marks for extensions
higher and you know we've we've hit
those. So let's add our visible range
back. Okay,
so back at this time. Okay, the market
is coming off, okay, at some point and
we have to ask ourselves where is it
most likely to bounce. Okay, it's
actually not going to show me the
VP on that time period about 24 hours
for this to load. So, as we let the VP
load, we need to ask ourselves where is
it most likely to bounce? Well, there's
a huge amount of participation here.
Everyone's watching the news. They're
looking at the tweets that are coming
out. They're trying to figure out what's
going on. I'm thinking I want to long
after we sweep these lows,
okay,
and get close to this bracket here. It
doesn't have to be perfect because this
is a massive range. I'm going for
alltime highs. This is,00 points on ES,
by the way, okay? It's $50 a point. So,
the market's coming down. Okay, let's
change this to four hours again, just so
we're not waiting forever. Okay, market
comes down. Boom. we get in there, we'll
go long.
Okay. And my TP should just be at the
highs. Okay. Unless I think we're going
to start downtrending. And I'll just put
it down there. Okay. This is a pretty
fat bracket, but it's no different than
trading on the daily or any other time
frame, right? And then we let it play
out. You can see that we're up 24 GS.
You know, it's ranging. It's choppy. And
there's the whole, you know, story of of
what's going to happen as we reapproach
all-time highs on ES here. But this is
just one contract. And I imagine most of
you haven't made this amount of money
trading, you know, 15 contracts in
whatever you're trading. This is a
trade, okay? This is just one trade.
Trading the volume profile looking for
that bounce out of participation because
we know that people are positioned
there. Nice 64 GS. So that's how we
trade the volume profile. I did not get
that,00 points on ES. Uh I have though
managed on ENQ, you know, trading this
system, uh catching two uh thousand
point trades on the upside here, which
is cool in addition to a few other
trades that I've taken. So that is my
system in an up in a nutshell. That's my
system in a nutshell. Thanks for
watching and uh yeah, shout out to RZ
for um
Oh, do a different outro. So that's the
VP model in a nutshell. Thanks for
watching,
>> Bar. It's been absolute pleasure to
break this down for us today and I thank
you for that. Everyone at home, drop a
comment of your biggest lesson from this
episode. Any questions, drop them in the
comments below. Myself and Forest will
check those out. The links for Forest
will be in the description, so make sure
you go check those out as well. But hit
like, hit subscribe. Other episodes are
on screen. And this has been Chart
Fanatics. Take a