All language subtitles for 7. Calibrate Position Management Entry

Now, let's look at the final use of the
volume profile tool.

Although in several examples we have
seen it mainly used to identify

entries above trading levels, the volume
profile is also extremely useful in

determining profit -taking and stop
-loss placement.

The levels to use will depend on the
type of profile used based on your

style, but in general, the logic will be
exactly the same for all of them.

Regarding entries, regardless of whether
we are in a trend or range context,

identifying the VWAP, VPOC, the high and
low zones of the value area, and the

low volume nodes will be extremely
useful in waiting for the development of

entry trigger.

Of course, if we are evaluating a buy
entry, we will identify these levels

the price, and if we are evaluating a
sell entry, we will see them above the

price. As we pointed out earlier, the
more of these levels we have in favor of

the price, the more confidence the
opportunity will give us.

and the more confluences of levels we
can identify, the stronger the signal.

Throughout the course, we have gone
through several examples of using

levels as entries.

Here, we see a summary for the example
of buy entries with different types of

profiles. Manually drawn profiles that
identify bullish impulses, manual

profiles that identify range contexts,
and session profiles.

In addition, we also present the VWAPs
as areas to look for possible entries.

Here are some examples of session
profiles using the weekly VWAP.

When trading with session profiles, it
is generally recommended to consider the

trading levels of the previous session.

As we can see, the price reacts in a
confluence zone where the VPOC of the

previous session and the weekly VWAP
coincide.

This type of opportunity has a high
probability of success, and the more

that converge in the same area, the
better.

Finally, although less frequently, We
also comment on the possibility of

for potential entries in low -volume
nodes.

As we already know, one of the ways in
which the price interacts with low

-volume nodes is through a V -shaped
rejection.

Now, we could use this knowledge to
propose scenarios where we would look

entry after a V -turn in a low -volume
node.

This V -turn would be represented on the
price chart as a failed price

discovery, a search for liquidity.

Here is a closer, more visual example.

First, we identify the low volume node,
as indicated by the multiple V -turn

price rejections and the two fast
-moving rejections.

From there, and once the price is
effectively positioned below this node,

use this information to look for an
opportunity to enter short should the

interact with this zone again.

Since we know that there is a high
probability that the market will reject

interaction in the form of another new V
-turn, knowing this information we

should start with this scenario and be
prepared to act if the market confirms

it.

Another critical footprint that we
should have identified in this example

position of the high volume node.

As we can see, both the high volume node
and the VPOC are at the top.

As we learned earlier, the directional
bias after seeing the price below the

last volume node should be bearish. So
as long as this situation is maintained,

the initially raised scenarios should be
in favor of looking for a bearish

continuation.

Therefore, since the last volume node is
already in favor, the approach of

looking for a short entry on the low
volume node is the most likely scenario.

And what happens is that the price
interacts with the lower trading area up

two times before continuing the downward
movement.

Again, this is a very complete example
where we were able to bring together

different concepts.

On the one hand, the identification of
the low volume node within the profile

and its representation in the price. On
the other hand, The determination of the

directional bias with the location of
the price and the higher volume node.

And finally, the search for the
potential short entry at the low volume

Let's look at another example using the
low volume nodes again.

This time, we start a manual profile
that covers the entire lateralization to

identify the relevant trading zones.

Imagine that we are at this point in
time.

The previous context is an uptrend and
we want to propose a buy scenario.

The two points where we should wait for
the price to seek an entry would be in

the rejection zones delimited by the
value area.

In the case of VAH, we should first
position the price above this level and

wait for a test of the level.

And in the case of VAL, which also
coincides with a low -volume node, we

value the entry if there is a direct
move into the area.

This part of scenario management is
fundamental.

Our job as analysts is to propose all
the scenarios we can think of based on

where the price is in relation to the
trading levels.

But ultimately, it is the market that
confirms whether the entry will be at

level or another or none at all.

We suggest and the market confirms.

And what happens is that it goes first
to the low volume node where it

a strong bullish reaction that gives
rise to a trend movement that manages to

leave the value area at the top and also
leaves a second entry by making a test

on the VAH of the profile.

In this case, it has used the two
operating levels to leave two

but in no case can we know in advance if
the market will go one way or the other

first. This is our job as analysts, to
be prepared for what can happen at any

time.

Let's look at one last example of
entering at low volume nodes.

We identify the end of the bearish
movement and run a manual profile to

the relevant trading zones.

Since the context is bearish, we already
know that we want to look for a selling

opportunity, so we will identify the
areas that we would watch to evaluate

entry. In this case, they would be the
three low -volume nodes and the value

area low of the profile, which also
coincides with one of the nodes.

Once the zones are identified, we will
set up the scenarios.

Since we are looking for a short
position and the price is below all the

levels, we will simply have to wait for
the development of a bullish movement

that will visit these zones to look for
the reaction that may give rise to

another new bearish impulse.

Remember, we do not know which zone the
price will react to if it does so in any

of them.

We simply identify them all and wait for
the market to confirm which one will be

the turning point.

And in this case, it was on the
intermediate low volume node from which

developed rejection and generated the
potential short entry.

An interesting question that may arise
for you is what happens if the price

not react on any low volume node? Or
similarly, what should the market do to

change the directional bias and instead
of wanting to sell, we would want to

buy? Both situations would lead to the
same behavior.

In this case, identifying the immediate
high volume node is critical to

determining the market bias.

The context is clear. As long as the
market is below it and clearly below the

value area, we will be willing to look
for opportunities to sell.

Therefore, if we want to buy, we should
at least wait for the price to position

above this volume node.

Remember that it is these high volume
nodes that will determine who is in

control of the market in the short term.

If the market manages to position itself
above this level, it would also have

regained the value area.

and it would be the right time to look
for buying opportunities.

The training zone remains the same. The
scenario now would be to wait for some

kind of test on the low volume node that
also coincides with the low value area

of the entire profile.

This is the dynamic of scenario
management.

We need to combine all the concepts we
have learned to read the market

in each situation, and based on what it
is doing, determine the directional

bias, set up scenarios, and wait on the
trading zones for the appearance of our

entry trigger.

Speaking of the entry signal, it is not
the subject of this course, but I will

discuss some of the behaviors I use to
enter the market.

More often than not, our main trigger
will be to wait for the appearance of a

candlestick showing intent, a
candlestick that denotes aggressiveness

direction we want to trade.

Because of the message they convey, this
is the best way of definitively

confirming the opportunity.

If we are in a trading zone where we
want to buy, and after seeing all the

necessary signs discussed previously, we
observe a candlestick showing bullish

strength, this informs us of a clear
intention on the part of the buyers.

The candlesticks that meet the
characteristics we are looking for are

a wide range, high volume, and a closing
price at the extremes, regardless of

whether or not there is a wick at the
opposite end.

and always analyzing in comparative
terms with respect to the previously

candlesticks. So the idea is clear.

If we are in the trading zone, we have
already done all our prior analysis and

some form of trigger appears, we have
the green light to launch the order.

The appearance of candlesticks showing
intent ultimately confirms a change of

control among market participants in the
very short term.

At that point, we will have everything
aligned, the context and the roadmap.

which will always refer to the longer
-term control, and the appearance of the

entry trigger, which refers to the
shorter -term control.

Here are some examples of our triggers,
both for the long and the short side.

If we look at it from the point of view
of market fractality, in essence, they

all represent exactly the same type of
reversal, with the only difference being

that some develop faster than others.

This concept of fractality is very
powerful and easy to understand.

Imagine that we observe a one
-candlestick trigger on a daily chart.

Well, if we go down in time, for
example, to a four - or eight -hour

will observe that same behavior as the
two -candlestick trigger.

And if we go down to the hourly chart,
we will observe the same behavior as the

three -candlestick trigger, and so on.

And those last triggers would probably
represent the behavior seen on a chart

15 and 5 minutes approximately.

So you need to be aware that the
triggers that we have just seen are a

reference, and that the market can tell
us exactly the same thing in multiple

ways, depending on the time frame in
which we are working.

Here we see two very different examples
that ultimately represent the same

thing.

Ultimately, the key is to determine the
reversal by identifying a candlestick in

the opposite direction, plus another one
in favor of the movement we expect.

and preferably with the latter showing a
closing price at the opposite extreme

to the previous one.

Let's look at some particularities we
should take into account with respect to

the entry trigger.

For example, the fact that one
candlestick trigger should be composed

bullish candlestick in the event we want
to buy, and that the remaining triggers

should fail to close above the last big
bearish candlestick that would establish

control.

We can also use this as an extra input
that will add more or less strength to

the scenario.

This slide shows practically the same
behavior with the only difference being

the closing price of the bullish
candlestick which would ultimately

greater or lesser aggressiveness.

In the pattern on the left, we see that
the bullish candlestick manages to close

in the upper third of the bearish one.

Although it is true that it could be
taken as valid for use as an entry

the fact that it is unable to close
higher suggests that the aggressiveness

the buyers is not at its peak.

which could make us doubt whether to
execute the trade or at least make us

reduce our exposure.

In the middle pattern, we see more
commitment from the buyers who have

to push the price to close above the
opening price.

This representation provides us with
greater confidence than the previous

And finally, on the right, we see the
representation that most suggests the

strength is on the buyer's side, with
the bullish candlestick closing even

the maximum of the bearish one.

These three representations should be
enough to activate the entry trigger.

In terms of the entry order, I always
recommend using a stop order in the

direction of the movement.

In other words, if what we want is to
buy, we will use a buy stop located

the current price.

And if what we want is to sell, we will
use a sell stop located below the

current price.

The development of a candlestick showing
intent is a clear sign of interest.

but it is worth using a stop order as a
definitive filter that suggests a

certain continuity in the movement
started with the trigger candle.

Continuing with the example of our entry
triggers, in the case of long trading,

we would place the order above the
candlestick. If we are going short, we

place the sell stop entry order below
the trigger candlestick.

This process will always be exactly the
same.

How far below?

At least one tick below the high or low
of the candlestick.

and preferably two to avoid micro -false
breakouts.

Although it may seem ridiculous, it
happens. A mini -false breakout on the

previous candlestick and reversal.

In this way, we can enter in favor of
the momentum and avoid these

microstructure behaviors.

This way of entering the market is a
personal recommendation.

It is the way I feel most comfortable
when executing the order. But it does

mean that it is the best way, or that it
is not possible to enter in another

way. Many traders enter the market using
limit orders placed at the levels and

trading zones.

This is another method that I do not
advocate.

The way I see it, chart analysis is
reactive, so trying to somehow

that the price will turn right at this
level is trying to guess and assume too

much. The truth is that we have no way
of knowing if such behavior will occur

when the time comes.

The underlying idea is that we must
continuously analyze the interaction

buyers and sellers.

And even if we are biased one way or the
other based on the context, we must

confirm when the time comes that the
approach is sound and that the market

itself confirms it.

If the market is at a trading level and
we see aggressive buyers appearing and

pushing the price higher, that is the
footprint we would need to see to

that our analysis appears to be correct
and in such a case would provide us with

a trading opportunity.

It should also be remembered that seeing
our entry trigger above the proposed

zone has nothing to do with whether the
trade later turns out to be a profit or

a loss.

As we have seen, there is always new
information coming into the market that

could change the perception of the stock
at any time.

But at least we will be closer to making
the right decision at any given time.

It is clear that the highest profit
margin will always be given by entries

limit orders, but it is also true that
these type of entries are more likely to

be wrong.

On the other hand, Entries with stop
orders give us greater confidence at the

cost of a lower profit margin.