Original subtitles

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.