1 00:00:00,200 --> 00:00:03,680 Now, let's look at the final use of the volume profile tool. 2 00:00:04,080 --> 00:00:08,119 Although in several examples we have seen it mainly used to identify 3 00:00:08,119 --> 00:00:12,860 entries above trading levels, the volume profile is also extremely useful in 4 00:00:12,860 --> 00:00:15,220 determining profit -taking and stop -loss placement. 5 00:00:16,059 --> 00:00:20,400 The levels to use will depend on the type of profile used based on your 6 00:00:20,400 --> 00:00:24,620 style, but in general, the logic will be exactly the same for all of them. 7 00:00:25,240 --> 00:00:29,020 Regarding entries, regardless of whether we are in a trend or range context, 8 00:00:29,550 --> 00:00:35,170 identifying the VWAP, VPOC, the high and low zones of the value area, and the 9 00:00:35,170 --> 00:00:38,850 low volume nodes will be extremely useful in waiting for the development of 10 00:00:38,850 --> 00:00:39,749 entry trigger. 11 00:00:39,750 --> 00:00:44,750 Of course, if we are evaluating a buy entry, we will identify these levels 12 00:00:44,750 --> 00:00:49,110 the price, and if we are evaluating a sell entry, we will see them above the 13 00:00:49,110 --> 00:00:54,090 price. As we pointed out earlier, the more of these levels we have in favor of 14 00:00:54,090 --> 00:00:57,270 the price, the more confidence the opportunity will give us. 15 00:00:57,560 --> 00:01:01,440 and the more confluences of levels we can identify, the stronger the signal. 16 00:01:02,160 --> 00:01:05,920 Throughout the course, we have gone through several examples of using 17 00:01:05,920 --> 00:01:06,920 levels as entries. 18 00:01:07,280 --> 00:01:11,340 Here, we see a summary for the example of buy entries with different types of 19 00:01:11,340 --> 00:01:16,280 profiles. Manually drawn profiles that identify bullish impulses, manual 20 00:01:16,280 --> 00:01:19,780 profiles that identify range contexts, and session profiles. 21 00:01:20,800 --> 00:01:25,900 In addition, we also present the VWAPs as areas to look for possible entries. 22 00:01:26,560 --> 00:01:30,280 Here are some examples of session profiles using the weekly VWAP. 23 00:01:30,960 --> 00:01:35,040 When trading with session profiles, it is generally recommended to consider the 24 00:01:35,040 --> 00:01:36,620 trading levels of the previous session. 25 00:01:37,060 --> 00:01:41,740 As we can see, the price reacts in a confluence zone where the VPOC of the 26 00:01:41,740 --> 00:01:44,740 previous session and the weekly VWAP coincide. 27 00:01:45,220 --> 00:01:49,780 This type of opportunity has a high probability of success, and the more 28 00:01:49,780 --> 00:01:51,900 that converge in the same area, the better. 29 00:01:52,960 --> 00:01:57,700 Finally, although less frequently, We also comment on the possibility of 30 00:01:57,700 --> 00:01:59,880 for potential entries in low -volume nodes. 31 00:02:00,380 --> 00:02:04,140 As we already know, one of the ways in which the price interacts with low 32 00:02:04,140 --> 00:02:06,080 -volume nodes is through a V -shaped rejection. 33 00:02:06,840 --> 00:02:10,740 Now, we could use this knowledge to propose scenarios where we would look 34 00:02:10,740 --> 00:02:13,340 entry after a V -turn in a low -volume node. 35 00:02:13,860 --> 00:02:17,560 This V -turn would be represented on the price chart as a failed price 36 00:02:17,560 --> 00:02:19,380 discovery, a search for liquidity. 37 00:02:20,440 --> 00:02:22,580 Here is a closer, more visual example. 38 00:02:23,410 --> 00:02:28,270 First, we identify the low volume node, as indicated by the multiple V -turn 39 00:02:28,270 --> 00:02:31,010 price rejections and the two fast -moving rejections. 40 00:02:31,470 --> 00:02:35,930 From there, and once the price is effectively positioned below this node, 41 00:02:35,930 --> 00:02:39,950 use this information to look for an opportunity to enter short should the 42 00:02:39,950 --> 00:02:41,390 interact with this zone again. 43 00:02:42,130 --> 00:02:45,670 Since we know that there is a high probability that the market will reject 44 00:02:45,670 --> 00:02:49,810 interaction in the form of another new V -turn, knowing this information we 45 00:02:49,810 --> 00:02:53,410 should start with this scenario and be prepared to act if the market confirms 46 00:02:53,410 --> 00:02:54,410 it. 47 00:02:54,650 --> 00:02:58,610 Another critical footprint that we should have identified in this example 48 00:02:58,610 --> 00:02:59,990 position of the high volume node. 49 00:03:00,530 --> 00:03:04,810 As we can see, both the high volume node and the VPOC are at the top. 50 00:03:05,270 --> 00:03:09,170 As we learned earlier, the directional bias after seeing the price below the 51 00:03:09,170 --> 00:03:13,410 last volume node should be bearish. So as long as this situation is maintained, 52 00:03:13,810 --> 00:03:17,390 the initially raised scenarios should be in favor of looking for a bearish 53 00:03:17,390 --> 00:03:18,390 continuation. 54 00:03:18,790 --> 00:03:22,850 Therefore, since the last volume node is already in favor, the approach of 55 00:03:22,850 --> 00:03:26,650 looking for a short entry on the low volume node is the most likely scenario. 56 00:03:27,590 --> 00:03:31,730 And what happens is that the price interacts with the lower trading area up 57 00:03:31,730 --> 00:03:34,190 two times before continuing the downward movement. 58 00:03:34,890 --> 00:03:38,830 Again, this is a very complete example where we were able to bring together 59 00:03:38,830 --> 00:03:39,830 different concepts. 60 00:03:40,030 --> 00:03:44,190 On the one hand, the identification of the low volume node within the profile 61 00:03:44,190 --> 00:03:48,770 and its representation in the price. On the other hand, The determination of the 62 00:03:48,770 --> 00:03:52,450 directional bias with the location of the price and the higher volume node. 63 00:03:52,750 --> 00:03:56,950 And finally, the search for the potential short entry at the low volume 64 00:03:57,890 --> 00:04:01,330 Let's look at another example using the low volume nodes again. 65 00:04:01,870 --> 00:04:06,410 This time, we start a manual profile that covers the entire lateralization to 66 00:04:06,410 --> 00:04:08,090 identify the relevant trading zones. 67 00:04:08,950 --> 00:04:11,250 Imagine that we are at this point in time. 68 00:04:11,490 --> 00:04:15,530 The previous context is an uptrend and we want to propose a buy scenario. 69 00:04:16,269 --> 00:04:19,990 The two points where we should wait for the price to seek an entry would be in 70 00:04:19,990 --> 00:04:22,410 the rejection zones delimited by the value area. 71 00:04:23,010 --> 00:04:28,110 In the case of VAH, we should first position the price above this level and 72 00:04:28,110 --> 00:04:29,530 wait for a test of the level. 73 00:04:29,810 --> 00:04:34,890 And in the case of VAL, which also coincides with a low -volume node, we 74 00:04:34,890 --> 00:04:37,690 value the entry if there is a direct move into the area. 75 00:04:38,190 --> 00:04:40,770 This part of scenario management is fundamental. 76 00:04:41,450 --> 00:04:46,080 Our job as analysts is to propose all the scenarios we can think of based on 77 00:04:46,080 --> 00:04:48,600 where the price is in relation to the trading levels. 78 00:04:49,020 --> 00:04:53,460 But ultimately, it is the market that confirms whether the entry will be at 79 00:04:53,460 --> 00:04:55,360 level or another or none at all. 80 00:04:55,820 --> 00:04:58,400 We suggest and the market confirms. 81 00:04:59,340 --> 00:05:03,740 And what happens is that it goes first to the low volume node where it 82 00:05:03,740 --> 00:05:07,760 a strong bullish reaction that gives rise to a trend movement that manages to 83 00:05:07,760 --> 00:05:12,650 leave the value area at the top and also leaves a second entry by making a test 84 00:05:12,650 --> 00:05:14,210 on the VAH of the profile. 85 00:05:15,050 --> 00:05:19,810 In this case, it has used the two operating levels to leave two 86 00:05:20,070 --> 00:05:24,350 but in no case can we know in advance if the market will go one way or the other 87 00:05:24,350 --> 00:05:29,590 first. This is our job as analysts, to be prepared for what can happen at any 88 00:05:29,590 --> 00:05:30,590 time. 89 00:05:30,850 --> 00:05:34,370 Let's look at one last example of entering at low volume nodes. 90 00:05:35,150 --> 00:05:39,710 We identify the end of the bearish movement and run a manual profile to 91 00:05:39,710 --> 00:05:40,830 the relevant trading zones. 92 00:05:41,430 --> 00:05:45,590 Since the context is bearish, we already know that we want to look for a selling 93 00:05:45,590 --> 00:05:50,050 opportunity, so we will identify the areas that we would watch to evaluate 94 00:05:50,050 --> 00:05:54,950 entry. In this case, they would be the three low -volume nodes and the value 95 00:05:54,950 --> 00:05:58,810 area low of the profile, which also coincides with one of the nodes. 96 00:05:59,830 --> 00:06:02,890 Once the zones are identified, we will set up the scenarios. 97 00:06:03,720 --> 00:06:07,600 Since we are looking for a short position and the price is below all the 98 00:06:07,600 --> 00:06:11,140 levels, we will simply have to wait for the development of a bullish movement 99 00:06:11,140 --> 00:06:14,700 that will visit these zones to look for the reaction that may give rise to 100 00:06:14,700 --> 00:06:15,860 another new bearish impulse. 101 00:06:16,660 --> 00:06:20,980 Remember, we do not know which zone the price will react to if it does so in any 102 00:06:20,980 --> 00:06:21,579 of them. 103 00:06:21,580 --> 00:06:26,180 We simply identify them all and wait for the market to confirm which one will be 104 00:06:26,180 --> 00:06:27,180 the turning point. 105 00:06:27,600 --> 00:06:31,160 And in this case, it was on the intermediate low volume node from which 106 00:06:31,160 --> 00:06:34,200 developed rejection and generated the potential short entry. 107 00:06:34,940 --> 00:06:39,060 An interesting question that may arise for you is what happens if the price 108 00:06:39,060 --> 00:06:43,880 not react on any low volume node? Or similarly, what should the market do to 109 00:06:43,880 --> 00:06:47,320 change the directional bias and instead of wanting to sell, we would want to 110 00:06:47,320 --> 00:06:50,540 buy? Both situations would lead to the same behavior. 111 00:06:51,060 --> 00:06:54,980 In this case, identifying the immediate high volume node is critical to 112 00:06:54,980 --> 00:06:56,180 determining the market bias. 113 00:06:56,830 --> 00:07:01,350 The context is clear. As long as the market is below it and clearly below the 114 00:07:01,350 --> 00:07:04,950 value area, we will be willing to look for opportunities to sell. 115 00:07:06,070 --> 00:07:10,070 Therefore, if we want to buy, we should at least wait for the price to position 116 00:07:10,070 --> 00:07:11,470 above this volume node. 117 00:07:12,210 --> 00:07:16,270 Remember that it is these high volume nodes that will determine who is in 118 00:07:16,270 --> 00:07:17,890 control of the market in the short term. 119 00:07:18,390 --> 00:07:23,010 If the market manages to position itself above this level, it would also have 120 00:07:23,010 --> 00:07:24,310 regained the value area. 121 00:07:24,700 --> 00:07:27,160 and it would be the right time to look for buying opportunities. 122 00:07:27,980 --> 00:07:32,200 The training zone remains the same. The scenario now would be to wait for some 123 00:07:32,200 --> 00:07:36,600 kind of test on the low volume node that also coincides with the low value area 124 00:07:36,600 --> 00:07:37,800 of the entire profile. 125 00:07:38,700 --> 00:07:41,000 This is the dynamic of scenario management. 126 00:07:41,520 --> 00:07:45,540 We need to combine all the concepts we have learned to read the market 127 00:07:45,540 --> 00:07:50,000 in each situation, and based on what it is doing, determine the directional 128 00:07:50,000 --> 00:07:54,340 bias, set up scenarios, and wait on the trading zones for the appearance of our 129 00:07:54,340 --> 00:07:55,340 entry trigger. 130 00:07:55,960 --> 00:08:00,440 Speaking of the entry signal, it is not the subject of this course, but I will 131 00:08:00,440 --> 00:08:03,060 discuss some of the behaviors I use to enter the market. 132 00:08:03,720 --> 00:08:07,300 More often than not, our main trigger will be to wait for the appearance of a 133 00:08:07,300 --> 00:08:11,460 candlestick showing intent, a candlestick that denotes aggressiveness 134 00:08:11,460 --> 00:08:12,660 direction we want to trade. 135 00:08:13,420 --> 00:08:17,720 Because of the message they convey, this is the best way of definitively 136 00:08:17,720 --> 00:08:18,780 confirming the opportunity. 137 00:08:19,690 --> 00:08:23,690 If we are in a trading zone where we want to buy, and after seeing all the 138 00:08:23,690 --> 00:08:27,950 necessary signs discussed previously, we observe a candlestick showing bullish 139 00:08:27,950 --> 00:08:31,750 strength, this informs us of a clear intention on the part of the buyers. 140 00:08:32,330 --> 00:08:36,610 The candlesticks that meet the characteristics we are looking for are 141 00:08:36,610 --> 00:08:42,110 a wide range, high volume, and a closing price at the extremes, regardless of 142 00:08:42,110 --> 00:08:44,310 whether or not there is a wick at the opposite end. 143 00:08:44,760 --> 00:08:48,900 and always analyzing in comparative terms with respect to the previously 144 00:08:48,900 --> 00:08:51,860 candlesticks. So the idea is clear. 145 00:08:52,100 --> 00:08:56,680 If we are in the trading zone, we have already done all our prior analysis and 146 00:08:56,680 --> 00:09:00,360 some form of trigger appears, we have the green light to launch the order. 147 00:09:00,820 --> 00:09:04,820 The appearance of candlesticks showing intent ultimately confirms a change of 148 00:09:04,820 --> 00:09:07,820 control among market participants in the very short term. 149 00:09:08,320 --> 00:09:12,560 At that point, we will have everything aligned, the context and the roadmap. 150 00:09:12,960 --> 00:09:17,220 which will always refer to the longer -term control, and the appearance of the 151 00:09:17,220 --> 00:09:19,720 entry trigger, which refers to the shorter -term control. 152 00:09:20,180 --> 00:09:24,420 Here are some examples of our triggers, both for the long and the short side. 153 00:09:24,680 --> 00:09:29,140 If we look at it from the point of view of market fractality, in essence, they 154 00:09:29,140 --> 00:09:33,620 all represent exactly the same type of reversal, with the only difference being 155 00:09:33,620 --> 00:09:35,400 that some develop faster than others. 156 00:09:35,920 --> 00:09:40,020 This concept of fractality is very powerful and easy to understand. 157 00:09:40,770 --> 00:09:44,290 Imagine that we observe a one -candlestick trigger on a daily chart. 158 00:09:44,510 --> 00:09:49,650 Well, if we go down in time, for example, to a four - or eight -hour 159 00:09:49,650 --> 00:09:52,730 will observe that same behavior as the two -candlestick trigger. 160 00:09:53,070 --> 00:09:57,390 And if we go down to the hourly chart, we will observe the same behavior as the 161 00:09:57,390 --> 00:09:59,190 three -candlestick trigger, and so on. 162 00:09:59,490 --> 00:10:04,110 And those last triggers would probably represent the behavior seen on a chart 163 00:10:04,110 --> 00:10:05,850 15 and 5 minutes approximately. 164 00:10:06,830 --> 00:10:10,530 So you need to be aware that the triggers that we have just seen are a 165 00:10:10,530 --> 00:10:14,330 reference, and that the market can tell us exactly the same thing in multiple 166 00:10:14,330 --> 00:10:17,270 ways, depending on the time frame in which we are working. 167 00:10:17,710 --> 00:10:22,030 Here we see two very different examples that ultimately represent the same 168 00:10:22,030 --> 00:10:23,030 thing. 169 00:10:23,170 --> 00:10:27,490 Ultimately, the key is to determine the reversal by identifying a candlestick in 170 00:10:27,490 --> 00:10:31,350 the opposite direction, plus another one in favor of the movement we expect. 171 00:10:31,840 --> 00:10:35,720 and preferably with the latter showing a closing price at the opposite extreme 172 00:10:35,720 --> 00:10:36,880 to the previous one. 173 00:10:37,240 --> 00:10:41,220 Let's look at some particularities we should take into account with respect to 174 00:10:41,220 --> 00:10:42,159 the entry trigger. 175 00:10:42,160 --> 00:10:46,040 For example, the fact that one candlestick trigger should be composed 176 00:10:46,040 --> 00:10:49,960 bullish candlestick in the event we want to buy, and that the remaining triggers 177 00:10:49,960 --> 00:10:54,260 should fail to close above the last big bearish candlestick that would establish 178 00:10:54,260 --> 00:10:55,260 control. 179 00:10:55,480 --> 00:10:59,860 We can also use this as an extra input that will add more or less strength to 180 00:10:59,860 --> 00:11:00,860 the scenario. 181 00:11:01,070 --> 00:11:05,310 This slide shows practically the same behavior with the only difference being 182 00:11:05,310 --> 00:11:08,750 the closing price of the bullish candlestick which would ultimately 183 00:11:08,750 --> 00:11:10,370 greater or lesser aggressiveness. 184 00:11:11,010 --> 00:11:15,370 In the pattern on the left, we see that the bullish candlestick manages to close 185 00:11:15,370 --> 00:11:17,150 in the upper third of the bearish one. 186 00:11:17,470 --> 00:11:21,870 Although it is true that it could be taken as valid for use as an entry 187 00:11:22,050 --> 00:11:26,730 the fact that it is unable to close higher suggests that the aggressiveness 188 00:11:26,730 --> 00:11:28,570 the buyers is not at its peak. 189 00:11:28,960 --> 00:11:32,700 which could make us doubt whether to execute the trade or at least make us 190 00:11:32,700 --> 00:11:33,700 reduce our exposure. 191 00:11:34,300 --> 00:11:38,240 In the middle pattern, we see more commitment from the buyers who have 192 00:11:38,240 --> 00:11:41,080 to push the price to close above the opening price. 193 00:11:41,340 --> 00:11:46,120 This representation provides us with greater confidence than the previous 194 00:11:46,840 --> 00:11:51,220 And finally, on the right, we see the representation that most suggests the 195 00:11:51,220 --> 00:11:55,380 strength is on the buyer's side, with the bullish candlestick closing even 196 00:11:55,380 --> 00:11:56,880 the maximum of the bearish one. 197 00:11:57,340 --> 00:12:01,460 These three representations should be enough to activate the entry trigger. 198 00:12:01,860 --> 00:12:06,660 In terms of the entry order, I always recommend using a stop order in the 199 00:12:06,660 --> 00:12:07,660 direction of the movement. 200 00:12:07,820 --> 00:12:13,560 In other words, if what we want is to buy, we will use a buy stop located 201 00:12:13,560 --> 00:12:14,560 the current price. 202 00:12:15,100 --> 00:12:20,040 And if what we want is to sell, we will use a sell stop located below the 203 00:12:20,040 --> 00:12:21,040 current price. 204 00:12:21,240 --> 00:12:25,260 The development of a candlestick showing intent is a clear sign of interest. 205 00:12:25,710 --> 00:12:29,610 but it is worth using a stop order as a definitive filter that suggests a 206 00:12:29,610 --> 00:12:32,810 certain continuity in the movement started with the trigger candle. 207 00:12:33,410 --> 00:12:37,890 Continuing with the example of our entry triggers, in the case of long trading, 208 00:12:38,050 --> 00:12:42,370 we would place the order above the candlestick. If we are going short, we 209 00:12:42,370 --> 00:12:45,590 place the sell stop entry order below the trigger candlestick. 210 00:12:45,850 --> 00:12:48,730 This process will always be exactly the same. 211 00:12:48,990 --> 00:12:50,010 How far below? 212 00:12:50,250 --> 00:12:54,250 At least one tick below the high or low of the candlestick. 213 00:12:54,460 --> 00:12:57,200 and preferably two to avoid micro -false breakouts. 214 00:12:57,760 --> 00:13:02,100 Although it may seem ridiculous, it happens. A mini -false breakout on the 215 00:13:02,100 --> 00:13:03,600 previous candlestick and reversal. 216 00:13:03,960 --> 00:13:07,920 In this way, we can enter in favor of the momentum and avoid these 217 00:13:07,920 --> 00:13:08,960 microstructure behaviors. 218 00:13:10,260 --> 00:13:13,240 This way of entering the market is a personal recommendation. 219 00:13:13,520 --> 00:13:18,060 It is the way I feel most comfortable when executing the order. But it does 220 00:13:18,060 --> 00:13:22,180 mean that it is the best way, or that it is not possible to enter in another 221 00:13:22,180 --> 00:13:27,160 way. Many traders enter the market using limit orders placed at the levels and 222 00:13:27,160 --> 00:13:28,139 trading zones. 223 00:13:28,140 --> 00:13:30,520 This is another method that I do not advocate. 224 00:13:31,260 --> 00:13:36,300 The way I see it, chart analysis is reactive, so trying to somehow 225 00:13:36,300 --> 00:13:40,440 that the price will turn right at this level is trying to guess and assume too 226 00:13:40,440 --> 00:13:45,100 much. The truth is that we have no way of knowing if such behavior will occur 227 00:13:45,100 --> 00:13:46,160 when the time comes. 228 00:13:46,660 --> 00:13:51,320 The underlying idea is that we must continuously analyze the interaction 229 00:13:51,320 --> 00:13:52,320 buyers and sellers. 230 00:13:52,780 --> 00:13:56,700 And even if we are biased one way or the other based on the context, we must 231 00:13:56,700 --> 00:13:59,960 confirm when the time comes that the approach is sound and that the market 232 00:13:59,960 --> 00:14:00,960 itself confirms it. 233 00:14:01,360 --> 00:14:05,280 If the market is at a trading level and we see aggressive buyers appearing and 234 00:14:05,280 --> 00:14:09,520 pushing the price higher, that is the footprint we would need to see to 235 00:14:09,520 --> 00:14:13,940 that our analysis appears to be correct and in such a case would provide us with 236 00:14:13,940 --> 00:14:14,940 a trading opportunity. 237 00:14:15,340 --> 00:14:18,860 It should also be remembered that seeing our entry trigger above the proposed 238 00:14:18,860 --> 00:14:23,520 zone has nothing to do with whether the trade later turns out to be a profit or 239 00:14:23,520 --> 00:14:24,359 a loss. 240 00:14:24,360 --> 00:14:28,680 As we have seen, there is always new information coming into the market that 241 00:14:28,680 --> 00:14:31,220 could change the perception of the stock at any time. 242 00:14:31,640 --> 00:14:35,920 But at least we will be closer to making the right decision at any given time. 243 00:14:36,520 --> 00:14:40,880 It is clear that the highest profit margin will always be given by entries 244 00:14:40,880 --> 00:14:44,840 limit orders, but it is also true that these type of entries are more likely to 245 00:14:44,840 --> 00:14:45,579 be wrong. 246 00:14:45,580 --> 00:14:50,040 On the other hand, Entries with stop orders give us greater confidence at the 247 00:14:50,040 --> 00:14:51,520 cost of a lower profit margin.