1 00:00:00,240 --> 00:00:04,300 We will now look at the last use of the volume profile in terms of calibrating 2 00:00:04,300 --> 00:00:06,300 position management, profit -taking. 3 00:00:07,020 --> 00:00:11,240 For profit -taking, we will mainly look for those levels or trading zones that 4 00:00:11,240 --> 00:00:13,640 indicate interest or acceptance by participants. 5 00:00:14,340 --> 00:00:19,280 As we have already mentioned, these are the high pre -trade zones and the VWAP 6 00:00:19,280 --> 00:00:24,320 levels. Both create an attraction on the price and this magnetism makes them 7 00:00:24,320 --> 00:00:26,200 excellent locations for profit -taking. 8 00:00:27,080 --> 00:00:32,270 As we have seen, A very important use of the visible range volume profile, which 9 00:00:32,270 --> 00:00:35,910 shows the volume distribution of all the price action we observe on the chart, 10 00:00:36,070 --> 00:00:39,190 is to identify large volume nodes from a bird's eye view. 11 00:00:39,730 --> 00:00:44,310 The basic idea of these acceptance zones is that since they are expected to 12 00:00:44,310 --> 00:00:49,030 attract some price, the market may continually rotate between them, making 13 00:00:49,030 --> 00:00:51,490 excellent areas for establishing profit taking. 14 00:00:52,330 --> 00:00:56,950 This means that if we are at any point on the chart, We can use this analysis 15 00:00:56,950 --> 00:01:01,330 identify the volume node immediately above and below us and use it to place 16 00:01:01,330 --> 00:01:02,330 profit taking there. 17 00:01:02,930 --> 00:01:06,750 Imagine that we are at the point I have marked, within the volume node where the 18 00:01:06,750 --> 00:01:09,170 cause of the next trend movement is being built. 19 00:01:09,730 --> 00:01:13,590 Now, if we confirm that the effective imbalance will be generated by the top, 20 00:01:13,730 --> 00:01:17,450 the market will most likely go for the volume node that is more immediately 21 00:01:17,450 --> 00:01:18,450 above. 22 00:01:18,790 --> 00:01:23,040 Similarly, if the imbalance is seen to be occurring at its bottom, it is very 23 00:01:23,040 --> 00:01:26,680 likely that the market will visit the volume node located at its bottom. 24 00:01:27,280 --> 00:01:31,660 The previous example is useful when we have references, when we have already 25 00:01:31,660 --> 00:01:33,600 developed such high volume nodes. 26 00:01:33,860 --> 00:01:36,320 But what happens if we do not have such references? 27 00:01:36,900 --> 00:01:38,860 This is what happens in this example. 28 00:01:39,100 --> 00:01:43,740 The market generates a distribution and we do not observe any volume nodes on 29 00:01:43,740 --> 00:01:47,140 the downside, mainly because the upward movement was very fluid. 30 00:01:47,480 --> 00:01:52,250 Or, You may even find yourself in a context where the price is trading at 31 00:01:52,250 --> 00:01:55,710 historical lows and there is absolutely no reference to take. 32 00:01:56,030 --> 00:01:59,990 In this case, you could take profits according to the principles of another 33 00:01:59,990 --> 00:02:04,110 methodology you are using, but if you are only using the volume profile 34 00:02:04,110 --> 00:02:08,270 levels, we can use the VWAP deviations for these cases. 35 00:02:09,130 --> 00:02:13,130 Here we have the same chart showing the second negative deviation of the weekly 36 00:02:13,130 --> 00:02:18,900 VWAP. As we can see, after actions that leave us with short entries, The price 37 00:02:18,900 --> 00:02:22,360 will look for this deviation before generating a corrective upward movement. 38 00:02:23,140 --> 00:02:27,660 Obviously, this is not the best way to take advantage of large trends, but it 39 00:02:27,660 --> 00:02:31,660 certainly effective for short or medium -term trades where we are trying to take 40 00:02:31,660 --> 00:02:33,780 advantage of trend movements of shorter duration. 41 00:02:34,700 --> 00:02:37,860 Here is an example of intraday trading with session profiles. 42 00:02:38,640 --> 00:02:43,340 After the buy entry and stop loss placement, we identify the volume node 43 00:02:43,340 --> 00:02:44,480 top of the previous session. 44 00:02:44,900 --> 00:02:47,140 This would be a good point to take profit. 45 00:02:47,680 --> 00:02:49,760 It does not have to be the entire position. 46 00:02:50,080 --> 00:02:54,100 It could be a partial profit -taking while letting the other part run to 47 00:02:54,100 --> 00:02:59,000 targets. The key is that when a break -even zone is reached, it is convenient 48 00:02:59,000 --> 00:03:00,540 do some kind of position management. 49 00:03:00,920 --> 00:03:04,880 As a low, we should protect it and move the stop to break -even. 50 00:03:05,700 --> 00:03:10,220 Another more complex example, the market generates a sideways movement at the 51 00:03:10,220 --> 00:03:12,100 top that creates a bearish trend movement. 52 00:03:12,640 --> 00:03:15,840 This movement is stopped with the appearance of a B -shaped profile. 53 00:03:16,490 --> 00:03:20,890 followed by another profile that overlaps the value areas, and finally 54 00:03:20,890 --> 00:03:24,670 -shaped profile that finally defines the bullish reversal pattern that we 55 00:03:24,670 --> 00:03:25,670 studied earlier. 56 00:03:26,030 --> 00:03:30,410 After this, the market begins to move higher, and the P -shaped profile is 57 00:03:30,410 --> 00:03:31,890 positioned above the value area. 58 00:03:32,110 --> 00:03:35,790 In this bullish context, we should start looking for potential buying 59 00:03:35,790 --> 00:03:39,770 opportunities until our entry trigger finally appears with this bullish 60 00:03:39,770 --> 00:03:44,350 candlestick. We set the entry and stop loss orders according to what we have 61 00:03:44,350 --> 00:03:48,350 learned. and now it is time to determine the location of the take profit. 62 00:03:49,430 --> 00:03:53,590 Obviously, we do not see a high volume node in the immediate vicinity of the 63 00:03:53,590 --> 00:03:58,170 current price, so the most logical thing to do at this point would be to place 64 00:03:58,170 --> 00:04:01,570 the take profit in the lateralization at the top of the chart. 65 00:04:02,350 --> 00:04:07,010 As we can see, this lateralization covers three different profiles, which 66 00:04:07,010 --> 00:04:09,890 us wonder where exactly we should place the take profit. 67 00:04:10,760 --> 00:04:15,460 In this type of situation, it would be best to draw a manual profile that 68 00:04:15,460 --> 00:04:16,800 the entire sideways movement. 69 00:04:17,300 --> 00:04:21,079 This way we would have a single large value zone that would identify the 70 00:04:21,079 --> 00:04:26,080 trading level, and it would be there, in the VPOC of this manual profile, where 71 00:04:26,080 --> 00:04:27,420 you should set the profit taking. 72 00:04:28,080 --> 00:04:32,220 Technically, I recommend placing the TP a few levels ahead of the exact level 73 00:04:32,220 --> 00:04:33,580 that determines the VPOC. 74 00:04:34,520 --> 00:04:37,960 Sometimes you will see that the VPOC is missed by a few ticks. 75 00:04:38,560 --> 00:04:42,940 This is because we actually want to take advantage of the magnetism exerted by 76 00:04:42,940 --> 00:04:48,040 the entire volume knot, not just the VPOC in isolation, but the area to which 77 00:04:48,040 --> 00:04:49,280 the VPOC belongs. 78 00:04:49,820 --> 00:04:53,180 As mentioned earlier, we need to treat these levels as zones. 79 00:04:54,080 --> 00:04:55,460 Let's take another example. 80 00:04:56,020 --> 00:04:58,920 Short entry after a rejection at a low volume node. 81 00:04:59,560 --> 00:05:03,660 After setting the entry and stop loss orders, we identify the high volume node 82 00:05:03,660 --> 00:05:07,640 at the bottom, which should be used to do some kind of position management on 83 00:05:07,640 --> 00:05:10,750 it. take partial profit or at least protect the position. 84 00:05:11,650 --> 00:05:13,890 This range trade is a bit more delicate. 85 00:05:14,170 --> 00:05:18,270 In this example, we enter the market to buy after the rejection of the price 86 00:05:18,270 --> 00:05:22,750 above the low volume node, which is located below the value area low of the 87 00:05:22,750 --> 00:05:23,750 profile. 88 00:05:23,970 --> 00:05:28,150 The problem with this type of trade is that the entry is inside the value area. 89 00:05:28,330 --> 00:05:32,570 And what happens inside the value area is that the equilibrium is such that 90 00:05:32,570 --> 00:05:35,690 there is an equal probability that the market will go up or down. 91 00:05:36,460 --> 00:05:40,060 This is assuming that the valuations of the participants have not changed, 92 00:05:40,260 --> 00:05:44,740 because if they have changed, and at the aggregate level it is considered that 93 00:05:44,740 --> 00:05:49,300 price and value at that point no longer converge, the market will necessarily 94 00:05:49,300 --> 00:05:53,620 start an imbalance in search of a new value zone that generates a new 95 00:05:53,620 --> 00:05:54,680 between the participants. 96 00:05:55,400 --> 00:05:57,540 This is what is happening in this example. 97 00:05:58,180 --> 00:06:02,440 After the rejection from the downside, the market starts the imbalance from the 98 00:06:02,440 --> 00:06:07,260 upside, and, of course, this imbalance must first go through the entire value 99 00:06:07,260 --> 00:06:08,340 area of the profile. 100 00:06:08,820 --> 00:06:13,200 So in this context, there would be no big problem to take the trade. 101 00:06:13,500 --> 00:06:17,620 The problem is that we will always have this dilemma because we cannot know in 102 00:06:17,620 --> 00:06:21,060 advance if we are really facing the event that will cause the market 103 00:06:21,660 --> 00:06:26,500 We will always have the doubt whether the market is still in equilibrium or 104 00:06:27,160 --> 00:06:33,070 In any case, and under this premise, What we have to do then is to manage the 105 00:06:33,070 --> 00:06:34,070 position more aggressively. 106 00:06:34,790 --> 00:06:39,190 Since we know that in a market in equilibrium, the price is most likely to 107 00:06:39,190 --> 00:06:43,230 between the extremes of the value area, the most conservative assumption we will 108 00:06:43,230 --> 00:06:47,510 make in this particular example is that it is most likely that the market will 109 00:06:47,510 --> 00:06:50,390 react after reaching the upper end of the value area. 110 00:06:51,010 --> 00:06:56,130 With this baseline scenario, we will take partial profits there or at the low 111 00:06:56,130 --> 00:06:58,470 end and protect the position at break -even. 112 00:06:59,150 --> 00:07:00,170 That is the key. 113 00:07:00,630 --> 00:07:04,550 We're not dismissing the opportunity, but we're managing it more aggressively, 114 00:07:04,770 --> 00:07:07,850 as if the trade were range -bound and not trend -bound. 115 00:07:08,250 --> 00:07:12,190 We will talk about this later when we present the principles of trading with 116 00:07:12,190 --> 00:07:13,190 value areas. 117 00:07:13,870 --> 00:07:18,670 Ultimately, this type of trading has a higher risk, but also a higher potential 118 00:07:18,670 --> 00:07:19,670 for profit. 119 00:07:19,750 --> 00:07:24,090 If we are right and it is the total imbalance of the structure, the profit 120 00:07:24,090 --> 00:07:25,690 potential will be relatively high. 121 00:07:25,910 --> 00:07:30,340 On the other hand, If we are wrong and the market is still in balance, we will 122 00:07:30,340 --> 00:07:32,480 protect ourselves with more aggressive management. 123 00:07:33,460 --> 00:07:37,560 In this other example, we would have long entry on the test at the value high 124 00:07:37,560 --> 00:07:38,880 area of the lower sideways. 125 00:07:39,480 --> 00:07:43,740 It leaves a good bullish candlestick that would activate the entry trigger 126 00:07:43,740 --> 00:07:47,680 we would set the stop loss just below the low of the pattern that identifies 127 00:07:47,680 --> 00:07:48,680 entry signal. 128 00:07:48,960 --> 00:07:53,700 In this case, we cannot move the stop loss location much further away as it is 129 00:07:53,700 --> 00:07:56,320 relatively close to the VPOC of the lower structure. 130 00:07:56,990 --> 00:08:01,610 In fact, the current stop -loss location would already be within the value area 131 00:08:01,610 --> 00:08:05,770 of that profile, so it is not a location we are very comfortable with. 132 00:08:06,050 --> 00:08:10,050 The problem is that there is no more suitable location that allows us to 133 00:08:10,050 --> 00:08:11,170 maintain a controlled risk. 134 00:08:11,930 --> 00:08:16,530 These situations will arise at other times. The key here for stop -loss 135 00:08:16,530 --> 00:08:19,530 placement is to rely on the end zones of the two profiles. 136 00:08:20,130 --> 00:08:23,850 Both extremes of the profiles identify a rejection zone. 137 00:08:24,350 --> 00:08:27,070 so we have no choice but to rely on their strength. 138 00:08:28,070 --> 00:08:32,850 Regarding the take profit, it is the right situation to zoom in and analyze 139 00:08:32,850 --> 00:08:37,250 overall context through the visible range profile or view the manual profile 140 00:08:37,250 --> 00:08:39,970 that we have previously pulled, as is the case. 141 00:08:40,590 --> 00:08:44,870 Fortunately, we have a clear reference to the left of the price, so we will use 142 00:08:44,870 --> 00:08:48,050 the high volume node of that profile for the take profit location. 143 00:08:48,890 --> 00:08:53,290 Again, you can decide to take profit on part of the position or close it 144 00:08:53,290 --> 00:08:54,290 completely there. 145 00:08:55,130 --> 00:08:59,090 Finally, let's look at another example of profit taking in the VWAP. 146 00:08:59,850 --> 00:09:02,470 In this case, it is the monthly VWAP. 147 00:09:03,030 --> 00:09:08,690 The VWAP is a very important trading level that also allows us to get a sense 148 00:09:08,690 --> 00:09:12,630 the anatomy of the trends based on how far the price is from the VWAP. 149 00:09:13,690 --> 00:09:18,610 In this case, as we can see, the price is far away from the monthly VWAP. 150 00:09:19,350 --> 00:09:22,870 This could be a fingerprint that tells us that the trend movement could be 151 00:09:22,870 --> 00:09:26,930 overextended, which puts us in a position to favor a reversion to the 152 00:09:27,790 --> 00:09:32,130 If we have managed to enter one of the market trading zones, a good place to 153 00:09:32,130 --> 00:09:35,370 take profits would be when the price reaches the VWAP zone. 154 00:09:36,090 --> 00:09:39,630 We have already talked about creating a position management where partial 155 00:09:39,630 --> 00:09:43,870 profits are taken when a trading zone is reached and the rest of the position is 156 00:09:43,870 --> 00:09:44,870 left to run. 157 00:09:45,160 --> 00:09:49,180 Well, part of the position could be left open until it reaches an area further 158 00:09:49,180 --> 00:09:51,840 away from the price, such as the VWAP. 159 00:09:52,660 --> 00:09:57,620 As we will see later, the magnetism that the VWAP exerts on the price is 160 00:09:57,620 --> 00:10:01,660 confirmed with this test that occurs to give rise to the continuation of the 161 00:10:01,660 --> 00:10:02,660 bearish movement. 162 00:10:03,220 --> 00:10:07,580 For more intraday trading, it can be very useful to identify the developing 163 00:10:07,580 --> 00:10:08,760 volume point of control. 164 00:10:09,280 --> 00:10:13,380 These are price levels that were the VPOC of a session at a given time. 165 00:10:13,800 --> 00:10:16,780 whether or not they were the final VPOC of that session. 166 00:10:17,460 --> 00:10:21,480 To have them displayed on the chart, we simply go to the Style tab of the 167 00:10:21,480 --> 00:10:24,460 session profile and check the Developing POC box. 168 00:10:25,540 --> 00:10:30,340 As we know, the VPOC of the session changes based on the trades that are 169 00:10:30,480 --> 00:10:33,540 and this level represents the footprint of that change. 170 00:10:34,120 --> 00:10:38,900 In this example, we see the price being attracted to these levels, virtually all 171 00:10:38,900 --> 00:10:39,940 of which are being tested. 172 00:10:40,590 --> 00:10:44,530 This is normal because we are dealing with a level that has been traded a lot 173 00:10:44,530 --> 00:10:47,130 and is therefore likely to have some magnetic behavior. 174 00:10:47,910 --> 00:10:51,990 The highlight of these levels is that we are only considering those that have 175 00:10:51,990 --> 00:10:52,990 not been tested. 176 00:10:53,830 --> 00:10:56,510 The same is true for naked VPOCs. 177 00:10:56,750 --> 00:11:01,170 Naked VPOCs are VPOCs from previous sessions that were not tested. 178 00:11:01,730 --> 00:11:07,230 Unlike DVPOCs, naked VPOCs were the last VPOC of the session. 179 00:11:07,810 --> 00:11:11,940 To include them in the chart, we simply go to the Data Entry tab of the session 180 00:11:11,940 --> 00:11:15,240 profile and check the Expand POC box on the right. 181 00:11:15,800 --> 00:11:20,240 There is a statistic that VPOCs from previous sessions have a high 182 00:11:20,240 --> 00:11:22,140 of being tested in the following days. 183 00:11:22,740 --> 00:11:25,200 Therefore, they are very interesting to consider. 184 00:11:25,760 --> 00:11:30,260 In this example, we see the magnetism of these levels attracting the price and 185 00:11:30,260 --> 00:11:31,860 even generating a subsequent reversal. 186 00:11:32,660 --> 00:11:35,600 Especially useful, as I said, for intraday trading.