Old Fashioned Trading - Aimed at First - Two Year Traders

If you are new to trading, volume profile is probably going to confuse. The strategy is pullback and break, which needs a bit of time to understand and to be able to spot. With volume as confirmation and POC to make sure you are on the right side, it will be too complicated, and mistakes will be made.

The1-hour strategy will be best if starting out

Volume profile is all price levels, and the volume distribution is visually represented as a histogram. POC 'point of control' is the largest amount of volume, during that period, and its price level. It is similar, or the value is usually close to vwap for the same period.

Trading view has it located here, settings
There aren't 9 points needed to trade, it is purely waiting for a break, waiting for a pullback, confirming with volume, and making sure you are moving away from POC and not towards it. That's the basics of it. ADR is the average daily range. It is the previous days' high to low range, measured in pips, all 5 days added together, and then divided by 5. Gives a typical average daily movement in pips. I divide by 6 to get a pip figure, and I take a partial at this. This isn't required, it's important for me because full-time cash flow. If I do this when I have travelled the equivalent distance of my initial stop, and I close 25%, I reduce my initial risk in half.

ADR should be available on TradingView, but it will be an unnecessary complication. If you are starting out, keep it simple, either a 30-min or 1hour timeframe strategy.

Managed to get a higher resolution image. TradingView and RSI is used on this desk, drawing recent highs and lows, volume and with moving averages (look like ema's). Timeframe 1 day | BrightSpring Health Services |NasDaq

VWAP - The King of Average



VWAP, is volume weighted average price, it is not dependant on timeframe. If you change timeframes, the average will be at the price point. In trading, this is an advantage over standard moving averages

The calculation


There a few different types, most platforms have these available for free. Ctrader does not have it built in but the are several available for free and more each week. TradingView has it built in.

There is fixed session based VWAP, where it ends at the end of the session and starts again fresh with new data.

There is anchored, which you have the option where you fix the start of the session.

I prefer anchored and use this free open source ctrader indicator, from the same author as volume profile that I use (post #10).

https://github.com/srlcarlg/srl-ctra...readme-ov-file

I generally mark the start of each week, and start of each day. Sometimes with a major down or up move, mark the high, low candle where it started

Weekly Example

Daily Example

Start of a up move Example


Trading is similar to moving averages; trade away from it, not towards it. If it breaks over/under, wait for a retest of it, confirm with a wick, and increase in volume. Fixing to a major move up or down, price goes under or over it, retests and continues, and then the major move is over.

Algorithmic trading institutional uses VWAP a lot, it's more suited to stock trading, but it is still used heavily with forex algorithmic trading, its difficult to confirm, but a popular tactic is to wait for it to pass over or under and immediately sell/buy to reverse back to it.

You can add deviation to most VWAP indicators, and algorithmic trading uses this as its mean reversion trade.

Trade examples

Attached Image (click to enlarge)

The first sell
Volume big increase with bearish engulfing candle, then several inside candles, price struggling to increase. Touches daily VWAP, final candle a 'Dark Cloud', but with decreasing volume - no interest in going higher. You can target weekly VWAP underneath.

The first Buy
Above the POC, above Daily VWAP, the blue kicker candle, big increase in volume, inside candle, bit less volume, next candle with wick, touches Daily VWAP exact to the line, increase in volume, next a doji, increase in volume - doji with increasing volume, or roughly the same is always a good entry point regardless of buy or sell. Indecision, and it will resume trend direction. Target previous day high & or standard fib 25-50% fib.

The Second Buy
Above daily VWAP, several pin bars in a row, narrow squashed ABC component to down leg (SMC inducement) Wyckoff spring (liquidity), Cyan engulfing candle, increase in volume, sat on top of POC, breaks through daily VWAP, next candle a spinning top (almost doji), increase in volume, retests VWAP in a compressed hurried way, next candle increase again. Can enter here or the spinning top. Target previous daily high & or 25-50% fib.

Found this indicator on TradingView, which is similar to ctrader indicator I use.

https://www.tradingview.com/script/s4xadZFc/

Example, from end of yesterday leading to today;

Should be a tricky day, good example day.

Talking as I'm taking a trading, leaving journal type notes.

Late Asia / Early Europe.

Volume distribution: A few patterns are observed; if you trade with volume profile, you will notice these, which are described as a 'P' a 'b' a 'B' or a 'D'. This matches the histogram shape for the sessions. It will help give you a picture of what may happen in the next session or what part of a market cycle you are in.

Long drawn-out histograms 'b' or 'P' are strong trends, 'D' short are narrow ranging consolidation periods.

The Basics

P - Top heavy buyers, Buyers, shorts squeezed - Trend is Up.
b - Bottom heavy, Sellers, longs liquidated - Trend down.
B - Double bulge, Equal sellers, buyers, two phases - Transition Day.
D - Balanced - Ranging Day.



From the image above:

First session is B, a bit more top-heavy, transition session, moving to a buy.
Second Session is a P, trend up session.
Third Session is a B, slightly heavier top part, transition session.
Fourth is still playing out, but a B, transition session.


The middle session downward leg is a AB=CD and a bearish pennant, with histogram almost a triangle, so this is a correction wave, rather than an impulse. I'll avoid Elliot theory, because not mentioned yet, as a fairly big topic. Summary of the session that is a 'P' is in the area for the expected end of wave 5.

As price has met this area, in the latest still forming session, the trend has reversed from meeting their price level and previous session volume, also Asia session for the same day, and a late New York from the previous day. If there was volume here, I may take a trade but there wasn't.


The light blue engulfing on top of the daily orange VWAP has a small wick and no volume to it; it is one of the small light blue volume bars. Next is a hammer, or a small hanging man, with even less volume. The large bearish engulfing has volume, but under the average, the hammer that follows has a big jump in volume, over the average. The bullish engulfing, with almost equal wicks, is terrible, almost a spinning top, showing no conviction, but a big jump in volume and delta volume, which is over 10% of the previous delta. It is also a bit constrained inside VWAP daily high/low price lines, but is sat above or on top of the current session 'POC'. The whole week's time has been spent above the weekly VWAP. So, now I'm waiting for a better candle, signal, not taking this buy, Im expecting a buy scenario because of weekly VWAP, but will take a sell, if there is volume with it.

The previous day Asia's POC' is lined up with this area, end of Asia session today. The 200 ema/sma is in the area, and might require a touch to turn bullish, daily open is also close.

Also, checking 30-minute and 1-hour timeframe, and daily, form this its a bit muddled, Daily is up, but last day a spinning top at the top, current day has gapped down a bit on open, and on futures, 30-minute looks down, entering weekly VAH area, 1-hour down, bounced off 20-sma area, but no engulfing candles, all a bit meh. It is below daily 'POC' and at the bottom of daily VAL. We're under 50% of previous 12-hour, with 2 previous sessions transition profiles, this is a good buy area.

Latest 15-minute


Reacting to open, and ema-200 (1hour 50), drawn a line from the yellow piercing, from the low to the left. Looking for Wyckoff magic for a buy or a break down and look for sell.



This is also warning me down, and no trend strength, shouldn't be trading and not for buys until over daily VWAP.


From experience,

With the jump down, it will create a possibly good engulfing candle. The open is less than the close - usually this is a good sign. At the 5-minute mark, candle and tick volume at 2000, should be 5500-6000 tick candle, which will be over average. 5 minutes to go, tick only 3000, this won't be a good candle.


Finished an inside spinning top, but volume finished 4853, so rush of volume at the end, starting to look down. Also, maybe a bullish Gartley forming. It's broken the line, depending on how it closes, it's either a spring or a break. 10 minutes for Frankfurt open, so I won't be taking a trade this close now. 1 hour and half from here until I would take a trade with London open. So, I'll post what is here and continue later.

It broke the line & closed over the line / a Wyckoff spring (liquidity).

Continuing From Above.

Europe Open.

Added live Volume tick readout at the bottom right, It will turn bright green when over the average.


Fib is a good area now 0.79%, a big increasing volume candle, each candle for 4 in a row creating an increasing inline diagonal pattern. This pattern is usually when at the bottom and about to reverse, traders are placing orders at different fib points on the way down, 50%, 61%, 70% and now 79%.

However, I won't buy from here, because it broke that line and I'm looking at sells, but only when under weekly VWAP and under the previous day's low would I sell with a strong bullish week. I'm way up on my weekly pip target. There is no point showing greed at this point, with no conviction in either direction, and at this time of day.

Update, nearly 20 mins to London

To switch to a buy, I would need the POC to move to the bottom, and the price to be on top and moving away.

Looking a strong contender for a bullish Gartley now, back up to 4200 ish, bounce off daily VWAP, and then final part of AB=CD, finishing a bit lower than where it is now, probably end of day ish.


Closed, 15 minutes from London open, no candle engulfing pattern, if I wasn't so healthy on pips this week, I would trade here a buy, with it on top of the other white line drawn.

POC hasn't moved, with London volume it will jump to the bottom soon, 1-hour is looking good, and 30-minute looking strong buy on daily VAL
1-hour above
I'm expecting a bounce of daily VWAP, to complete another AB=CD. If there is volume with the bounce, I may scalp sell to weekly VWAP, end of AB=CD, depending on time with London, and if the POC moves or not.

It is still long-term bullish and weekly bullish.

London open, POC has moved, in a new session, my white line was hiding it. Consequently, with POC moving, I'm not looking to scalp sell now, get over the daily VWAP, and stay there. I will buy. 1-hour finished a strong hammer, pin bar, 30-minute is under daily POC, London open volume looking tame and is a bearish candle, so possible intentions are up, but London loves to fuck about until 11 am Comex 4-hour candle open.

8:15, looking like trend up to me at this stage, but I'll still wait to get over the Daily VWAP

Also, a potential Bearish Gartley is more advanced than the Bullish one I was describing. ~4223 for entry. I don't enter bearish Gartley unless under Weekly VWAP; I would on anything other than Gold or indices.

The fundamental news with the Fed rate cut in December, now 50% from 67% for a cut at the start of the week, is the reason I'm being cautious, and I'm protecting my weeks' pips so far. I also have a buy from 4000 from last week open.


08:30 Sat on the POC, but no candle pattern confirmed, volume delta slowing, but an increase of 75.

Now its all looking a bit meh again, POC has moved higher, 1-hour might be best to trade from when it starts to look confusing. Looking at 9am now

1-hour Above.

Continuing

Late Europe.

15-minute closed, volume increasing POC now above, bounced off daily VWAP, 15-minute is not clear now, 30-minute still under daily POC, its looking sell but waiting to be under previous day low and weekly VWAP. 4-hour Comex futures is at 20-ema.

Comex Futures 4-hour below


10 minute mark for 15-minute candle, looking bullish again, with big jump in volume, matching with Comex futures 20-ema.

Current plans:

Under Weekly vwap, under previous day low - Sell
Over daily VWAP, retest and good 15-minute candle with volume, or strong 1-hour candle, which ever comes first - Buy

Attached Image (click to enlarge)

More volume, spinning top candle close (indecision), POC has moved lower, at one stage during 15-minute POC was underneath.

Enable bid/ask line is sometimes better than drawing support/resistance lines, without the clutter.


Latest, volume decreased, small engulfing, but three consecutive reducing volume candles, 1 hour from next Comex 4-hour candle- its usually when the futures market starts to move. Almost a 'D' to Europe volume profile, ranging.

See how the next 15-minute closes, 1-hour might have divergence from Bollinger band B, and might buy from there.


Not great candle, but has volume within it, wait to see what POC does, and when, where it moves.


Now at weekly POC, and 50% fib for move down

New 4-hour Comex candle open,

Sell, close my longterm 4000, and that's me done for the week.

M31 I tried following your introduction material and found the 'Initial Setup' very confusing I am afraid to say...

I am currently demo trading forex and looking to learn new material.

I've edited front page, and a new post:
https://www.forexfactory.com/thread/...5#post15472185

Yeah it's not easy to follow, I'll try and explain it better in another post and if I could edit the original posts I would.

You need to be approaching 1000 hours of simulator or live trading, until I would attempt to follow intraday pullback break with volume profile, its 2000-6000 hours before doing this full time.

Think of like learning to fly or driving a car:

You're starting to fly in a twin engined jet plane with a flight computer,
You're learning to drive in a difficult to control fast car.

Theres also a message to it, to stop the eternal search and copying strategies. When starting out, the biggest mistakes are plainly making repeated risk management mistakes and everyone tries to fix them by looking for strategies rather than fix their flaws.

I'm trying to demonstrate you only need to stop repeating the impulsive mistakes and pick a simple strategy. Which, after the initial psychology introduction, and another couple of posts that becomes clear, and I talk about it. It is meant as a textbook to follow, rather than a strategy to copy.

If I reveal it too early, it doesn't have the same effect. It's targeted at impulsive, impatient individuals who fail with self-discipline issues. There is more than this to it here, and after post# 23 it becomes more of a learning text book, with more examples.

I'm also demonstrating that strategy isn't important with a coin flip exercise, everyday, 3 coin flips a day. In a 2 weeks $1000 to $1600, all with risk management.



There are probably more than two weekends required to go through everything and complete the exercises, maybe more with the videos.

The last 3 posts I made Friday, are almost live trading, trying to post and edit as quick as possible, it might make more sense.

If under 6 months start with something like this

https://www.forexfactory.com/thread/...1#post15465561
or
https://www.forexfactory.com/thread/...7#post15466157

Example of Bollinger Band B (or RSI), with supertrend, and FVG, 1-hour this all I used for years when working with alerts.

A more simplified principle of what I do:

1-hour market structure / in combination with 4-hour FVG


1. Wait for a break.
2. Wait for a pullback. 38-50%
3. Wait for price to move with an increase in volume, back towards trend direction and a candle pattern (the bar colors).
4. I use sit on your POC as a way to determine inducement ABC part of pullback is over.
5. You can substitute this with drawing lines from SMC like principles of inducement.
6. I use weekly / daily VWAP as confirmation, depending on counter trend / or I'm feeling risky.

I use ADR5 /6 as a partial target to reduce risk and increase win rate, limit draw down because of full time.

Attached Image (click to enlarge)

For example, If I were to buy here ADR5 /6 would be ~140pip, I would take partial, breakeven, or one touch breakeven. I finish with cash and trade is a win or a 1.25 - 2 % loss

Sit on your POC

Engulfing candle, wait for POC to move, wait for a candle that has a wick through POC, but open / close is above and sat on the line. Confluence above Weekly VWAP, target back to Daily VWAP and previous 12-hour 50% range.

And again, volume falling = Risky

Sell your POC

1. FVG
2. Equal high, fib is 0.93,
3. The biggest volume candle of the day is down, creating the FVG.
4. Row of inside candles with falling volume.
5. Big jump in volume, sat on the POC and daily open,
6. Candle wick isn't great, it's reacting to 50% area from move up (the pullback of a pullback ABC, and why I use POC).



Target down to weekly VWAP or EMA 200, previous day low.

Typical trend following trade, high R:R

1. Round number.
2. Order block or equal low / previous day low.
3. Volume increasing
4. Need Confluence Weekly VWAP, or anchored VWAP from up move, EMA / SMA / 50 / 200 VWAP is the King of Average.

Attached Image (click to enlarge)

Waiting for POC,

Engulfing with volume, but a horrible candle, still waiting for POC to move its arse

New 8-hour candle and volume profile opened, it can be risky taking the POC when it's very early in the data, and the histogram can't be relied on. Will have to wait.


FVG and POC moved, still waiting



POC has moved again, bounced off daily VWAP, red hammer wick almost touched FVG, big increase in volume, and volume delta +505.

Target next round number, because gold is mental this week, 1200 days, I went full round number 1000 and partial at 500.

Open a Second Position - How to be Greedy with Safety.


New York is open, there is enough room and equity in profit for another position.



1. Break
2. Pullback more than 38-50%
3. Waiting candle / volume

4. Above daily VWAP (Red)
4. Above Weekly VWAP Confluence complete - I can go full 4% risk, but will protect the other first


Got the candle, volume not amazing jump for New York, kickers can be manipulation candles, wth wicks I wait for FVG. Coincided with new 8-hour volume profile too, which is not great.


Over daily open, new candle not made it back over daily open, drop in volume but that means no interest down. Want it sat on my POC with a wick and will buy, full power.


Massive jump in volume delta, way over 10%, I would buy here, but because 2-3 candles into a new profile and a tiny FVG, going to wait for one more, it might take off with the volume that was put down here before I have a chance, if it breaks during candle forming, I will buy. Whilst waiting, I have calculated stop, take profit, and partial setup ready. All I have to do is press a shortcut key to buy, I'm ready, and not rushing.


Doji, buy, volume delta still up. Risk is full 4%, stop brought up to the other position, and partial taken. Target is 50% fib. Set from high - low of previous.

Doji's are excellent buy or sell with volume.



Partial target from first I have reduced because I have already taken a percentage when new position opened, that target and this target made in one and a half candles (20 minutes).

Hi M31, thank you for your reply - I understand your post and this would be future resource material for me to refer to at a later date for improving my system.

Currently I have a really simple system that works on demo trading forex. I began heavily learning everything about forex 2-3 weeks ago and then created a system, a week ago I was taking loss after loss with a win here and there due to maybe luck, I made the system better but it wasn't perfect. I made some more improvements after some more trading by looking into every losing trade, and realised my losses were silly mistakes. I reached a good point with my system after refining it, and on Wednesday and Thursday this week I made a profit of £129.89, I know its only 2 days worth of trading but its a big improvement a week prior - so your point about improving what you are using is very true.

I now research on a daily basis and think of ways to improve my system and encourage everyone to do the same, read and watch everything about trading - it goes a long way.

Simple is often best, think I had stochastic, RSI, MFI, Obv and macd at one stage. I was sat there scratching my head most of the time. With realsiing this, and this early - you will be fine. I always review my trades at end of month, mark a comment and a honest why if there was an issue.

This one post on risk management, I'm happy with, think it shows why risk management is boring but the number one skill required to trade long term.
https://www.forexfactory.com/thread/...9#post15455619

The price action guru, calls himself the best price action trader in the world, Al Brooks, with an ego like that he will be rubbish, but he said one really good quote: "To be profitable, stop doing the stupid stuff"

Stop loss placement is often the deciding factor in win rate, rather than signal. Every stop I place is under a low or high, with a slight buffer.

Reviewing trades, because I can't sleep, and this is a good example of how I use POC.

Pullback can get confusing because every moves has an ABC.

When markets are getting close to ranging condition, equal buyes and sellers and with no clear direction. Every move has a 'C' leg coming.

All the blues are bullish legs, all the reds are bearish.

Igonring the VWAP, looking at POC, where are the lines?

How many have a sell your POC or sit on your POC?

The end, you can see where it has shifted to buying, and the Point of control is now with and behind the buyers.

Yes, its the simple things rather than being overly technical.