Mind your 'p's and 'b's | Supplementary Material

Alright, guys, so this is going to be one of our supplementary learning videos and we're going to be talking about minding your P's and B's. So these videos are going to be what we sort of iterate on the course with moving forward. Most of this stuff is going to be posted in the supplementary video category, since the course is essentially, the course is essentially done. So everything will be something that supplements that. Mind your P's and B's. Right, so more like uppercase or lowercase P, but a lowercase B. And I say that because what we're talking about are profiles like this and like this, okay? So where you have excess at the low in the case of the P, most of the distribution at the high and excess at the high and most of the distribution at the low in the case of the B. And I say lowercase B because you can have profiles that look like this. So, so an uppercase B and that would be sort of your normal variation. So for this we're focused on the profiles that stand out as such, right? So in the case of a B, in the case of a P. So we have two obvious cases of that right here. So just in terms of market profile, to reiterate, the benefit of profile is that we get the data organized in a very easy to read format, right? So we take an entire day's worth of data, or you can look at a weekly profile and take an entire week's worth of data and it's compressed and we could see exactly whether or not the market was balanced, whether it was imbalanced, where the market spent most of its time, where it was rejected, where it was accepted, where value developed and so forth. Another really useful thing with looking at profile, and I think that it's something that is just not mentioned and you'll find that it's very easy to do is that when you're looking at compiling just some basic statistical analysis or building some sort of mechanical edge, you can go through a year's worth of profiles very quickly. If you're looking at the very obvious things like breakouts from balance Dalton setups, these P shaped and B shaped setups, or these P shape and B shape profiles and how they resolve, you can do that very quickly. So you can go through, you know, a year's worth of data. So I've actually just compiled 150, because I had that loaded 150 worth of profiles to get an idea of, you know, statistically how actionable certain setups are. So in the case of a Dalton setup. I did this with bitcoin specifically. The Dalton setup is called the 80% rule. Alright, so 80%, and that means that 80% of the time when you have a setup like this, so where the market opens up outside of yesterday's value, so yesterday's value is here 80% of the time when the market gains re acceptance into that value area, it covers the value area. So the idea being, you know, it's a stronger idea if you have a balanced day, which in this case this is a balanced day, you're definitely going to open up outside of that value area. If you close with outside of it, because it's crypto, it's a 24 hour market without any gap. So you're outside of value. Okay, you get re accepted within value. So two rotations, so two back to back rotations. And then you're 80% of the time going to cover the high to the low in this case. And if you came from below the low to the high. Now in crypto, what I found was in a year's worth of Data that it's 76% of the time that this happens. Now you could break it down more specifically. You could probably say, okay, how often does it occur within the first hour of acceptance? Okay, so let's say that, you know, we're looking at it and we want to break it down and say, okay, so we have two half hour rotations within, right. How many times does it occur that we get the rotation throughout value within the first, let's say two hours right after that period versus, you know, the entire day. Because you could see sometimes it might chop around and it might actually traverse that whole area, but it might take a while to do it. And then there's sometimes when you know, it does it all in one move. So what are maybe the conditions that precede one or the other happening? And the idea is with Market profile, because it is this very friendly tool in terms of data organization that you can very quickly go through a year's worth of profiles, two years worth of profiles, and if you have an afternoon begin to compile maybe some of these actionable setups, or rather the evidence that precedes an actionable setup, or rather that is part of an actionable setup. So just to also reiterate the benefit of profile is, you know, when we're looking at an individual day like this, you know, days are day candles, weekly candles, five minute candles, one minute candles. If you're not looking at the time frame, you don't know what you're looking at, they're all looking the same, right. So ultimately candles, structures, patterns are all fractal. They're things that happen on the five minute that are actionable. The same setup can happen and look identical on the daily and be an actionable setup as well. But the idea with a higher time frame structure is that if you have the setup occur in sort of the same way that it would occur in the lower time frame, it's going to carry much more weight. A daily candle is 24 one hour candles. It's 48 half hour candles. And it's just a much larger piece of data, right. Of the smaller data sets. But when we're looking at a daily candle, right. If we're looking at a candle chart, this is what we would see as the daily candle on just a candlestick. Okay, here's the close, here's the open, here's the low, here's the high. Now if we were just looking at this as the candle, you'd say, all right, this is kind of a neutral candle. You know, it's coming up to resistance, prior range high back here. Market had come down. It's coming up through a level again, looks kind of decent, somewhat rejected. Rejected at the lows. It's a firm looking candle though. What you wouldn't see is where most of the activity was distributed, which is actually above inside of the wick. So again, sort of reiterating on the points that we drive home in the course. Benefits of looking at footprint, the benefits of looking at where the volume was distributed and also the benefits of why we look at tpo. But when we're looking at, when we're looking at how a daily profile develops, right, A tpo, there are some setups that are very actionable that we could find by just looking back at again, a sample of 150. And the point of this video is that you're going to hopefully go and go throughout your own samples of maybe one year, two years and so forth and create really strong mechanical setups and create strong pieces of evidence that can help you inform your discretionary method or even if it's a mechanical, systematic method moving forward. But the idea is we can apply the same setups on these daily distributions as we can apply in the footprint chart. Again, they're going to carry a little bit more weight. So with the P shape and the B shape profile, what we're going to be focused on as the more actionable setups are going to be where we close with relation to the highest volume level.

When we're talking about a B shape profile. Again, we're looking at something like this. Traditional TPO analysis is going to say that a profile like this is going to be long liquidations. Okay. So market moves very quickly to the downside, swift move, long liquidations and then forms another balanced area. Right. It moves from imbalance to balance. Okay. Now it's a 24 hour market. So this can occur in a profile that looks like this. Let me get the just the whiteboard on this can occur in a profile that looks like this as a B. Or it can be part of one 24 hour period, it can look like this or it can look like two back to back periods. Right. Where you have one balance area long liquidation and then look like this. Right. All of these are somewhat the same, but it's just a fact. It's just the fact that it's a 24 hour market that sometimes you're going to get them painted one way, sometimes you're going to get it clean and look like this. Sometimes it's going to be after a significant daily close and then you'll have this happen. Right. But the idea that we're going to be conveying in this video is something that you should be able to look for regardless of again how the day perfectly closes or opens. It's going to be more a matter of where market structure is currently. Where we are currently rather within market structure, the behavior of price action, behavior of order flow as well. So again focusing on B's and P's now, getting right to what is the most actionable setup. So in a sample of 150, you're going to say B's what we're talking about within this is rather is the same as sort of the idea with vwap. Okay. When you have market that creates a B pattern like this 78% of the time when you have this and you close above the point of control, you're going to have a meaningful extension to the upside. Okay, so meaningful extension within two days that follow 78% of the time you're going to have a move that is a multiple of where one standard deviation or one average sub period range size. So if in this case we're going to say it's 67 when we close above the point of control 78% of the time in the cases that followed, we had a move that was twice that value. Okay, so again this is just a very quick analysis going through the last 150 days. You could substantiate this by going through even more Data. But the point of this is to help you start to explore. So 78% of the time when we close above the point of control. So here's your point of control. In this B shaped profile, this acts as a base and we have an extension that is 2 ASPR, so ATR essentially to the upside. The inverse is when we have a P 80% of the time there's less Ps in bull markets, but 80% of the time when you have a P shaped profile where you close below where most of the activity is. So in this case we don't close below it, we close towards the low of it. 80% of the time when you close below. So if you have a profile that looks like this and this is at a high, if we close below this 80% of the time within the two days that follow, we're going to have a meaningful extension to the downside. That is two times that average sub period range size. So two times that half hour atr. Now this is where it's going to get a little bit muddy. Again, it's a 24 hour market. There is certain discretion that you have to consider. Right. I think the most important thing that you should remember is that P's usually happen at tops of the move, whether it's after a long trending period. So move like this and then you have a P at the high. The idea is most of the risk is at the high if you're spending your time below it. That's trapped activity. Okay. And they also occur in moves down as short covering. You have the market rip up, liquidates, shorts and then consolidates. And then if you're spending your time below this X is the close that you're more likely to continue moving down. Now I say that because there are times clearly in this 24 hour market where you can have a move that you know, the day occurs like this. We're in the move down. You have a B shaped profile and is this a base or is this a bear flag? Right. Because if you have most of the activity in that B and you close down here, this really just looks like this on a candlestick chart. Right. And if you're favoring the lows, this might lead to continuation. So Bs are mostly going to be bases though consider B like a base as a bottom for a move up. P's are mostly going to be tops. Okay. P's more often than not are not going to be bases for moves upwards. Now with Ps it's very important if you continue to move up, right. If you're going to have a P at a high that you maintain that volume. And it's just the concept of constantly retaking where most of the activity came in. So if you see a P, you have to be a lot more mindful of a downside move. Whereas Bs can occur at bottoms and at tops. Right. The idea with B is you're building a base. Now again, meaningful response, meaningful extension to the upside. So if you're having a B within a downtrending market, maybe there's a less actionable setup. Whereas a B, you know, in a move that has been moving up, we move up. Let's say we have a spike up. Market's consolidating. I'm just drawing a line chart. But then you have a B within the profile and you're trading above that. It's just the idea, I want to force the idea down your throats that you have most of the risk below you, right? And you're building a platform, you're building a base versus when you have a P at the high, you know, you have most of that as overhead. Now again, 24 hour market. So let's say, you know, in this example that we have right here, there is some, you know, there is some a little bit of discretion you're applying, right? Because hey, this is the point of control. Yeah, we close above it. We do have this profile that, you know, if not for one tick setting, maybe this could be the point of control. Right? This is just a hair off of being the point of control. Here is the high volume. Point of control. Here is the next highest volume node within that area. So I think the idea that you want to consider is, okay, so clearly most of the activity is up here. Contextually. This is above an area that has acted as resistance more recently. Is this a fake out? Well, what makes it more likely a fake out and a deviation? Well, how are we going to open with respect to this close? So we open with respect to this close and immediately start driving downward. So yes, at that point the market didn't close above the point of control. But as soon as we start trading below it, you could say, all right, well, 24 hour market, we're trading back below most of the risk. This is probably going to offer a meaningful extension to the downside. Again, meaningful extension. Take into consideration current structure. But we're looking at short term trade opportunities, right? Short term momentum plays. And the idea is the same as when we're looking at a footprint. If we're looking At a footprint. And this is a key level that we're focused on. Sort of a mousetrap setup. Here's the candle through it, here is most of the activity. We want to pay attention to how the market responds with respect to all this activity. Are we continuously trading above it? Okay, if we could trade above it, then this can be a base. But so long as we are spending most of our time below it, this is more like a trap setup. And it's a trap setup on a much higher time frame. Right. So activity is trapped above this high. So what I think that you should focus on. And one of my favorite followers actually had posted this recently. I'm really happy that he did because he puts together really good threads. He's a guy who trades tpo. So in silico, probably one of the best follows P's and B's, right. B is in base. Okay. And P is in the platform that you're going to fall off of. Right. So when you have a P, typically you're going to find this as an area of crowded longs. And when you have a B, this can be. Right. It can be a long liquidation that ultimately though, does lead to a move upward. Ultimately, it's where you trade with respect to these. Right? So if you have, you know, let's say that, you know, the point of control is here in this P. So this P is above a key level. Though, if we continue to maintain this P, it might not be the best case that this P is, you know, a P that's going to unwind down. This might be the acceptance above the level. So it is important to apply discretion. Right. But more often than not, when you have a B, okay. And when you have a P, this is going to lead to an unwind to the downside if we maintain below the point of control. And this, if we're maintaining the point of control to the upside, is going to act as a base. So this is just one of the benefits of looking at profile, right? There are certain patterns, rather certain distributions and structures that stand out. So if we're rolling up on a day where we're, you know, let's say that this is. Let's just forget about all this structure over here. This is, you know, your third wave up. You have, let's say you have excess up here and you have a P with excess. And now you're trading, you know, imagine that. Let's just give you a better example. Market moves up. We're three drives up like this, okay? So you're three Drives up current context quite extended from maybe your higher time frame support. And now you have this P profile with X sets at the high. Here's your point of control. Okay, so is this a continuation structure or is this more likely to come back down towards that day's low? Well, I think it'd be more likely to come back down towards that day low and offer sort of that unwind trade. If we're spending most of the time below where the activity came in versus, you know, let's say that market moves up, we have a P profile. Okay, now we do get an unwind of that day. Okay, now we form a B profile. So what are the odds for this structure? Well, maybe this is going to be a higher time frame consolidation. Maybe this ends up forming a base over time and continues up. But we know that, all right, most of the activity is now relegated towards the low. We're maintaining that low. Okay, so maybe this is setting up for more of a mean reversion pattern within. Okay, it's just a, it's an idea. It's. It's the idea that you could look at the shapes of these profiles, take them in the current context and derive some actionable setups from it and look back over the course of, you know, years worth of data very quickly and see, you know, how they've unfolded. And what we've seen is that B shaped profiles in this bull market, right? B shaped profiles where you open above so where you get the best case scenario so where you don't have to follow on the next day, B shaped profiles where you open rather close above the point of control 78% of the time have resulted in a move upward that's substantial, right? Substantial by intraday.

Values and P shape profiles. And this is not an example of one. So let's find one that this is a better example of a P shaped profile right here. P shaped profiles where you've closed below have more often than not resulted. If we've maintained acceptance below that meaningful corrections in the opposite direction. Alright, so just one of the ways you can use profile. A very easy way to immediately start to separate data also. So just going through historical profile types to derive a bias moving forward or to derive some sort of idea for maybe what you can expect or how strong the current trend is, how strong that value area is, right? And so forth.