The ONE Trading Indicator That Will Expose The Truth About The Markets (Pass Prop Firms)

No matter how many technicals you use, without volume you're missing a major part of the picture. There's no one competing where you're playing the game versus here. The market's 100% going to react here. So it's really, really important to understand really what we call high value areas and low value areas. High value areas are literally just.

It's time to master the volume profile. This one indicator will show you exactly how people are positioned in the markets.

When we get to this edge, there's nobody here above us. And so if you think about what moves the market, there are. What's most likely to happen as a trader is when volume comes into the market it's going to be a massive change in structure because none of these prices are sticky. All of my executions rely on this idea of.

Please welcome this seven figure trader, Forrest Knight. In this episode, Forest breaks down his VPE strategy using the volume profile to know exactly where to be positioned in the markets.

If you're looking for the candle for information then you have to wait for the photo. You literally have to wait for the close. This price here will never get retested if you actually wait for it to close. All of this is really just thinking of where people are positioned, how they would behave in an auction.

Knowing that, Forest reveals the exact mechanics of the markets and how they operate and then showcases exactly how to use the volume profile in order to be profitable and to have strong conviction in your edge.

People want to buy when prices are low, freak out when they're really red, get greedy when they're really green. They do the wrong thing at the exact right time because they're welcome everyone.

Back to Chart Fanatics the go to.

Channel for all the very best trading strategies and concept breakdowns with the best traders in the world talking in which.

Today we have a very, very special guest. He's actually one of the co owners.

Of this incredible studio the Move. But he's also an incredible trader, a.

Seven figure trader, a phenomenal trader who.

Uses the volume profile. It is trading with Forest, AKA Forest.

Yeah, Just for us. What's up man?

Welcome back man. How are you man?

I'm good man. Another day in the trenches. That's it.

We've been in the trenches together this week finally and you know this week has been a. It's a great week. We've been covering some incredible episodes and you know I got to learn the day one that I got here that you're a trader as well.

Yeah.

You know, one who's been full Time for a very long time. And trades personal accounts as well, Right. Seven figures.

Yeah.

And you trade the volume profile.

I do, yeah.

Yeah. So where do you think is best to begin? You know, with this breakdown in terms of the strategy.

So it makes sense to. Let's talk about what the volume profile is. Right. So what is the vp? The volume profile tells us how many people transacted at a price. So at the bottom we often think of volume across time. So we might have 9am and 10am, right. So we're looking at volume into the open market opens at the middle part, 9:30am, right. So at 9:00am you might have this much volume. And then at 10:00am, maybe this is the one hour chart, we have this much volume, right. And so a lot of people will look at this change in volume and track volume deltas. But what if I asked a different question? Right. Maybe we're trading in Q. Right. This is an NQ chart right now that we're looking at. And I said, hey, I don't really care how much volume was transacted at 10am what if I said how many people transacted at 20,000, right? So maybe there's a price right here and this is 20,000, right. Or if I said how many people transacted at 18,000 ever? So not at 9am, not at 10am across all of time. Or I might ask a different question. Maybe how many people transacted at 18,000 from the time period of 9 to 10am? So it's a very different way to think of volume. But what it allows us to do is get intuition about which prices are stickier or more important than others. And that's really, really key to trading the volume profile. Another element of this is picking what your time ranges are. Right. And so typically, if we get rid of this bottom part right here, right. I'm looking at the volume profile across multiple days and then also RTH. So RTH is going to be that 9:30 to 4:00pm okay, right. And those are, that's a key time frame every single day. And so every single day I'm looking at the market and I'm saying, okay, what is the volume profile going to look like within today's session? What is the story and the narrative of the auction for today?

Because when it's just the volume bars on, on just time, it's just showing every, every transaction throughout that time. So of course, if it's an hourly chart, for example, it's specific to that time window, so it still has relevant information. But because it's not specific to a price or the correlation between both, it becomes less precise of what you can do with that information. Right. It gives you a time window that, okay, there's a lot of volume within this time period, but it doesn't really give you much to go on after that fact when in comparison to using both the price as well to understand exactly where orders are looking to at specific price levels with specific time levels. So that's why you start looking at volume profile.

Exactly. And so let's actually draw one a VP Right now I'm going to do this sideways because we often talk of distributions. I just got a marker on my shirt, so you don't have to be a statistics nerd necessarily. A lot of people have probably heard of a normal distribution. So a normal distribution looks like this. Right. And then there's like something called a standard deviation. So this is where most of the stuff is that you're measuring. And then there's a little over here. Okay. And then there's a little over here.

Okay.

So imagine if what we're measuring is volume across prices. Okay. And let's do our 20,000. So this is our price, this is 20,000. Okay. And then over here we have maybe 15,000. And up here we have 25,000. And what we're measuring is the volume. Let's imagine that this, this, this curve here is volume. So if we do a bar like this and this is volume. So just looking at it, you can see, oh, most of the volume is around this 20,000 level. Yeah. And when we say volume, I think this is a key part of volume profile as well, is these are people. So when we talk about transactions and volume in general, these are actual people who are positioned here. And so what we can do is we can flip this around knowing that most of the people are around 20,000. As a trader, we can get some really good intuition about what important. So I'll actually draw this kind of how a chart traditionally looks. So we'll have our prices on the right.

Okay.

We'll have our time on the bottom and whatever is on the left. So over here I'm just going to do every 5,000. So we'll do 10,000, we'll do 15,000, and we'll do 20,000. And we'll do one more at 25,000. So it's 9am I'm looking at the markets and we have a volume profile distribution. Let's just say it's 9, 9am we have some overnight activity a little bit from, from EU and we get a distribution that kind of looks like across a set of prices. What you'll get is a, is a histogram or a bar chart that'll look like this. Okay. You'll get a bunch of bars. Okay. And this is our, this is our vertical volume bars. Right. And let's do it like this. So we've got our volume bars and we've got our prices. And let's say that the current price overnight is. Let's use a different marker actually. Let's use some green actually. Can I borrow that black one? Cool.

That'll work.

So we have some prices and I know this isn't normal and then it whips alls in here. Right. And the price is here. Something like that. Kind of a weird squiggle. And if I, if I had to ask you like what set of prices are we most likely to be stuck into? It would make sense for us to be stuck around where people are. Right. That's why we kind of moved quickly higher. Right. This is thinly traded between the 10,000, the 15,000 and then we're getting stuck and we're, we're consolidating inside of where there's a lot of volume. And what's important here is if we have this consolidation, it's very different. If the story of the volume profile is perhaps like this, let's imagine that we're consolidating now, but now the volume there actually isn't a lot of volume there. It's all kind of thinly traded. Right. You just have some bars like this.

Yeah.

So now none of these prices matter. And what's most likely to happen as a trader is when volume comes into the market, it's going to be a massive change in structure because none of these prices are sticky.

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It's really, really important to understand which prices are sticky or unsticky. And that goes into really what we call high, high value areas and low value areas. And that's how we determine that the high value areas are literally just where the bars are the biggest. Yeah, right. And the low value areas or skinny belly is where the, the bars are the lowest. And we expect prices to rip through low value and we expect, expect prices to seek out liquidity and actually seek out the high value areas which is important as well. And, and to get stuck there once it gets there.

Because that's why, the reason why we can consolidate even though we have high volume. Because I can imagine for a lot of people out at home the misconception of like high volume means movement when really high volume just means higher transactions. So when we're consolidating in a high volume price and area, it's a lot of the time because there's a battle going on between the buyers and sellers. It's a higher volume pace. So we're seeing obviously more transactions take place. Which doesn't necessarily mean we're going to move. We're going to see like a really big bullish move or bearish move that can happen too. But if we are consolidating, it's nothing to say oh this isn't working or I'm very confused. It's more so to understand that we still got all those transactions but they're battling out at the moment. And that's why we may see a consolidation alongside that increase of volume.

Yeah, definitely.

And what you'll, what you can start.

To kind of surmise across the day is you know, we have 9am we'll have the open. Let's actually just start with the open.

Okay, so the market opens at 9:30.

And it closes on the right side of our chart at 4pm Eastern Standard Time. Of course we're talking about, and let's try and figure out the story for a day. And let's imagine that we know that at 25,000 we could draw our volume profile anywhere. I did it on the left side, I might do it on the right side this time. So we know that there's a massive shelf up here. Now the real VP tends to be higher resolution. You have a ton of bars, it's very jagged. Have a.

We're going to see it later, right?

Yep, yep. We have a massive shelf up here. We have a, some very small nodes down here. Very, very, very little value. And then we have another massive shelf down here. Right. So the market opens today, right. We have some candlesticks that are forming like this. We get a, you know, maybe a very high volume bottom wick. Then we get another candle next to it. It's another up candle. Right. So we have up candle, up candle. Do a little arrow for you, two up candles. And we're here. And maybe this is, you know, it does more the timeframes we're pushing up into the edge of this node. What will happen is when we get to this shelf, we have a trade idea now and you'll see this especially. And there's a very good example I can show you here shortly on the weekly time frame where it looks very, very similar to this. When we get to this edge of, there's nobody here above us. And so if you think about what moves the market, there are buy side aggressors and sell side aggressors. Right. People often talk about buyers versus sellers, but it's really buyers versus buyers and sellers versus sellers. And whichever competition is more fierce moves the markets. So if the ferocity, the competition of buyers is bigger than the ferocity of the competition sellers, the price goes up because there's more. The buyers are competing. Right. So what happens here is that you run out of buy side. You'll just run out of people here. There's no, there's literally no one here.

Yeah.

Okay, so where is everybody? Well, it's very obvious. They're all down here. And so what happens is, is you get this down candle back into this range. So that gives you a trade idea. Now doesn't mean you're going to stay in this range forever. Obviously you'll break through. But when we do break through, it gives you this. We rip through these low prices until we get to the next shelf. So this low value area tends to be where we get the big kind of. If the, you know, the ICT traders will call them fair value gaps and things like that, that'll form. But they're big candles with low volume. Right. The market's just moving very Quickly, it's racing.

So in a sense, we've collected the volume from this area to take us to the next one. But in the interim or in the middle, should I say, we're not really expecting the orders to come from there. And that's why we're not necessarily wanting to trade in this area versus when we recognize that we're reaching this area. So the bottom of this and no volume area that can present the trade idea back into the volume area and then potentially a trade idea could come from there to then try and take us there. But really, are you saying the higher probable setup is to trade within maybe the edge, but within the high volume areas?

So this is, this is a great segue into the, to the setups. Right. So let's talk about that. There's a few kind of key levels that I look for every single day that I want to coincide with these. The, the volume profile. Right. And so the four key levels, guys, every single day are the overnight high. I'll just do overnight high. The overnight low. Whoops. Terrible. Overnight high. Overnight low. Prior day high. Yeah, it's really hard to write and talk, by the way.

I know.

And prior day low. So four key levels. Why do these prices matter now? This is less volume profile. This is more auction market theory. But they go together. Yeah. So if we look at a day, any given day, and let's say the day looks like, you know, this, and the market closes here. Okay. So we have the low of the day at the high of the day and you have some other pivot there. The very last person to go long went long here. Right. Someone went long here. And that person is in a lot of pain because we see that the market went down and it never got back to their price.

Yeah.

So what's going to happen is on the next day when the market moves to their price, they're going to want to get out. Right. Maybe not all of them, maybe some of them will, will, you know, wait because they think the market, the market's going to go in their favor. But a lot of these people who are trapped are going to become sell side aggressors. They're going to race to get out even. So as we get to here, as we approach this level, we'll actually start to see sell side competition increase. So imagine if you combine that and you and you have confluence with the shelf. Right. And so in terms of setups, it's looking at where the auction has confluence with these major shelves. And then the other aspect of that is the Candles that we get. So if. Imagine that the market moves here and we get a massive candle with a top wick.

Mm.

Okay.

So we get a lot of volume here. Top wick. So we crack this price. The last trap long. I call it the last man. It's at a shelf. A ton of volume comes in once we touch this shelf.

Yeah.

To the, to the downside. I know this is a green marker, but imagine that this is a down candle. We get a down candle at the edge and we sweep. That's a trade idea. So all of. All of my executions rely on this idea of a high volume signal candle that has confluence with an edge and a higher time frame volume profile. So I'm basically combining a little bit of technicals with what the auction is telling me of where people are actually positioned. The buying profile is telling us where people are positioned.

What time frame would you be looking at your volume profile.

So there's two major time frames. I would consider this to be like the weekly. Right. Or a higher time frame. So the weekly or the daily. And then my key levels are going to be on like the four hour.

Yeah.

Weekly time it comes out to. WTF.

Yeah.

So the weekly time frame or.

44 hour.

Yeah. Most of my executions are the four hour down to the two. Yeah. Yep. So this, the very best setups would be like, this is a four hour candle. There was a good trade. And we'll talk about it in a second. Where this was on the one hour chart.

Yeah.

But what's really, really important here is higher is better. What will happen is. Okay. If we get a bunch of candles. Okay. And maybe like this. Like this. We get a really high volume bottom wick green candle. But let's say that this is the one minute. Okay. And we're talking about volume. So intuitively we can imagine even if we see a relatively higher volume spike here. Yeah. Or even looking at the volume profile, we get a really big bar in the volume profile in the one minute here. It's still a one minute time frame. Right. The very next minute could be like this. Right. There's just. There's. There's too much that could happen in that time frame.

Yeah.

Where the inverse is. Is very, very true as well. If. Okay, we have an auction and let's do, let's do a really high time frame. Let's say we get a nice. The market comes down like this and then we get a huge high volume bottom wick on the weekly at an edge. Okay. And this is actually what happened in the market Right now. And then the market comes out of it like this spark. It comes down high volume. Bottom wick comes up at the edge of a vp. That gives us that, that weekly kind of reversal that we're in right now. Yeah. And that's an exact type of signal candle. A lot of people aren't looking at weekly candles for signal candles for trades. Very true.

Yeah.

But what's cool about this is you don't have to trade the weekly. You look at the weekly. I know. Oh, the market bias is up. So now all of my executions, I should be looking for the long side. Right. And I can still trade the 15 or whatever timeframe people want to trade. But I'm using the volume profile to give me bias. Yeah. Right. And so if I literally, if you hold held long after this weekly candle close long enough, you're green right now. Right. Really simple.

Within this candle there, if you've identified, you know, so you're at the edge, you've identified your high value areas. Are you looking to execute within this candle or once this candle is printed, you're then looking for executions to then take you into this direct continuation.

I am looking for candles to close. This is a really important concept because what will happen is. Let's do, let's do an example of what happens if you. What I call front running a candle. Right. And so we have a candle and let's say it looks like this and it's, this is just a full body candle. It's green. Right. And this is, we're trading a four hour chart. Okay. And right now we are at three hours, 3.98 hours. It's about to close and I'm like, hey, this is a signal. I should go long now.

Yeah.

What happens in those last few minutes is this candle like right here turns into this candle. It gets smashed. Right.

So crazy.

Right?

The last few literally minutes.

And this happens to a lot of traders. Not just on the four hour, happens on the 15 minute, the five minute, whatever your timeframe is. If you trade, if you're looking for the candle for information, then you have to wait for it to close. You literally have to wait for it to close. It's a mistake that I made when I started. I see, I see it in my community. I see a ton of people do it. They try to preempt the candle and there's, there's actually is some edge here. This kind of gets away from vp. If you watch how fast this candle changes in the last few minutes.

Yeah.

The next candle is probably going to do the same thing because like an FYI, like it, the market repeats itself. And so you can start to anticipate these fast changes in the candle formation. But generally if I'm looking for a signal, you have to wait for the signal. Imagine the literally the candle has not finished printing it. Yeah. And you know one thing you can do is there's, you can actually turn off the candle or indicators that you can. You literally won't see the candle until it's done forming. That's, that's a really cool trick that you can do as well.

That's interesting. That is really interesting.

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What's interesting as well is I think what happens to people is their assumption is I'm going to miss the trade and I'm going to get even if it's an extra few points or a bit more by entering now versus waiting. And the other fear is that okay, closes here. I want to say enter here ones if it doesn't pull back. So let me just enter now so I don't, you know don't have to worry. Next minute closes. Like this whole trade idea is actually not valid.

Then. Yeah. So what's down and then you miss out. And I'll tell you something else in terms of drawdown with this, if you wait for the signal candle, you'll get something like this, right? So you'll get, let's say we have a candle that closes like this. This is our weekly candle, weekly time frame, we get a ton of volume. The market came into it like this and we're expecting something like this. Okay. If I wait, it's very unlikely with. If this is a signal candle and up candle, high volume, up candle at the, at an edge. This price here will never get retested. If this is, if you actually wait for it to close. Yeah, it won't get retested. Now these prices might get retested. Right. We'll even see like 80% retest. Especially on NQ, I trade in Q a lot. You'll see 80% retest of the wicks and that's even a trade idea really in the weeds. But if retest of this can become a trade idea, even though you're long biased, you know this is going to get retested, but this bottom price will never get retested. So what happens is, is your bracket is literally just. I go, I go long here because I get the signal. I go long here and my stop is just here. And I'm willing to eat all of this as drawdown, expecting us to go way up here on a weekly time frame. I mean this is thousands of points at this point. So you can trade it like that. Like you said, you brought up a really good point. Some people might want to, you know, get in down here long instead expecting the retest. But what you'll see sometimes is a very bullish immediate reversal. I'll see on the four hour time frame, this candle closes. The very next candle, it just goes.

Yeah.

And then the net like it's, it's out of here and you're like, whoa. Even though it's a high time frame, like it's, it's gone. So you have to, especially when it's.

Higher time frame as well. And if that happens and you've waited for say you know, a few weeks for that to, to position itself.

Yeah.

Then you hesitate looking for a perfect trade or a better trade for that pullback and it just goes. Because that's what I think the characteristics of the pair or, or side of the industry that you're trading. So whether it's in this case, say your, your indices or your indexes or whether it's gold or whether it's forex, like knowing the characteristics of that pair. So like you said here, noticed that NQ will just run.

Yeah.

So when you notice that being able to make sure you trade alongside those characteristics versus doing what you want price to do or how you want your trade to look, I mean that happens to a lot of people and a lot of it is based off like emotion in terms of I've waited so long for this trade, I want to make sure I get the maximized results from it. You know, I don't want to have an entry here for example, versus an entry here because this is, I don't know, let's say 100 points.

Right.

On the grand scheme of things, as you said, this could be thousands of points. So what is it? Just 100 point difference? You know, if looking for perfection versus being in a profitable trade.

And a lot of people, I mean a lot of people struggle with the concept of. Of accepting red. Yeah. And I've heard traders too that trades will good trade should work out for you immediately. I like those trades better. I also know though, at least in my system, if I have a signal candle, there's an acceptable amount of drawdown.

Yeah.

Again, I know that this price will never get retested or my thesis has failed. Yeah, Always trade my thesis. Anything in here. I'm accepting the weight. I will go to the lowers. Right. I don't have to draw everything. But we could drill in to find a more optimal entry. I don't necessarily worry about having a perfect entry though. So long as I get in when I see the signal and the price is going to race for me.

Do you have a specific scenario where you might look for a so retrace entry?

Yes. So the classic example is really get rid of all these is really anytime you have a really long wick on on nq. This is kind of subjective, but let's do a few different types of candles. We have a candle like that, right. It's like a wide body doji. You can get a small body doji, some long wicks, get a shooting star candle or we might get a hammer candle. Right. So a few of these are different types of candles that we'll get you anytime you get a really extended wick like this in the market. Intuitively you should think about the fact that within this time frame the market. Let's imagine that this is an up candle. Okay.

This is an up candle.

So the market Opened here?

Yeah.

Okay. At some point in opening, it raced all the way down here and closed up here. That's crazy. That's nuts. Right? There was so much volatility versus the story of this candle. Let's say this is also an up candle. The market opened here, it went down, it went up, and it closed here. Right. Very, very different stories about the volatility.

Not much emotion behind and all volatility.

Exactly. So this is a very volatile candle. And so if we think about the fact that that's volatile, what we can expect to happen in this next candle, even though this is an up candle, is we'll probably get something like this. Right. It's going to retest this and the vp, by the way, at the same time. I'll do a little VP for this is. You'll see that this is like low value, and then it'll be like higher value over there. And so we have our histogram here. These are bars. Right. Get our histogram and you can literally see how people are positioned. And so the price will race through low value. It'll come back up to where it's sticky, and then it will continue higher.

Okay, so that's how you then start to filter. Okay. This is where this particular candle close means I should look for a retracement entry versus just entering after the close versus the. The original example to the left, for example, might be one where you go, okay, this is where I'll enter and, you know, not wait for a retracement because we can probably look to continue. It's interesting how that works though, right? With the volatility. The interesting thing is, no doubt that's the candle where most people think that this is going to go without me, I need to get in.

Exactly.

When in reality, that's the one that pulls back.

And then they face the immediate red.

Yeah.

On a candle like this, you're almost always. If you long it, you're going to face immediate red. And then if you just have a. A lot of times we'll use like a 50 fib. And I eyeball this. I never use the fib tool, by the way. I'll just eyeball the middle and then I know that it's going to go between 50 to 80%. So I'm like, I'll just long inside this box and I'm good now. Sometimes the market doesn't always behave the exact same way. Sometimes it gets away from you and you just don't make money or you miss out. And that's Fine. But yeah, I know it's going to test 50 to 80% of this and I'll just put a limit long and it, I'll tap it to the tick. Like I've had some pretty cool days where it's like you get a tick perfect entry at the 50 or it comes down here a little bit, you do a little red and then you're just green for the rest of the.

Day or the trade.

Because when you are just, you know, straight into the red, what ends up happening is you hold it. If you're lucky, you, you hold it and you keep holding it. You don't close it.

Y.

But I say if you're lucky, it comes back to break even, then you close it.

Yeah.

And then it goes without you. And then normally what ends up happening is you either start chasing prices and longing higher up with a very skewed risk to reward. And more than likely, you're probably not putting your stop here. You're probably putting it under some lower time frame low, which gets swept or worse. Is that because you then have missed the long, you start trying to short to long. Meaning you try and short here, but price keeps pushing through and you're short here and it keeps pushing through. And that's how you end up blowing out an account.

And that's what happens to most people. You know, they, they, they do the wrong thing at the exact right time because they're, they're not thinking intuitively about. Again, all of this is really just thinking of where people are positioned. Yeah, right. And how they would behave in an auction knowing that people want good prices.

Exactly.

People want to buy when prices are low, they freak out when they're really red, they get greedy when they're really green or they, they want to race to exit. And so that's, that's really core to my system.

Is there anything else you look for here? Is it Simply that the 50 to 80% fib you market hours or anything specific that you need to see or would like seeing maybe as an additional confluence, whether it's a lower time frame VP or you know, particular candlesticks or a particular level is anything in that area that you look for.

So really if, and this is like one type of setup. So really what I would prefer to see is if we modify the scenario. Let me see if I can draw this out well enough. Let's imagine that I use what's called a session vp which it'll in real time draw the volume profile during as volume is coming in during the day.

Okay.

So let's imagine that in our vp we have some high value up here. Okay. Or maybe even a ton higher up here. Right. And then we have some value down here. Okay. So what I want to see is then we have some other bars, like, you know, whatever, throughout the day. So we've extended this long kind of bar into this shelf. So all of my trades like this was more of like talking technicals, but my actual trades that I would take full leverage on have to have confluence with a volume profile, what I call the edges. Right. So these major nodes in the higher time frames, that's really what I'm looking for. Or what's likely to happen is I'll get some type of reaction. But because I'm in low value, technically there's no one here. And where there is aren't people is where you get the really weird barcoding and people really get chopped up. They're like, wait, why isn't my system working? And it's like, there's no one here. So the price is just. It's the market's doing true price discovery because there's no one competing where you're playing the game. Yeah. Versus here. The market's 100% going to react here. It's 100% going to react here. Every single time it has to. Right. There's a massive amount of people there waiting. They're waiting to take action because the price finally came back to them. Because they're super green. Right. If they long down here or if they're trapped, they got to get out. Like they finally came back to them. They got to get out. So that's really key for no matter how many technicals you use without volume, you're missing a major part of the picture.

I love that in terms of the volume profile. I know you trade nq, as you say, but is this something that is universal? Like you could trade it across? I would say more the sort of futures side, maybe option side, versus Forex, for example, Because Forex doesn't have a centralized exchange.

Yeah.

That's a bit difficult to rely on the volume and the data.

It becomes pretty impossible, actually. So I would say I trade this with option and I can actually show you what this looks like across the options chain. So let's get rid of this really quickly. But that's a good point. If you're trading something that doesn't have volume.

Yeah.

This fails miserably. Right. You have to do something else. I don't trade Forex. Right.

For that reason, most people don't so.

Let'S imagine you have some strikes. Assumer trading, spx.

Okay.

And what's cool is the most brokers, if you look at the option chain, have almost a volume profile built in for each strike. So we'll just do 5,000. Okay. And then I'm going to skip some prices. Let's just do 5050. 5100. And then we'll do 4950. And what am I doing? 50. So 4900.

Okay.

Thankfully, I understand this better because we did an options masterclass here on Chart Fanatics.

Nice.

So now I understand strike prices and everything, which is great.

We'll do one more. So we'll do 4850 and 5150. Check that out, by the way. So most broker tools, there's, there's all these options Greeks up here. So we've got the Greeks, okay. For both sides. And these are calls we call Greeks. So then you have put Greeks. Yeah. Okay. And you'll also have this, this interesting column called Open interest or oi. Yeah, and oi. Cool. And so the way that I like to visualize OI is as a bar, a volume bar. And so at 5150, we're going to have a huge amount of OI.

Okay.

At 5100 we'll have half of that. At 5050 we've got like a sliver. A sliver. And then on the put side we're going to have a sliver, a massive bar. And a massive bar. So we're trading spx. We're looking at the options interest. If we go up, okay. If the price starts to come up, okay. Price is here. Price comes up. We could, we should expect the underlying to react at this shelf. And that happens especially when these are expiring. I ignored it or I didn't talk about expiration. Let's talk about, we're talking about today. There's every strike across all the different expirations. But if this is expiring today, I have to ask myself, if this is 100,000 open interest, that means that if this price goes through this, 100,000 people are going to be in the money. And you got to ask yourself who is getting screwed in that situation? Right? So what happens tends to happen. And that does happen, by the way. Sometimes the market will move it. It'll squeeze through these shelves, right? We might have another price higher here and it'll actually race across the oi. It'll, it'll do this and it'll bounce at the edge of the oi. Right. But what will also happen is if, say it's 3:00pm, it's the end of the day. Okay. It's 3:00pm, we get to this edge. What happens is all those premiums get killed. They get crushed. Yeah. Because there's too much incentive for people holding the underlying right. Or it doesn't matter on the call side or the put side. There's too much incentive for this to not go in the money at the end of the day. And so you'll see this get killed. And then what will happen is after settlement open, after all these are dead, then your, then your trade that you got crushed on completes. Right. So it. The same concepts 100% apply on the. The OI. But the one thing with options is that you really have to look for exceptional levels of interest. A mistake that people make, especially in my community, is we, we'll end up with a day that kind of looks like this and you'll get one that's like slightly higher.

Yeah.

But it's like the delta between these is not extreme enough for any of this to matter. I need a. If these are the bars, like an outlier. I need like this.

Yeah.

Now we're going to react at 4950. Right. On the downside because there's a massive amount of interest there.

So don't get tricked into thinking just because we have an increased volatility across all prices. That's edge. In reality, the edge is actually found in having an outlier and having like a unique observable amount of volume in comparison to everything else.

Exactly, exactly. And you did mention volume. So open interest is basically at open with the open positions are. But intraday you want to watch the volume as well. And you can also plot that as a histogram or a bar chart. Got it. And it's the same thing. But yeah, you really want to watch those delta. So the main thing would be on like Friday, right. When it's opex. Watch this. A lot of people over fixate on this because they learn about it from me and I'm like, guys, it's. Unless there's a, a large amount of contracts expiring or motivation, the market's not going to just reject every strike with interest. Like there are plenty of days where the market comes down and all these are just in the money.

Yeah.

And those people just made money. But we don't know what like this could be a hedge. Right. We don't necessarily know what the net result is.

Of course.

All I know is that 100% this happens, right? So you want to look for the outlier edges in the volume, right?

Definitely.

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So if we do pros and cons, we do pros on one side, cons on the other. And again, just for everyone at home, cons is just simply stating things that may be hurdles or things that you need to be aware of. When trying to apply the volume profile and the concepts we've covered so far, it's not necessarily a bad thing. But in terms of pros, I think it really gives you a true insight into the auction. Right. The buyers and sellers versus just relying on candlesticks and the technicals alone.

Yeah. So I would say the first pro is it's not really a derivative indicator. So like if you think of what a candlestick is, it tells you where price was in a time frame and it tells you how many at a price. Right. For sure. 100%. Right. There are other types of like cumulative, like volume indicators that are more derivative. Right. They're time based. Even like VWAP is like accumulating averages. This is just like how many people transacted at 5,000. Yes. How many? I want to know. Right. It tells you that the other pro for this is that it's easy to see deltas. Yeah. Right. And so if we talk about, you know, this bar versus this bar, like you don't even have to know. Yeah. You have never spoken to me and you're like, hey, there's something happening. Yeah.

What's going on there?

What's going on there? Like there's a lot of people at this price. Maybe I should pay attention. And you, you'll probably arrive where I've arrived eventually. So those are the two major pros. What's the third kind of.

You say it's fractal. So like you can use it, you're using on a higher time frame, but you can use it on lower time frames as well.

It is fractal.

And the edges like on intraday will.

Have confluence with higher time frame. So you'll see a. Maybe within the regular trading session you'll see a shelf. And then when you zoom out to like the daily, you're like, oh, that shelf is also also the edge of the weekly shelf. I thought there was a lot of people here. It actually turns out there's a lot of people here. And that can give you extra edge and maybe you leverage up in that trade. Right. I believe in variable position sizing. So leverage up.

Would you say it's simple as well?

In a sense, it is simple in.

Terms of like, what we've covered. In terms of like, here's what you look for and here are your edges. And, you know, these are where you trade within and. And where you target. And then here's the no trade zone. So it kind of creates a very systematic approach.

It does.

Of where you're looking to answer, where you're looking to execute. Where's of interest versus where's not of interest. And of course, simple doesn't mean easy.

Right.

That's. Yeah, I know that can be a misconception.

I can think of the other side of this immediately. So the con, yeah, it is simple, but the thing with the volume profile, and I don't know if I can. We don't really have to match it. But the first con is that it's slow. Okay. Even if you're trading the volume profile on a lower time frame, it's slow because you need to. By definition, I need to wait for it to form to have some intuition.

Yeah.

And I can't have a full distribution with one candle.

Yeah.

I need like multiple candles. Right. So it's slow. Another con that I would say is you could have infinite overlapping. So kind of like you can. It's fractal, but it's like, it's easy. How many? Yeah, you know, it's like, wait, do I use the.

Is that part to only have specific time frames as you mentioned?

I use. Yeah, I try to get two time frames as far apart from each other. For example, you wouldn't want to trade on the 30 and then use the one hour for confluence. If you're trading on a 30. Yeah. Go to like. I know most people don't trade the three, but go to the three hour. Like, try to get as far away as possible so that you actually have some like the big ship moving the small ship.

This is the problem that if you go, let's say, you know, weekly, daily, four hour, one hour, 30 minute, 15 minute, five minute, you're gonna have conflicting within there. You'll find maybe four that are bullish, two that are bearish, one that's neutral. And the problem with that one is very confusing. You don't know which one to go for. Two, if you have a bias that you have personally, you're going to try and align with whichever one matches our bias versus which one Makes the most sense. And the market's telling you because, you know, I think I've been guilty of that. No. So many times where I want to see price go up. Every, you know, all out of 10 time frames, majority say it's going to go down, but whichever one says it's going up, that's my, that's my word. That's like, yes, this is why I'm doing this, because it makes sense.

Right? Yeah, yeah, yeah, yeah. It's. It's tough because it's slow and you can look at a lot, but if you're doing it the right way, there is a low number of trades. And I think this is the thing that kills good and bad.

This one.

Yeah, yeah. It kills new traders because, like, especially across different. Yeah, it's not exciting, you know, and I, you know, I live stream in the morning. Everyone's like, what's the trade right now? Right. And I'm like, like I don't have anything for you. Like, I would be, I would be making like, I'm always willing to give, like what I think will happen next. But I always give the disclaimer like, this isn't a trade I would take because there's no signal candle. Like it doesn't meet all of the executions. You can get good. I would say another pro, though. Flip side of that is you'll get good at predicting chop, which is a con as well, because I can predict chop pretty well, kind of what the next chop is going to be. But it doesn't mean it's a good trade because chop tends to be less sticky and you get. It's. It's more variable. But you can get better at predicting chop because, you know, right. If you're. Say you're chopping down here and there's a big bar up here, it's like it's going to chop into that. Yeah, right. It has to. I don't know how long it'll take, but it's going to chop up to that next shelf.

Gotcha.

Right, so that's, that's definitely a pro.

That's perfect. I think we can jump onto the chart and see some examples.

Right, let's do it. All right, so let's look at some examples that have played out recently today. This morning is a really good example. So I was talking about this morning how we were likely grind up higher due to the way that the VP was developing. So let's just go to the 15 minute. By the way, guys, use a replay tool if you haven't used TradingView before, it's super simple. It's, it's, it's a great tool. So let's just go to 9:30am and let's see what the volume profile look like. So the indicator that I have on is called the session volume profile HD. It is from settlement open, which is 6pm Eastern Standard Time to, you know, the, the close, which is 5pm Eastern Standard Time. So 23 hours in the day, you can see here we had this strong green candle here at 8:30, right. And then we start to build value higher. We build this node here at the highs we, which is very different than we can even see yesterday's high. Right. The distribution here ended up being weighted very, very into the middle of this day. Right. So there's an immediate difference in the shape of the auction. So these prices, for whatever reason, it doesn't matter if they're long or short, I don't really think about that anymore, to be honest. I just know that there's people here and because there's people here, they're going to be playing the game. So my first question at this point in the day is will this continue to build or is it going to quickly reject? Because if this node gets big enough, it's a bullish signal. We're going to continue this way because the auction is literally, it's moving away even though there's a large amount of people down here. Right. At these prices the market's basically saying, hey, we're never coming back. We're just going to build enough value here, it's going to start to go higher.

Auction moves.

Yep. And so what we can do is, and this is, you know, pre market, we watch the candlesticks and the node gets bigger. So at this point I'm thinking, yo, where it's 100%, we're going to go higher today.

Yeah.

And if I'm taking any longs, my stops are, you know, down here at the edge of the node. Right. You could do it right at the edge of the node and then your TP is going to be, you know, wherever, wherever it is. I need to go to a higher timeframe to see where the shelf is. But what we could play this out.

You're looking for the same way you set your stop, you're setting your TP to a shelf, like to an area where the nodes are reducing the auctions, leaving or dying off edge to edge.

That's why I call it the volume profile edges. Yeah, that exact reason. I'm literally just expecting it to traverse all of the players in a node and once you run out of people, it's likely going to reject. And then specifically today, because it's a Friday, I wasn't expecting a. I was looking at. We talked about OI earlier. Yeah. There wasn't enough really juice. So this, this ended up pinning or what we call pinning kind of higher. So that's an example just from today, what we call a. It's not really a P shaped volume profile, but looking at trending price action on the volume profile. If we go to the one hour, there's another example I think from Monday if I recall. Yeah. This is a, an interesting trade here. There's. There's a few here that we could talk about, but sure, yeah, let's talk about this. This one hour close here at, at 1300. So we'll go back in time, select a bar and let's talk about the key levels. So I mentioned there's four key, key areas that I care about. Prior day high, prior day low, overnight high and overnight low. So this overnight low got taken out here. Overnight high. Actually we got to talk about this first. This is an actual trade I took. I totally forgot about this. Sorry.

That's no problem.

So we have overnight high or. Sorry, prior day high. Let's do PDH and we have prior day low or overnight low. Overnight low.

Cool.

Two key levels.

Cool.

We don't have the higher time frame VP on. But what I really want to care about is what's the shape of the session volume profile here and what kind of candles form around what the auction is telling us.

Yeah.

So we'll go ahead and move forward in time a little bit. We get a print on the one hour. We get a high volume top wick candle into the auction. Now I know because I trade level to level that this at least is going to go to overnight low.

Yeah.

We got again a signal. Candle at the high at the edge alpha key level. This is a pretty tight trade here. I'm looking at the prior day volume profile as well. I could also overlay the. This visible range here and I can see that there's a, you know, a shelf down here essentially. Right. So this other indicator shows me the volume profile across whatever's on my screen. Visible range.

And so sure though, any price that's on the screen is going to show you all of that volume exactly as these specific days.

Yep. So this is session by session and then this is everything on my screen. So you can see it, you know, change as I do that.

Got you.

But let's imagine I go short here, right? And I did. And then I do a tp and maybe I want a TP at the edge of this shelf. Right. Safety would be overnight low. But we come down there and let's see how close we get to that. We go through wicks right off of this, this edge here. Right. Then if we continue to go forward in time for our next signal candle, we swept this price. We got a. It's a lower volume bottom wick, but we got a green bar. Another key thing, this isn't really related to volume, but just like the story of every day, you're very unlikely to sweep a prior day high and a low in the same in the same session. It's extremely unlikely unless you have like a huge break in structure. So because we swept prior day high, even though we ran lower, it's extremely unlikely we sweep prior day low. So as soon as I see this weakness and change, I know that I can do a mean reversion back into, you know, maybe the point of control. Right. So I'll go back a little bit. One bar, I go long, right. I do my TP at the point of control, which is in the volume profile. It's just the price with the most amount of volume.

Yeah.

Right. And so we go forward in time. Okay. And it goes a little bit higher, but who cares? I got my money on my trade. So those are two very kind of simple examples from the last seven, seven days or so.

Definitely. But the thing I love, as we talked about in terms of simplicity, not to mistake again for easy, but simplicity meaning that this one way of observing the market, when you understand it and you're able to then see it in the market day to day, provide you everything you need from where to execute, where not to trade, where best to trade, where to target. And I think those are a lot of the problems or they solve, sorry, a lot of the problems that a lot of traders face because they may have a good entry system, but they don't have the management, the target, where not to trade, for example, or they have the good target, they don't have the entry. So this you can see, incorporates all of those into one system. Just one question though. Off the back of it, looking at it now on the charts, sure. How much of a process would you say for someone new looking to use volume profile, how much of a process would you say there is to really picking up, really training the eyes? What's the realistic, not maybe timeframe, but what's the realistic journey look like?

I Think in general for a trader, like if you're really good, it's going to take you. The fastest I've seen someone get profitable is 18 months. And that's, that's just fast in general. It took me years, just to be candid, like I suck. It took me, it took me years to get profitable. I think for the volume profile, the hardest thing about this is that it doesn't give you that many trades.

Yeah.

Like I, I went back days here to show you like good examples. And one of the toughest parts about my system that I've been filling too is because there's a low number of trades. If you're waiting, if you're truly waiting for that signal candle to form. And I notice in this very high VIX environment you don't always get that. So I've been trading more around just the shape itself than anything else. Here's a good example of a volume profile shape that we got here. This is what we call a P shape. Right. It's literally just shaped like the letter P. So this is kind of a bullish. Right. The auction pushed higher and volume accumulated higher. And so we expect that continuation higher. Right. Which is basically what we got. If we get rid of this, the replay there you can see that's exactly what we got. P shaped close.

It did chop a little bit.

Market push higher. And then the inverse of that is what we call B shaped volume profile. But you can trade just with that. It's really hard for new traders to just trust the VP and not look at the candles. Yeah, I've tried even trading without the candles and just using the vp. It's hard. It is much harder. But that's how you get intuition about the prices.

Would you say, is there anything to the previous volume profiles in terms of. Let's say like here we pushed three, four days and you can see that the point of control, you can see where the auctions were for those days. And we see this push down and this sweep, if you will, before seeing the momentum kick back in. Is there anything from those previous profiles that help for a move like that?

100%.

So in general, one of the. There's really two setups that we have. So I have mean reversion trades of various sorts. But the.

There's also a previous POC retest trade.

And so this is one of the key trades that I teach people is we're in an uptrend. All right. And we know that the market doesn't just go vertical. It always comes back. The question is where does it come back to? Right. And so conveniently, there is this price from yesterday where most of the people are positioned. Yeah, Right. And so if I had to be a betting man, which I am, and I'm like, huh, what price is going to get retested for a liquidity grab? It's probably going to be the price with the most amount of people. And so if we look to go long here. Right. And then I'm just going to tp, assuming we're in an uptrend, we're going to crack the highs. Previous PoC retest is our playbook trade. Right. And it doesn't even matter how long this takes. Like, this is such a bread and butter trade for me that you'll take it every time. What people struggle with this, with this is holding it. Right. This can take. This is a one hour chart. Right. So this was, you know, five hours to get out of this trade, which, you know, for a lot of newbies they're looking for minutes.

It's gonna be difficult.

It's one day, but it's still five hours. Right. But it works across multiple time frames of that forest. Okay, so we're going to look at.

Some examples of the volume profile and how trading at the edges of the VP or just the edges of the auction in particular, is such a powerful entry model. Okay, so let's take a break for.

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Now let's get back to the episode I've here.

I'm on ES futures, okay? I trade ES and AQ futures. And there are a few key things.

That I want to call out on.

My chart right now. So first and foremost, I'm on the four hour chart. I trade specifically on the one hour, four hour daily time frames. I don't really go lower than the one hour for the style of trading that I trade. I am a day trader, but I do a lot of like intraday swings. My average hold time is like four to five hours and I often will hold trades even overnight. Okay, so a lot of swing trading in this model. There's a few things I want to call out here, okay? In the volume profile, right, we can see that there's a massive amount of participation right here. This is where people are based, okay? So I am interested in folks basis, okay? Where people are positioned matters, okay? And really we want to enter, we want to enter at the extremes of these positions, okay? This is really at the core of vpe. There's a lot that we could reason about, argue about, debate about in the middle of participation.

But at the edges of the extremes.

You can also almost think of it like in science where we're just removing variables, okay? We want to as few variables as possible, okay. On day trades we actually simplify this even further, okay?

When we talk about day trading, there's.

Only four areas where it's Friday high, okay? Prior day low, carbonate high, and overnight low, okay? Those are the four areas where I even look to enter a trade. And then I look for confluence with the buying profile. For now though, we're going to stick on this four hour timeframe, okay? And what we want to do is.

This is an event that a lot.

Of you probably remember this day coming up here, there's the edge of the auction here, there's a low value area, okay? Right below this thing I marked in red down here, an area of low value, lower participation. There is a previous low here, previous low here, previous low here.

And then another big auction down here.

We actually have this auction and this auction here.

Right.

So all of this is also kind of a shelf. So if you look at where. If we split the volume here temporally, okay. Just over time, we can see how all this volume above all this here really started after this point in time here. Once we broke these highs. Okay. I'll show that to you separately. So once we passed, we do a little cross section here. Boom.

Boom.

Okay. All of this node happened after. Let's just call the September 4, 2025. So a lot of volume has been built since September, September 4th in particular. Okay. Now because we're interested in where people are positioned when we have an event like maybe this. Okay. The question is, where are we going to go? So let's go back just a little bit. What makes sense from a participation perspective for this to bounce? We don't want to catch a knife.

Okay.

We could short.

Obviously we're at the end of an auction here. We could see that we just range.

Across all this participation.

Right.

We cleaned up all these players here. Maybe you had a thesis short. We're not going to even talk about the short here. What I'm really concerned with is where do I long?

Okay.

There's a few areas where the VP might tell us along. Okay. I might try along here at.

Let's get rid of that thing.

I'll try along right here.

Okay.

But what I'm going to actually do is I'm going to long. Once we sweep, we clean up this entire edge here. Once we sweep this edge, okay. In the volume profile edges, we're trading the volume profile edges, the VPE system, and we are looking for confluence with clear edges in the market. That is where we're going to get the highest probability outcomes.

Okay.

Trading is like poker, but unlike poker.

We can just wait until we're dealt.

A good hand without having to pay to play. You don't have to pay to get dealt another car to hands in the markets. You can just wait. You can literally do nothing. So I'm going to do nothing. Market sells off, we sweep that edge, we'll go ahead and buy. Was do a market buy here. We'll get in so we get it.

Now my TP is going to be.

Based off of the volume profile.

Okay.

So I could look for either a small intermediate bounce up to 6,721. Okay. Where we traverse the node, we always look for no traversal for our take profits.

All right.

Assuming we're still in an uptrend.

Okay.

I'm always looking for a node traversal. Or I could go all the Way up to here. So let's deal with something a little conservative, maybe a little skittish. Put our TP right there. Then my stop loss. We're going to do the same thing, okay? We're going to assume that we're not going to traverse this other node.

I can make it tighter and put.

It right here, maybe outside of here, but we might sweep this edge as well. So I'm going to assume that at worst case scenario we do that. So this is like a one to three. Okay? Risking one to make three on a pretty big time frame here. So let's see what happened. Go forward. It swept this edge, okay? And after cleaning up that last little bit of participation, it dips down into this node a little bit and eventually we hit our TP there. Okay, so good example of using the volume profile for taking trades. Now obviously we go back one more time. We can see how trade management is also key. So I went for a sweep of this edge. There was another key edge here which would, would be the A edge.

I would, I would say, right.

In terms of confluence, we always want to ask ourselves, is there an edge that lines up with a node? So this edge is actually beyond this node. If we look at this edge right here, it's in the low value area. So we crack it, but we crack it in low value. The edge that's really has a very, very clean alignment with the node is actually the edge over here and that's where we bounce. And so a better way to take this trade again would actually be to wait for that little sweep. Okay, we got the sweep. Then you take the long. Okay, Then we can do the same thing. Okay, we'll go for the traversal of the node and our stop loss now is still the other side of this node. So now we're really using the VP for our entry model. We'll get in. Okay, comes up, make a decent chunk of change. Not a bad little trade there. Okay. And that trade took about, you know, what is that, five days? Okay, five days make a couple thousand dollars. Not a bad trade. Pretty kind of standard trade in the VPE system. So that's what it looks like on the intermediate timeframes. Let's see if we can look and find just a very simple day trade example. So what I'm going to do here for our day trades we look for is very, very simple. For our day trades, I'll write the model out for us. Okay, we look for a signal candle at an edge, and we look for the candle to be in the direction of the trade. Look for candle to be in the direction of the trade.

Okay.

And then the third thing here is we hold until the next edge. Okay. So what I mean, this is a trade that I took very recently actually. Okay, there's a short here. So we're on the four hour chart. Boom, boom.

We'll go here. Awesome.

So there's a very apparent edge on the chart. We have these previous highs. Where is my arrow tool? The previous highs here.

Okay.

I want us to sweep these highs. So once we sweep these highs, I'll look. This is. This is a really key thing here. We don't just take trades at the edges. We want confirmation that this is actually going to do some type of mean reversion or retracement.

Okay. A lot.

My playbook trades. There's two playbook trades that I do. This is one that I show you. The other one is prior PoC retest. But nonetheless, once we pass this, I'll just look for a trade. Cool. So we get a candle and I.

Said we want a signal candle.

Well, the signal candles in the VPE system, they're very, very simple.

And you're all going to be surprised.

At how simple this system is. It is a relatively higher volume Doji. Shooting star or hammer candle. Okay. In the direction of the trade. So this is a Doji. It's higher volume than the previous candle. Relatively higher volume. So relatively higher volume. This is an important definition here. Means it's higher volume than the previous candle.

It doesn't mean it's a high ish.

Volume candle relative to a bunch of other candles. It means it's higher volume than the previous candle. Add an edge and it's one of these candles in the direction of the trade. I want to short into the mean in this case, when I talk about mean reversion. We're shorting into the auction. We're shorting into participation. There's a large block of participation here. Let's get rid of this little square. Let's add another square.

Okay.

We weren't short into participation here. Okay. That's what we're looking for. If we add our session volume profile as well. Okay. We'll get rid of our visible range volume profile really quickly. And we can see where people are positioned in recession. This is really, really important because traversing this auction where people are positioned and then the relative strength of those positions is exact. Exactly how I trade my in my entire trading system. So we'll go short here. Let's just go back a bar. Okay.

We'll go short. Okay, we'll go short.

We'll just mark it in.

Cool.

Now where do I want to take my tp? Well, we want to trade edge to edge. There's a few different edges here.

First, let's put our stop.

Okay. The thesis is that we're not going to break the high of the candle. We did the sweep. So the market should not go higher before it rotates and traverses the auction to a degree. We have the overnight low and there's a prior, prior day low. Now the four areas that I called out for day trades were prior day low, overnight low, prior day high, overnight high. In this case, I'm going to go because there's a large amount of participation.

Lower.

I'm going to go for that prior day low. Okay. Prior day low is right down here. We'll hit confirm. Okay, this is that prior day low level. Do an option J.

Okay.

And we'll label this as. It's not gonna. Let me label it by clicking it. Let's do PDL for prior day law. So we're gonna go for that prior day law. Now the entry on this is Friday. Okay. It's the 10 o' clock four hour candle.

For those of you who follow me.

You know that I. The 10, 10 and 2 o' clock are like the times I look to trade, right? Because those are the four hour candles. That's the primary time frame I trade. If I don't have a trade there, I'm usually doing nothing most of the time. Which is great because I don't wanna.

Be on my desk all day.

Anyways, got a company to run. So let's see what happens. Okay, we go a little bit red. Still red. Okay. Comes down a little bit. Boom.

Look at that.

Hits the prior day low. Why does this happen? Okay, the reason that this happens is very, very novel. And it's something everyone understands, but they don't think about and use when they're actually trading. Instead they overcomplicate it. We care about where people are positioned without the volume profile. We know where people are positioned. We know that they're positioned somewhere in this candlesticks. What we're missing is how many people are positioned there. Okay, are most of the people positioned here or are most of the people positioned here? Or are they positioned here or here and on which days? This is really, really, really critical because when we know where people are positioned, we know when they have to make a decision. Okay. Just like you freak out when your 50k prop account starts to approach your intraday trailing or whatever, right? Or your entry, you start to freak out. The hedge funds and all these players that you think run the markets do the exact same thing, okay? The guy with a $10 million entry freaks out at the exact same time as you. And the reason he freaks out, I'll show you right here, is because when he gets this candle, okay, he goes long, right? And let's actually, let's emulate a hedge fund, okay? So he goes long with, I don't know, a thousand contracts. And he's like, cool, I can't wait to do something. Oh, crap, I'm immediately red. So he's trapped long, okay?

And he is going to, once the.

Market comes back to him, want to do something about his trade, right? And when the market finally comes back to him, they are going to be sell side aggressors.

So all the people who bought up.

Here are going to become sell side aggressors. If we go back and we look at the low that we swept, okay, right down here, and this is going to be a little hard to do on the replay. So we'll just go to this candle. All right, well, we actually need a, a lower time frame. If they went short here, okay, that means every subsequent candle after going short here, the market's going up. They're red. They are red for this entire part of the trade. And then once we get back to them after, once we sweep this price, we clean these people up, they become buy side aggressors, okay? They're marketing out of their positions. And the reason that they're doing that is that some of them are waiting to go break even. And some of them are getting antsy just like you do. And they're gonna go, well, maybe I won't get break even, maybe I should get out now. So they start hitting that market and whether it's a full position or individual lots tranches in a position, they're doing that. So that psychology exists across every single timeframe, every player in the market. People aren't nearly as sophisticated as we think they are. And we know that because we can just observe the market and see what happens around the extremes of people's positions.

Right?

We know again that people have to react. We just saw it right here. Okay, we swept this low, okay. We put in after sweeping this, the Monday low. The market is coming up a little bit now. It's ranging right now. But before fomc, which is in about an hour, you can basically anticipate that it's going to mean revert Back into here. Not to mention, I haven't talked about it in this video, but the session volume profiles themselves. Okay, we have two sessions, POCs stacked right here. 6857 is some change. Right? This session's POC and this session is point of control, right on top of each other. Most of the people for these two days exist right here. I'll say it again, it's really, really key. Most of the people for these two days exist right here. And that's why it's really powerful. So let's go ahead and see if we can find a few other examples of high volume signal candles at the edges of the auction. And we'll go back a bit to where we were just very clearly maybe uptrending or something like that.

Right.

I'm gonna look at some, some previous VAL retest as well. Okay, so here's, here's a good example. This is a different model or different entry in the VPE model, but it's something that we, we talk about quite a bit in our community. Okay, so this is the, the concept of just trading the auction and looking for these node traversals. So the market's in an uptrend. Overall, we know through observation that prior day VAL is a great entry long.

Why?

Okay, so let's get rid of the visible range VP and let's just talk about what we're actually looking at here. Okay, so the volume profile itself is a purple line. There's another purple line. There's a red line. Between the two purple lines is 70% of the participation. That's where most of the people are at the point of control is where is the actual price, where literally most of the people are. So 70% of the people are between these purple lines. And then most of the people are at the red line. Okay, so one standard deviation is 68%. You don't have to know statistics. Just understand that this is essentially one standard deviation of people. So if I had to ask myself, okay, tomorrow, where is the market most likely to interact? It's most likely to interact where people are positioned. Why? Because of what I said earlier. People have to make decisions at their basis. They do. They freak out. Either they're going to double down, they're going to, you know, which will be.

Aggressive on one side, or they're going.

To get out and get skittish. So generally you can expect this area, okay, between the VH to get interacted with in your trending markets. Okay. We should not see too much interaction below because there's not too much volume below, right within this horizontal histogram, which is just a blind profile. Cool. So let's just play that out, okay? And instead of doing four hour bars, let's do one hour, okay? So the market does a thing comes up, okay? And you can see here how if you would have longed right here, let's actually just go back a little bit. Let's imagine you go long right here. You're like, cool.

I am.

I am super confident this thing is going straight up overnight. We're just going to go long. So we go long. Dope. We're green. We're really freaking green.

Oh, no.

Oh, no. I'm freaking out. I'm freaking out. But look where it comes to. Look where it finds, okay, participation, okay? It finds participation in this previous session at the val. This is where all the people yesterday participated, okay? Then after interacting with that, it continues doing what it's doing. So instead of just immediately taking that long, okay, in this uptrend, what you can do is, right? You can just wait, okay? We'll go back to the bar. Can you say, you know what? I know in an uptrend, I want to. I want a long bal. This is our trade plan, okay? I want to long balance or do nothing.

Right?

This is how I trade in dpe. So it's going, it's going, it's going, it's going. All right, cool.

Hit my val.

We'll go long. Okay? I'll put my stop. It should not go really below yesterday's overnight and to tp. We're in an uptrend. I should be able to go for the highs, okay? I should, right? It goes boom. Easy money. So there's no reason, by the way, in a trending market not to go for the highs for your tp. If you are right, if you're doing something else, then you literally don't trust what you're seeing on the charts. You don't trust that you're actually an uptrend. You should change your thesis. Okay, so that's a very, very simple example there. Let's go to the monthly. I want to show you some magic on the monthly chart for the VP of why this system is so magic, okay? And you can kind of see my, my marks for extensions higher. And you know, we've, we've hit those. So let's add our visible range back, okay? So back at this time, okay? The market is coming off, okay. At some point and we have to ask ourselves, where is it most likely to bounce? Okay? It's Actually not going to show me the VP on that time for about 24 hours for this to load. So as we let the VP load, we need to ask ourselves, where is it most likely to bounce? Well, there's a huge amount of participation here. Everyone's watching the news or looking at the tweets that are coming out. They're trying to figure out what's going on. I'm thinking I want a long after we sweep these lows, okay.

And get close to this bracket here.

It doesn't have to be perfect because this is a massive range. I'm going for all time highs. This is 1100 points on ES, by the way. Okay. It's 50 a point. So the market's coming down. Okay, let's Change this to 4 hours again just so we're not waiting forever. Okay. Market comes down, boom. We get in there, we'll go long. Okay. My TP should just be at the highs.

Okay.

Unless I think we're going to start down trending and I'll just put it down there.

Okay.

This is a pretty fat bracket, but it's no different than trading on the daily or any other time frame. Right. And then we let it play out. You can see that we're up 24 GS. You know, it's raining, it's choppy, and there's the whole, you know, story of what's going to happen as we re approach all time highs on ES here. But this is just one contract and I imagine most of you haven't made this amount of money trading, you know, 15 contracts in whatever you're trading. This is a trade, okay? This is just one trade. Trading the volume profile, looking for that bounce out of participation because we know that people are positioned there nice, 64 GS. So that's how we trade the volume profile. I did not get that 1100 points on ES. I have though managed on NQ, you know, trading this system, catching 2000 point trades on the upside here, which is cool. In addition to a few other trades that I've taken. So that is my system in a nutshell. In a nutshell.

That's my system in a nutshell.

Thanks for watching. And yeah, shout out to Riz for do a different outro. So that's the VPE model in a nutshell.

Thanks for watching Boris.

Well, it's been absolute pleasure to break this down for us today and I thank you for that. Everyone at home, drop a comment of your biggest lesson from this episode. Any questions, drop them in the comments below. Myself and forest will check those out, but links for forest will be in the description so make sure you go check those out as well.

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