Most traders lose money by averaging down in the middle of a range. Use volume profile to find value area high and low, enter aggressively on absorption, then take profit at the midpoint and value area end. Move stops to breakeven after confirmation.
And that's where I think a lot of traders get trapped when they trade the middle of the range. This is your volume profile. This is the volume cluster you built. That's your value area high. And then this is your value area low. I'm going to have a tight stop. I'm going to know if I'm wrong quickly. There's two different ways you can do this. This is aggressive entry. And if I really like to trade and I see a lot of absorption, what I would do is enter here. And then if it comes back down and it comes here, rejects, I would add here, average up. This is a common misconception. A lot of traders average down. You should be averaging up, adding to a winning position when you get that confirmation. Either you can add here, this aggressive entry, or if you're already in, you can average in in and potentially move your stop here. This would be your breakeven and you're out for breakeven because you could be wrong here. Or this could be your first entry because now you have confirmation. You try to break out, potentially trapping buyers here, and what you would target is the middle point as your first TP and then the end of the value area.
