Uncovering Market Moves with Volume Profile

Introduction

• Overview of how to use volume profile to understand market moves.
• Discussion of four main volume profile shapes: D-shaped, P-shaped, B-shaped, and Thin profile.
• Importance of volume profile for identifying market sentiment, institutional activity, and trading opportunities.

Quiz and Practical Examples

Question 1: B-shaped Profile

• Profile Shape: B-shaped
• Market Sentiment: Sellers in control; price likely to go down.

Question 2: Trading Plan for Thin Profile

• Key Area: Significant volume cluster in downtrend.
• Plan: Trade from volume cluster where price reacted positively.

Question 3: D-shaped Profile

• Profile Shape: D-shaped
• Expectations: Market likely to rotate; key areas identified for trading.

Question 4: P-shaped Profile

• Profile Shape: P-shaped but not proper due to closing below 50% of daily range.
• Outcome: Price likely to go down despite typical expectations.

Instructor Introduction

• Instructor: Dale, trading since 2008.
• Website: Trader Dale; focuses on volume profile and order flow.
• Publications: Four books including:
  • Volume Profile Book
  • Order Flow Book
  • VWAP Book
  • Stock Investing Book
• Trading Predictions: Nearly 1500 predictions made on TradingView since 2016, with a 67% win rate.

Understanding Volume Profile

• Purpose: A tool to track big trading institutions through volumes.
• Shapes of Volume Profile:
  • D-shaped
  • P-shaped
  • B-shaped
  • Thin profile
• Calculation of Volume Profile:
  • Starts at the beginning of the day.
  • Wider profiles indicate high trading interest; thin profiles indicate low interest.

Volume Profile Shapes Explained

D-shaped Profile

• Characteristics: Heavy volume in the center, low volume at the edges.
• Market Sentiment: Indicates balance; often occurs during market rotation.
• Trading Strategy:
  • Longs: From lower volume areas.
  • Shorts: From upper volume areas.
  • Take Profit: Aim for the point of control.

P-shaped Profile

• Characteristics: Heavy volume at the top, low at the bottom.
• Market Sentiment: Indicates uptrend or end of downtrend.
• Trading Strategy:
  • Longs: From point of control and volume bumps.
  • Caution: Not all P-shaped profiles indicate strong buying; check closing price.

B-shaped Profile

• Characteristics: Heavy volume at the bottom, low at the top.
• Market Sentiment: Indicates downtrend or potential end of uptrend.
• Trading Strategy:
  • Shorts: From point of control and volume bumps.
  • Caution: Ensure proper B-shaped profile by checking the closing price.

Thin Profile

• Characteristics: Formed during strong trends; little to no pullbacks.
• Market Sentiment: Indicates dominance by either buyers or sellers.
• Trading Strategy:
  • Longs: From volume bumps during uptrends.
  • Caution: Be wary of macro news affecting price behavior.

Favorite Trading Setup

• Strategy: Combines thin profile trading with price action setup.
• Execution: Look for significant volume cluster near previous support/resistance levels.

Membership Offer

• Volume Profile Pack: Includes 15-hour video course, daily trading levels, indicators, and tech support.
• Platforms: Recommended NinjaTrader 8 for analysis and IC Markets for trading.

Conclusion

• Recap of Volume Profile Shapes:
  • D-shaped: Balanced market
  • B-shaped: Sellers present
  • P-shaped: Buyers present
  • Thin profile: Strong trends
• Encouragement to practice trading strategies discussed.