Understanding Volume Profile for Trading

Have you ever looked at the chart and wondered what is really happening behind the surface? In this video I'll show you how to uncover the hidden truth behind market moves using volume profile. We'll break down the four most important volume profile shapes which is the d-shaped profile, the p-shaped profile, the b-shaped profile and thin profile and discover what they reveal about the market sentiment, about institutional activity and most importantly about key trading opportunities which you can take advantage of. You'll learn exactly how to trade each shape of the market and how to trade the market in a different way. effectively, how to spot areas of high probability trades and how to track the footprints of big institutional traders. Plus I'll share with you my favorite trading setup. So let's get started and let's start with a little quiz so you can see where you are at right now. So here's the first question. Take a look at this profile right here and tell me is the price going to go up? or down. Let me show you. The price after a little rotation went downwards and the reason was that this profile was a B-shaped profile which is telling us that sellers are in control and that they are pushing the price downwards. Right? So let's go for the next one, for the next question. So if you spot this on the chart and you're like, oh, I'm going to go for the next one. Then, what your plan for the next day should be? What is the plan for tomorrow? What is the key area to trade from tomorrow? So... The key area to trade from here was this significant volume cluster which formed within this downtrend. This is something which is called a thin profile and those volume clusters are very important especially in thin profile and as you can see the price reacted very nicely to it. All right so that's how you trade the thin profile. Now here's the next question. If you see something like this, what should you expect the market to do tomorrow? Let me show you. Because this was a D-shaped profile you expect the market to rotate and to react to this zone and to this zone. So it should be short from here and along from here. Now here is the last one. Take a look at this volume profile, the shape of this volume profile right here. What should you expect to happen the next day? Should the price go up or should the price go down? This one is tricky. This is a tricky question. Let me show you. It was tricky because this profile corresponds with the letter P, but it is not actually a proper P-shaped profile because the price is closing below 50% of the daily range. And that's why in this case the price didn't go up as it should after a proper B-shaped profile But it went downwards Now if you guys haven't understood anything of what I just showed you then don't worry there's nothing to be afraid of you are here to learn and I'm here to help you and I can promise you that by the end of this video you'll perfectly understand what I have just showed you you'll be able to immediately put this into action. Now I haven't properly introduced myself so let me do that very briefly now. I'm Dale and I've been trading since 2008. I founded my website which is Trader Dale website around 8 years ago and on my website I teach traders how to trade with volume profile with OrdiFlow and with VWAP. I wrote four books on trading. The first one that's the the volume profile book, second one that's order flow book, then there is the view up book and book about stock investing. But the main reason why you should trust me and spend your time with me is because I deliver results and you can Check that yourself. Since 2016 I've been publishing trade predictions on TradingView. By now I have made almost 1500 predictions there. And if you go through them you'll see that in the long run my strategy has 67% win rate without any money management, position management, nor any special rules. Now, you might think that 67% win rate is not that special because many people claim claim to have more than that, right? But can you show me a person who can predict in advance where exactly the market will turn and do that consistently for 9 years? Apart from checking my trade predictions, you can also take a look at what our members have to say about our service, either on Trustpilot where we have many fantastic reviews, majority of them 5-star reviews, or if you prefer a video that then you can check out our website and some video testimonials there. Alright, still with me? So let's talk about Volume Profile. Now, Volume Profile is a professional trading tool and not many retail traders are actually using it, but many professionals do use it. And the reason it is so unique is it is allowing us to track the big trading institutions and we track them through volumes. Volume Profile is a great tool. tracks the volumes, right? And if you look at volume profile then the wider the volume profile the more everybody was interested in trading in that particular level. The volume profile can have many different shapes depending on how volumes are distributed throughout the day. And now I'd like to show you how volume profile is calculated or drawn in real time and then we'll take a closer look at the main volume profile shapes. So this is the start of the day where a new volume profile starts to calculate. The wide parts of the volume profile show where a lot of trading happened, meaning those prices had high interest, and the thin parts of the volume profile show where little trading happened, meaning those prices were not very popular. As you can see this is shifting as more and more trading is taking place. So this is how volume profile is getting formed. It can form different shapes but there are four basic shapes which are most common and now we are going to take a closer look at each one of them. So on my screen here you can see the four main shapes. The D-shaped profile corresponding with the letter D. And there is the B-shaped profile. profile which corresponds with the letter B, the P-shaped profile which looks like letter P and then there's the thin profile which looks simply like a thin profile. Now obviously the shape of the profile won't always be perfect like in the picture, right? Sometimes you'll need to use your imagination a bit to be able to tell which one of those four basic shapes of profile you are actually looking at. So let's now take a look at the four volume profile shapes, what they tell us and most importantly how we trade them. So this is the D-shaped profile and it corresponds with the letter D. It has a heavy volume zone here, usually very close to the middle and low volumes around the edges. It forms when there's a rotation and actually this is the most common volume profile because rotations happen very very often in the market. If you look at any charts, then you'll start noticing that most of the time is just rotation. I would say like maybe 70% of the time the market is in a rotation, right? And the rest is the trends and strong rejections. But most of the time, the market is in a rotation. And in the rotation, there's a D-shaped profile, right? So you'll see that mostly in a rotation and in cases where the price is going sideways. The most important places in the D-shaped profile is the point of control. That's the place where the heaviest volumes are traded. And also... those little bumps those little volume bumps in the low volume zone so those are important as well right now what the d-shaped profile is telling us about the market it can tell us two things about the market Either the market is in a balance, as you can see on this chart right here, the price is in a rotation here, in a consolidation, and there are those d-shaped profiles, right? So this is balance. Sellers and buyers are currently content with the current price. Buyers and sellers are both happy to be trading around this zone. and they consider it a fair price, right? So D-shaped profile means balance. It can also mean end or pause of a trend. So if you look here, there was an uptrend and after the uptrend a D-shaped profile formed. So buyers were no longer more aggressive than sellers. but there was a balance and this balance could mean either pause of the trend or that the trend just ended right so when you see a d-shaped profile it means the market is in balance or if this is after a trend then it is very likely that the trend has just ended or paused now how do we trade the d-shaped profile. As I was saying the main areas with the d-shaped profile is the point of control, that's the place where the heaviest volumes are traded, and then the little bumps in the low volume zone. Those volume bumps, right? Now these volume bumps represent support and resistance zones. The one at the top that's a resistance the one at the bottom that support and the price likes to react to them right so that's how you trade the d-shaped profile longs from here shorts from here and ideal take profit is the point of control in this case it is sort of hard to tell because there's heavy volume zone here and also heavy volumes on here but most often the d-shaped profile actually has the point of control somewhere around the middle and that's usually a good take profit for those traits all right so when you see a d-shaped profile then market is in a rotation and you want to go short from the higher border of the rotation and long from the bottom border of the rotation. Alright? By the way you guys can check out the volume profile book. There are more examples, more details, complete set of rules to how to trade this shape of the volume profile and also the other shapes of the volume profile. So you can download the book below this video. there's a link you can download the book for free or if you guys want a printed version then you can go to amazon and order it there. I'll drop a link below this video as well so you can check it out. All right let's go to the shapes. Here is the p-shaped profile it looks like letter p it has a heavy volume zone at the top and low volume zone at the bottom. Now it can form two ways. Either a rejection of lower prices like this, the price is going downwards, then there's a strong rejection, buyers start to jump in and push the price upwards, so this is a rejection of lower prices. Or the p-shaped profile can also form when there's an uptrend, right? Heavy volumes are shifting upwards and at the top of the profile there is this heavy volume zone. So this is how the p-shaped profile can form. The most important places in a p-shaped profile is the place where the volumes were the heaviest, that's the point of control. and also a volume bump which is created in the low volume zone. So this would be the volume bump right here. With the other example the point of control is here and in here there are more of those volume bumps. The most prominent one is this one. Then there's also this one and this one. All those could represent strong levels to trade from. Now what the p-shaped profile is telling us about the market? Again, two things. Either uptrend or end of a downtrend. So if you look in here at this picture, then if you look at the daily profiles, then they all, almost all, look like a letter p. This means that volumes are shifting higher and higher and we are in a strong uptrend. Right? Volumes are shifting. So when you see a p-shaped profile then you know that buyers are active. Now it can also mean an end of a downtrend. So if you look here there's a downtrend the price is dropping but suddenly there's a p-shaped profile. And as I was saying, P-shaped profile means buyers, right? And if you see buyers after a downtrend, then it could mean the end of the downtrend. Right? So P-shaped profile means uptrend or end of a downtrend. In either case, when you see a P-shaped profile, then it means buyers. All right? Now, let me show you how to trade the P-shaped profile. So as I was saying... saying and the two most important places in a p-shaped profile is point of control and the little volume bump in the low volume zone. So let's take a look at this p-shaped profile right here. This is the point of control so that's support. Price makes pull back to it. You go long from there. This is the trade that you take and then there is this little volume bump and this is also a support. That means when the price makes pull back to that support you go long from there, from this little volume bump. This volume bump, even though the volumes are not so heavy here, represents a place where buyers stepped in and started to buy aggressively, right? So even though the volumes are not too heavy here, that level is actually important. Now there's one thing that you need to know about the p-shaped profile. And one thing that you need to be careful about. There are two examples here. This P-shaped profile is actually not a P-shaped profile, even though it does have the similarity to the letter P, but it's not a proper P-shaped profile. The other one also looks like a letter P, but this one is a proper P-shaped profile. The reason the first one is not a proper P-shaped profile is if you look at the price, how much is the P-shaped profile? the price closed, it closed below 50% mark. 15% of the daily range, right? So if this is the daily range then the close of the day is below 50%. If the day closes like that, then this is not a proper p-shaped profile, because p-shaped profile is buyers, right? But this is not buyers. When day closes like that, it's not buyers. So when you see this, you don't trade it as a p-shaped profile. On the other hand, this one is a proper p-shaped profile, because if I draw the 50% mark here, the price closes, the day closes about. that 50% mark, right? So that's buyers. So keep this in mind, not everything that looks like a p-shaped profile actually is a p-shaped profile. Alright, let's now go for the B-shaped profile. This one is easy because it is the same thing as the P-shaped profile, only it is reversed. So let's take a closer look at it. The B-shaped profile corresponds with the letter B, like this, and it has heavy volume zone at the bottom. and low volume zone at the top. It can form two ways. Either rejection of higher prices like here or in a downtrend where the volumes are shifting lower and lower and then it forms the B-shaped profile. So this is how it can form. There are two important places in the B-shaped profile. The first one is the point of control. That's the place where the heaviest volumes were traded, so that's the point of control. And the other important place in that B-shaped profile is the little volume bump in the low volume zone. In this case it would be this. volume bump. In the second example, it would be this volume bump. Those are also important, even though the volumes are not that heavy. They are important because they signify aggressive and strong sellers. right in the first example here those volumes actually show us a place where sellers stepped in and reversed the price from uptrend to this strong self so that's why this volume bump is important in this case this volume bump is showing us a place from which the strong solo started so again aggressive bars right so that's why those small volume bumps are also important. Now what the B-shaped profile is telling us about the market. Again two things either downtrend or end of an uptrend. So when the price is dropping downwards Then what you'll very often see are B-shaped profiles, right? Volumes are shifting lower and lower. That's a downtrend. Now, you can also mean an end to an uptrend. So in this second example, there's an uptrend. But suddenly after that uptrend, there is a B-shaped profile. When you see this, when you see a B- shade profile after an uptrend then you need to be prepared the uptrend either paused for a bit or that there'll be a change of a trend in this case there was a sudden change of a trend right because b shade profile means sellers right in any case when you see a b shade profile it is sellers, right? That's important. Now how do we trade the B-shaped profile? Now as I was saying the important places in a B-shaped profile is, let me draw the profile here, the little volume bump in the low volume zone and also the point of control. So if I extend the point of control to the next day and this would be the place to go short from right? Because that was the point of control, price made a little pullback and you go short from there, from the point of control. Then there's also this little volume bump here and this also represents a strong resistance and another short when the price makes pullback to it, right? Short from here. Now as you can see I drawn the level from the beginning of that heavy volume zone. That's what I like to do. I currently like to trade from the beginning of the heavy volume zones. I'm having better results trading like that. Earlier I was trading exactly from the place where the volumes were the heaviest but I missed some trades. Like this one I would miss this one. But Right now I trade from the beginning of the heavy volume zone and I miss way less trades this way. That's how I currently trade. There's one important thing about the B-shaped profile. If you look at those two pictures, both correspond with the letter B, right? But the first one is not a B-shaped profile, not a proper B-shaped profile. The second one is. The reason is, again, if I draw a 50% mark here. daily range right 50 of the daily range then if the price is closing above that 50 mark then this is not actually a proper b-shaped profile a proper b-shaped profile closes below the 50 mark only then it signifies sellers and we can trade it as a proper b-shaped profile all right Now let's talk about the last main shape of volume profile and it is the thin profile. Looks like this. It is thin and the reason it is thin is that it forms when there is a strong trend, very strong. trend usually no pullbacks or very little pullbacks and very often those strong trends are initiated by macro news and there's no central heavy volume zone here. The reason is that when there is a strong trend like this there is simply no time for the big guys, for the big trading institutions to place their huge orders there, right? They need rotation, not a strong trend. like this. So that's why when the price shoots in one direction like this, there are not really any major heavy volume zones there, right? There are only those smaller volume bumps. Now the thin profile can either show us very, very aggressive buyers or very, very aggressive sellers, right? What is telling us about the market is simply that one side of the market, either buyers or sellers, are absolutely dominating that market, right? So in here buyers are dominating, in here sellers are dominating. Now the most important places in a thin profile are the volume bumps. If you look at this thin profile, then the volume bumps within that thin profile are those. And those are the most important places here. The reason is that they are showing us places where strong buyers who are pushing the price upwards are adding aggressively to their long positions. So that's why those work as strong supports. So if you look at this one, then there's a little pullback to it and a reaction. The way to trade the second one would be going long from here. The way to trade the third one would be going long from here. The price likes to react to those heavy volume bumps because those are aggressive buyers who are helping to push the price up first. So that's how you trade the thin profile. Now actually my favorite trading setup is based on trading the thin profile. My favorite setup is actually a combo of two trading setups. One is using the thin profile and the other setup is a price action setup. Let me show you here. It's very simple but very effective and you can find it actually pretty often. So let's first check out this thin profile here. The price was in a strong downtrend and this thin profile formed here. I would say that the most important volume clusters here were this one and this one. This one was the heaviest volume cluster but for me it was not as important as this one. Let me show you why. If you look here the price was reacting to this level in the past and also it was reacting here for the second time in here. So that means that this level in the past was a support and when the price blew past the support it turned the support into a resistance right that's the price action setup and if you look here at the same place there's also that volume cluster So those are the two setups that complement each other very nicely and both are pointing me to this resistance from which I trade my shard. All right, so what you want to see is this thin profile with significant volume cluster and at the same time something like this. The price reacting to that level and then you just trade that level from the other side like this. Okay, support turning into resistance combined with a heavy volume cluster. Very very good setup, give it a try. I'm pretty sure that you like the results. And by the way, if you guys are interested in learning exactly how I trade, in learning my strategy from A to Z, then you might want to consider joining us and becoming a member. Let me show you what you get if you become a member, alright? Just real quick. If you become a member and get our volume profile pack, then you'll get a volume profile course, which is a 15-hour long. Video course about volume profile trading where I'll teach you all my trading setups including exact steps for trade entries take profit and stop loss placement position management and money management rules. Then you'll also get my personal day trading levels which I trade every day. You'll be getting those and you can trade alongside me every day. And it's not just the intranet trading levels, it is also the swing trading levels. As I was saying you can trade those with me every day and have the same trades as I do. Now you'll also get a pack of volume profile indicators for various trading platforms like TradingView, NinjaTrader or MetaTrader platform and also my custom made view up indicator. At top of all that you also get free tech support which means that one of our tech guys will connect to your computer and he'll set everything up for you so he will download the NinjaTrader 8 platform, he'll install my indicators, he will create exact workspaces as I do, he'll connect you to data, he'll you'll have it in no time so you can focus on trading instead of setting everything up. All right so that's the volume profile pack you can get that on my website and let us move on a bit and let's do a little recap of what I just showed you about the four basic volume profile shapes. So we have a D-shaped profile which stands for balanced market. looks like letter D. Then we have a B-shaped profile which signifies strong sellers are present in the market. Then we have a P-shaped profile which indicates buyers are present. And then we have a thin profile which indicates very very strong trend. Now let's do a one more little quiz so we can see whether you can apply the things which you've learned today. Alright? So let's start with this one. Take a look at the shape of the volume profile here. This volume profile and tell me where the price is going to go the next day. up or down This one is pretty easy, right? This one was a B-shaped profile and now you know that B-shaped profile stands for sellers and that the price should go downwards. Important areas to trade in the B-shaped profile would be the point of control, So this would be the first resistance zone. Then there are also those two little volume bumps. So this one would be another resistance zone. And this one would be another resistance zone. All right, now let's go for the next question. Take a look here and tell me what do you do next? What's your plan for the next day? So, this was a D-shaped profile with important zones, important volume clusters in here and in here. So, when you see a D-shaped profile, you should anticipate that the market will be rotating and reacting. to those volume clusters here, right? So those two represent strong levels to trade from. This one is a resistance, that means short from here, and this one is a support, and that means long from there. Alright? Now let's go for the next one. Take a look here. Right here you can see a pretty massive sell-off, right? But you want to look at what happened before that, right? I want you to tell me what you should expect after this strong sell-off here. Should the price go up or down? Let me show you. In here there was the thin profile, right? And within the thin profile there was this significant volume cluster right here. As you now know this represents a strong support because when the price was going higher and higher this was the place where buyers were active adding to the long positions, right? So this is a support. Even though the price is dropping very very aggressively, buyers should step in and push the price upwards from there again. Right? Like this. So this would actually be a pretty good long trade but only if this wasn't caused by strong macro news. If there is a strong macro news you don't want to trade against that, right? But if this wasn't a macro news spike then it would be okay to enter a long because of this, because of the thin profile and the significant volume cluster within the thin profile. Alright, now here's the last one. There was an uptrend but now the price is dropping. So it looks like the uptrend is over and my question here is what you should do next? What should be the plan for the next day? What do you do? Up or down? Well, since we have a B-shaped profile here, with a massive point of control right here, it shows a significant support. So even though the price is dropping there's a solid chance that the price will reverse because of this strong v-shaped profile and because of the point of control here right. As you can see the price reacted very nicely to it and looks like it continued with that in that uptrend. Now let me guys give you a couple of useful points before we wrap the video up. The first point is about the charting platform which I use. It is the NinjaTrader8 platform. Here is the link. It is a free platform. They also have a paid version of the platform but you don't need that. All the features that you are going to need are in the free platform. I too use the free platform so it's fine to use it. Don't need to pay anything here. You can connect it to free FXCM data. This is a very good data, especially if you trade Forex. So connect it to FXCM data. And as I was saying, I use it only for analysis or for charting, right? I trade with a broker, which is called IC Markets. So I don't place the orders in Ninja Trader, but I place it with my broker. IC Markets is a very good broker. I've been trading with them for like 10 years. They are reliable, they have very tight spreads, fast execution, they have low commissions and all that helps with intraday trading. Because when you are doing intraday trades, you need to be fast and you need the trading to be cheap, which means tight spreads and low commissions. I see markets have it, so they are very good for intraday trading. Also, they are very good for swing trading, they have many trading instruments available, so everybody can find what they need. they need. Now I think that at this point we've covered everything that we needed to cover so I hope you guys liked the video, I hope you found it useful. If you have any questions then here's my email address, shoot me a message and I'll be happy to help. Alright, so I'm looking forward to seeing you next time hopefully in the members area and until then happy trading!

effectively, how to spot areas of high probability trades and how to track the footprints of big institutional traders. Plus I'll share with you my favorite trading setup. So let's get started and let's start with a little quiz so you can see where you are at right now.

So here's the first question. Take a look at this profile right here and tell me is the price going to go up? or down. Let me show you.

The price after a little rotation went downwards and the reason was that this profile was a B-shaped profile which is telling us that sellers are in control and that they are pushing the price downwards. Right? So let's go for the next one, for the next question.

So if you spot this on the chart and you're like, oh, I'm going to go for the next one. Then, what your plan for the next day should be? What is the plan for tomorrow?

What is the key area to trade from tomorrow? So... The key area to trade from here was this significant volume cluster which formed within this downtrend.

This is something which is called a thin profile and those volume clusters are very important especially in thin profile and as you can see the price reacted very nicely to it. All right so that's how you trade the thin profile. Now here's the next question. If you see something like this, what should you expect the market to do tomorrow? Let me show you.

Because this was a D-shaped profile you expect the market to rotate and to react to this zone and to this zone. So it should be short from here and along from here. Now here is the last one.

Take a look at this volume profile, the shape of this volume profile right here. What should you expect to happen the next day? Should the price go up or should the price go down? This one is tricky. This is a tricky question.

Let me show you. It was tricky because this profile corresponds with the letter P, but it is not actually a proper P-shaped profile because the price is closing below 50% of the daily range. And that's why in this case the price didn't go up as it should after a proper B-shaped profile But it went downwards Now if you guys haven't understood anything of what I just showed you then don't worry there's nothing to be afraid of you are here to learn and I'm here to help you and I can promise you that by the end of this video you'll perfectly understand what I have just showed you you'll be able to immediately put this into action.

Now I haven't properly introduced myself so let me do that very briefly now. I'm Dale and I've been trading since 2008. I founded my website which is Trader Dale website around 8 years ago and on my website I teach traders how to trade with volume profile with OrdiFlow and with VWAP. I wrote four books on trading. The first one that's the the volume profile book, second one that's order flow book, then there is the view up book and book about stock investing.

But the main reason why you should trust me and spend your time with me is because I deliver results and you can Check that yourself. Since 2016 I've been publishing trade predictions on TradingView. By now I have made almost 1500 predictions there.

And if you go through them you'll see that in the long run my strategy has 67% win rate without any money management, position management, nor any special rules. Now, you might think that 67% win rate is not that special because many people claim claim to have more than that, right? But can you show me a person who can predict in advance where exactly the market will turn and do that consistently for 9 years? Apart from checking my trade predictions, you can also take a look at what our members have to say about our service, either on Trustpilot where we have many fantastic reviews, majority of them 5-star reviews, or if you prefer a video that then you can check out our website and some video testimonials there. Alright, still with me?

So let's talk about Volume Profile. Now, Volume Profile is a professional trading tool and not many retail traders are actually using it, but many professionals do use it. And the reason it is so unique is it is allowing us to track the big trading institutions and we track them through volumes. Volume Profile is a great tool. tracks the volumes, right?

And if you look at volume profile then the wider the volume profile the more everybody was interested in trading in that particular level. The volume profile can have many different shapes depending on how volumes are distributed throughout the day. And now I'd like to show you how volume profile is calculated or drawn in real time and then we'll take a closer look at the main volume profile shapes. So this is the start of the day where a new volume profile starts to calculate.

The wide parts of the volume profile show where a lot of trading happened, meaning those prices had high interest, and the thin parts of the volume profile show where little trading happened, meaning those prices were not very popular. As you can see this is shifting as more and more trading is taking place. So this is how volume profile is getting formed.

It can form different shapes but there are four basic shapes which are most common and now we are going to take a closer look at each one of them. So on my screen here you can see the four main shapes. The D-shaped profile corresponding with the letter D. And there is the B-shaped profile. profile which corresponds with the letter B, the P-shaped profile which looks like letter P and then there's the thin profile which looks simply like a thin profile.

Now obviously the shape of the profile won't always be perfect like in the picture, right? Sometimes you'll need to use your imagination a bit to be able to tell which one of those four basic shapes of profile you are actually looking at. So let's now take a look at the four volume profile shapes, what they tell us and most importantly how we trade them.

So this is the D-shaped profile and it corresponds with the letter D. It has a heavy volume zone here, usually very close to the middle and low volumes around the edges. It forms when there's a rotation and actually this is the most common volume profile because rotations happen very very often in the market. If you look at any charts, then you'll start noticing that most of the time is just rotation.

I would say like maybe 70% of the time the market is in a rotation, right? And the rest is the trends and strong rejections. But most of the time, the market is in a rotation. And in the rotation, there's a D-shaped profile, right? So you'll see that mostly in a rotation and in cases where the price is going sideways.

The most important places in the D-shaped profile is the point of control. That's the place where the heaviest volumes are traded. And also...

those little bumps those little volume bumps in the low volume zone so those are important as well right now what the d-shaped profile is telling us about the market it can tell us two things about the market Either the market is in a balance, as you can see on this chart right here, the price is in a rotation here, in a consolidation, and there are those d-shaped profiles, right? So this is balance. Sellers and buyers are currently content with the current price.

Buyers and sellers are both happy to be trading around this zone. and they consider it a fair price, right? So D-shaped profile means balance. It can also mean end or pause of a trend.

So if you look here, there was an uptrend and after the uptrend a D-shaped profile formed. So buyers were no longer more aggressive than sellers. but there was a balance and this balance could mean either pause of the trend or that the trend just ended right so when you see a d-shaped profile it means the market is in balance or if this is after a trend then it is very likely that the trend has just ended or paused now how do we trade the d-shaped profile.

As I was saying the main areas with the d-shaped profile is the point of control, that's the place where the heaviest volumes are traded, and then the little bumps in the low volume zone. Those volume bumps, right? Now these volume bumps represent support and resistance zones.

The one at the top that's a resistance the one at the bottom that support and the price likes to react to them right so that's how you trade the d-shaped profile longs from here shorts from here and ideal take profit is the point of control in this case it is sort of hard to tell because there's heavy volume zone here and also heavy volumes on here but most often the d-shaped profile actually has the point of control somewhere around the middle and that's usually a good take profit for those traits all right so when you see a d-shaped profile then market is in a rotation and you want to go short from the higher border of the rotation and long from the bottom border of the rotation. Alright? By the way you guys can check out the volume profile book.

There are more examples, more details, complete set of rules to how to trade this shape of the volume profile and also the other shapes of the volume profile. So you can download the book below this video. there's a link you can download the book for free or if you guys want a printed version then you can go to amazon and order it there. I'll drop a link below this video as well so you can check it out.

All right let's go to the shapes. Here is the p-shaped profile it looks like letter p it has a heavy volume zone at the top and low volume zone at the bottom. Now it can form two ways.

Either a rejection of lower prices like this, the price is going downwards, then there's a strong rejection, buyers start to jump in and push the price upwards, so this is a rejection of lower prices. Or the p-shaped profile can also form when there's an uptrend, right? Heavy volumes are shifting upwards and at the top of the profile there is this heavy volume zone. So this is how the p-shaped profile can form.

The most important places in a p-shaped profile is the place where the volumes were the heaviest, that's the point of control. and also a volume bump which is created in the low volume zone. So this would be the volume bump right here. With the other example the point of control is here and in here there are more of those volume bumps. The most prominent one is this one.

Then there's also this one and this one. All those could represent strong levels to trade from. Now what the p-shaped profile is telling us about the market? Again, two things.

Either uptrend or end of a downtrend. So if you look in here at this picture, then if you look at the daily profiles, then they all, almost all, look like a letter p. This means that volumes are shifting higher and higher and we are in a strong uptrend.

Right? Volumes are shifting. So when you see a p-shaped profile then you know that buyers are active. Now it can also mean an end of a downtrend.

So if you look here there's a downtrend the price is dropping but suddenly there's a p-shaped profile. And as I was saying, P-shaped profile means buyers, right? And if you see buyers after a downtrend, then it could mean the end of the downtrend.

Right? So P-shaped profile means uptrend or end of a downtrend. In either case, when you see a P-shaped profile, then it means buyers. All right?

Now, let me show you how to trade the P-shaped profile. So as I was saying... saying and the two most important places in a p-shaped profile is point of control and the little volume bump in the low volume zone. So let's take a look at this p-shaped profile right here.

This is the point of control so that's support. Price makes pull back to it. You go long from there. This is the trade that you take and then there is this little volume bump and this is also a support.

That means when the price makes pull back to that support you go long from there, from this little volume bump. This volume bump, even though the volumes are not so heavy here, represents a place where buyers stepped in and started to buy aggressively, right? So even though the volumes are not too heavy here, that level is actually important.

Now there's one thing that you need to know about the p-shaped profile. And one thing that you need to be careful about. There are two examples here.

This P-shaped profile is actually not a P-shaped profile, even though it does have the similarity to the letter P, but it's not a proper P-shaped profile. The other one also looks like a letter P, but this one is a proper P-shaped profile. The reason the first one is not a proper P-shaped profile is if you look at the price, how much is the P-shaped profile?

the price closed, it closed below 50% mark. 15% of the daily range, right? So if this is the daily range then the close of the day is below 50%.

If the day closes like that, then this is not a proper p-shaped profile, because p-shaped profile is buyers, right? But this is not buyers. When day closes like that, it's not buyers. So when you see this, you don't trade it as a p-shaped profile. On the other hand, this one is a proper p-shaped profile, because if I draw the 50% mark here, the price closes, the day closes about.

that 50% mark, right? So that's buyers. So keep this in mind, not everything that looks like a p-shaped profile actually is a p-shaped profile. Alright, let's now go for the B-shaped profile. This one is easy because it is the same thing as the P-shaped profile, only it is reversed.

So let's take a closer look at it. The B-shaped profile corresponds with the letter B, like this, and it has heavy volume zone at the bottom. and low volume zone at the top. It can form two ways.

Either rejection of higher prices like here or in a downtrend where the volumes are shifting lower and lower and then it forms the B-shaped profile. So this is how it can form. There are two important places in the B-shaped profile. The first one is the point of control.

That's the place where the heaviest volumes were traded, so that's the point of control. And the other important place in that B-shaped profile is the little volume bump in the low volume zone. In this case it would be this. volume bump. In the second example, it would be this volume bump.

Those are also important, even though the volumes are not that heavy. They are important because they signify aggressive and strong sellers. right in the first example here those volumes actually show us a place where sellers stepped in and reversed the price from uptrend to this strong self so that's why this volume bump is important in this case this volume bump is showing us a place from which the strong solo started so again aggressive bars right so that's why those small volume bumps are also important.

Now what the B-shaped profile is telling us about the market. Again two things either downtrend or end of an uptrend. So when the price is dropping downwards Then what you'll very often see are B-shaped profiles, right? Volumes are shifting lower and lower.

That's a downtrend. Now, you can also mean an end to an uptrend. So in this second example, there's an uptrend.

But suddenly after that uptrend, there is a B-shaped profile. When you see this, when you see a B- shade profile after an uptrend then you need to be prepared the uptrend either paused for a bit or that there'll be a change of a trend in this case there was a sudden change of a trend right because b shade profile means sellers right in any case when you see a b shade profile it is sellers, right? That's important.

Now how do we trade the B-shaped profile? Now as I was saying the important places in a B-shaped profile is, let me draw the profile here, the little volume bump in the low volume zone and also the point of control. So if I extend the point of control to the next day and this would be the place to go short from right? Because that was the point of control, price made a little pullback and you go short from there, from the point of control. Then there's also this little volume bump here and this also represents a strong resistance and another short when the price makes pullback to it, right?

Short from here. Now as you can see I drawn the level from the beginning of that heavy volume zone. That's what I like to do.

I currently like to trade from the beginning of the heavy volume zones. I'm having better results trading like that. Earlier I was trading exactly from the place where the volumes were the heaviest but I missed some trades.

Like this one I would miss this one. But Right now I trade from the beginning of the heavy volume zone and I miss way less trades this way. That's how I currently trade. There's one important thing about the B-shaped profile. If you look at those two pictures, both correspond with the letter B, right?

But the first one is not a B-shaped profile, not a proper B-shaped profile. The second one is. The reason is, again, if I draw a 50% mark here. daily range right 50 of the daily range then if the price is closing above that 50 mark then this is not actually a proper b-shaped profile a proper b-shaped profile closes below the 50 mark only then it signifies sellers and we can trade it as a proper b-shaped profile all right Now let's talk about the last main shape of volume profile and it is the thin profile. Looks like this.

It is thin and the reason it is thin is that it forms when there is a strong trend, very strong. trend usually no pullbacks or very little pullbacks and very often those strong trends are initiated by macro news and there's no central heavy volume zone here. The reason is that when there is a strong trend like this there is simply no time for the big guys, for the big trading institutions to place their huge orders there, right?

They need rotation, not a strong trend. like this. So that's why when the price shoots in one direction like this, there are not really any major heavy volume zones there, right? There are only those smaller volume bumps. Now the thin profile can either show us very, very aggressive buyers or very, very aggressive sellers, right?

What is telling us about the market is simply that one side of the market, either buyers or sellers, are absolutely dominating that market, right? So in here buyers are dominating, in here sellers are dominating. Now the most important places in a thin profile are the volume bumps.

If you look at this thin profile, then the volume bumps within that thin profile are those. And those are the most important places here. The reason is that they are showing us places where strong buyers who are pushing the price upwards are adding aggressively to their long positions.

So that's why those work as strong supports. So if you look at this one, then there's a little pullback to it and a reaction. The way to trade the second one would be going long from here. The way to trade the third one would be going long from here.

The price likes to react to those heavy volume bumps because those are aggressive buyers who are helping to push the price up first. So that's how you trade the thin profile. Now actually my favorite trading setup is based on trading the thin profile. My favorite setup is actually a combo of two trading setups.

One is using the thin profile and the other setup is a price action setup. Let me show you here. It's very simple but very effective and you can find it actually pretty often.

So let's first check out this thin profile here. The price was in a strong downtrend and this thin profile formed here. I would say that the most important volume clusters here were this one and this one. This one was the heaviest volume cluster but for me it was not as important as this one.

Let me show you why. If you look here the price was reacting to this level in the past and also it was reacting here for the second time in here. So that means that this level in the past was a support and when the price blew past the support it turned the support into a resistance right that's the price action setup and if you look here at the same place there's also that volume cluster So those are the two setups that complement each other very nicely and both are pointing me to this resistance from which I trade my shard.

All right, so what you want to see is this thin profile with significant volume cluster and at the same time something like this. The price reacting to that level and then you just trade that level from the other side like this. Okay, support turning into resistance combined with a heavy volume cluster. Very very good setup, give it a try.

I'm pretty sure that you like the results. And by the way, if you guys are interested in learning exactly how I trade, in learning my strategy from A to Z, then you might want to consider joining us and becoming a member. Let me show you what you get if you become a member, alright? Just real quick.

If you become a member and get our volume profile pack, then you'll get a volume profile course, which is a 15-hour long. Video course about volume profile trading where I'll teach you all my trading setups including exact steps for trade entries take profit and stop loss placement position management and money management rules. Then you'll also get my personal day trading levels which I trade every day. You'll be getting those and you can trade alongside me every day. And it's not just the intranet trading levels, it is also the swing trading levels.

As I was saying you can trade those with me every day and have the same trades as I do. Now you'll also get a pack of volume profile indicators for various trading platforms like TradingView, NinjaTrader or MetaTrader platform and also my custom made view up indicator. At top of all that you also get free tech support which means that one of our tech guys will connect to your computer and he'll set everything up for you so he will download the NinjaTrader 8 platform, he'll install my indicators, he will create exact workspaces as I do, he'll connect you to data, he'll you'll have it in no time so you can focus on trading instead of setting everything up.

All right so that's the volume profile pack you can get that on my website and let us move on a bit and let's do a little recap of what I just showed you about the four basic volume profile shapes. So we have a D-shaped profile which stands for balanced market. looks like letter D.

Then we have a B-shaped profile which signifies strong sellers are present in the market. Then we have a P-shaped profile which indicates buyers are present. And then we have a thin profile which indicates very very strong trend.

Now let's do a one more little quiz so we can see whether you can apply the things which you've learned today. Alright? So let's start with this one.

Take a look at the shape of the volume profile here. This volume profile and tell me where the price is going to go the next day. up or down This one is pretty easy, right? This one was a B-shaped profile and now you know that B-shaped profile stands for sellers and that the price should go downwards. Important areas to trade in the B-shaped profile would be the point of control, So this would be the first resistance zone.

Then there are also those two little volume bumps. So this one would be another resistance zone. And this one would be another resistance zone. All right, now let's go for the next question.

Take a look here and tell me what do you do next? What's your plan for the next day? So, this was a D-shaped profile with important zones, important volume clusters in here and in here. So, when you see a D-shaped profile, you should anticipate that the market will be rotating and reacting. to those volume clusters here, right?

So those two represent strong levels to trade from. This one is a resistance, that means short from here, and this one is a support, and that means long from there. Alright?

Now let's go for the next one. Take a look here. Right here you can see a pretty massive sell-off, right? But you want to look at what happened before that, right? I want you to tell me what you should expect after this strong sell-off here.

Should the price go up or down? Let me show you. In here there was the thin profile, right? And within the thin profile there was this significant volume cluster right here. As you now know this represents a strong support because when the price was going higher and higher this was the place where buyers were active adding to the long positions, right?

So this is a support. Even though the price is dropping very very aggressively, buyers should step in and push the price upwards from there again. Right?

Like this. So this would actually be a pretty good long trade but only if this wasn't caused by strong macro news. If there is a strong macro news you don't want to trade against that, right?

But if this wasn't a macro news spike then it would be okay to enter a long because of this, because of the thin profile and the significant volume cluster within the thin profile. Alright, now here's the last one. There was an uptrend but now the price is dropping. So it looks like the uptrend is over and my question here is what you should do next?

What should be the plan for the next day? What do you do? Up or down? Well, since we have a B-shaped profile here, with a massive point of control right here, it shows a significant support. So even though the price is dropping there's a solid chance that the price will reverse because of this strong v-shaped profile and because of the point of control here right.

As you can see the price reacted very nicely to it and looks like it continued with that in that uptrend. Now let me guys give you a couple of useful points before we wrap the video up. The first point is about the charting platform which I use.

It is the NinjaTrader8 platform. Here is the link. It is a free platform.

They also have a paid version of the platform but you don't need that. All the features that you are going to need are in the free platform. I too use the free platform so it's fine to use it.

Don't need to pay anything here. You can connect it to free FXCM data. This is a very good data, especially if you trade Forex.

So connect it to FXCM data. And as I was saying, I use it only for analysis or for charting, right? I trade with a broker, which is called IC Markets. So I don't place the orders in Ninja Trader, but I place it with my broker. IC Markets is a very good broker.

I've been trading with them for like 10 years. They are reliable, they have very tight spreads, fast execution, they have low commissions and all that helps with intraday trading. Because when you are doing intraday trades, you need to be fast and you need the trading to be cheap, which means tight spreads and low commissions.

I see markets have it, so they are very good for intraday trading. Also, they are very good for swing trading, they have many trading instruments available, so everybody can find what they need. they need.

Now I think that at this point we've covered everything that we needed to cover so I hope you guys liked the video, I hope you found it useful. If you have any questions then here's my email address, shoot me a message and I'll be happy to help. Alright, so I'm looking forward to seeing you next time hopefully in the members area and until then happy trading!

Transcript for:Understanding Volume Profile for Trading

Transcript for:
Understanding Volume Profile for Trading