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Is the Bitcoin market bearish?📊 Bitcoin Market Psychology Analysis Market psychology analysis is one of the most fascinating and practical approaches to understanding Bitcoin's current position! 🎯 🎭 Market Psychology Cycle Phases: 1. Hope Phase 🟦 Likely the current point for many assets · 📈 Description: After a panic-driven crash, the market stabilizes and consolidates within a relatively stable range · 💰 Price hasn't returned to previous lows and shows occasional small positive breakouts · 😌 Sentiment: Fatigue from the downturn, but quiet hope for gradual improvement · 👴 Experienced investors accumulate while newcomers remain cautious · 📊 Indicator: Moderate trading volume typically 2. Optimism & Belief Phase 🟩 · 🚀 Description: Price begins breaking key resistance levels · 📰 Media gradually starts paying attention again · 😨 Sentiment: FOMO (Fear Of Missing Out) among experienced investors · 😞 Regret over selling at the bottom · 📈 Indicator: Beginning of increasing trading volume 3. Greed & Euphoria Phase 🟨 · 📈 Description: Full-blown bullish phase - price rises consistently and rapidly · 🗞️ Positive news dominates everywhere · 👥 Friends and acquaintances talk about massive profits · 💭 Sentiment: Belief that "this time it's different" and "price only goes up" · 💸 Greed for more profits and borrowing to buy · 📊 Indicator: Very high trading volume and positive media coverage 4. Denial Phase 🟧 - Danger Point! · 📉 Description: Price falls from the peak · 🤦 Many investors consider this just a "temporary correction" · 🔮 Expect a return to the peak · ❌ Sentiment: Strong denial · 🛒 Buying during the decline hoping for recovery · 📊 Indicator: Trading volume remains high 5. Fear, Panic & Capitulation Phase 🟥 · 🚨 Description: Sharp and rapid decline · 📉 Price experiences consecutive breakdowns · 😱 Sentiment: Intense fear, panic selling · 💔 Acceptance of heavy losses - absolute despair · 📊 Indicator: Very high selling volume 6. Apathy & Depression Phase ⬜ · 😴 Description: Market remains stagnant with low volatility for extended periods · 💤 Prices are low and boring · 🚫 Sentiment: Complete disinterest in the market · 👋 Most people have accepted defeat and exited the market · ☠️ Talk of "Bitcoin's death" resurfaces · 📊 Indicator: Very low trading volume and minimal media attention --- 💡 Golden Insight: Understanding these phases can help you make the best trading decisions! ✨ --- 📌 Market Psychology + Technical Analysis = Trading Success 🚀 --- 💬 Let's Interact! I'd love to hear your thoughts! 👇 · 🤔 Which phase do you think we're currently in? · 📊 What's your market outlook for the coming months? · 💭 Share your technical analysis perspective · 🎯 Have you used market psychology in your trading strategy? · 📉 What indicators do you find most reliable? · 💡 Any successful trades based on market sentiment? · 🔮 Where do you see Bitcoin in the next 6 months? Let's learn from each other! Share your comments and analysis below 👇 Your experience and insights are valuable - let's build our trading knowledge together! 🌟 Feel free to ask any questions or share your trading experiences! 💪
Education
by Hosseincryptoorg
GameStop and Fibonacci: It's About TimeThis is my first attempt at publishing a video on TradingView, so hopefully it works. I wanted to put together something educational about fib channels and why I like to use them. They're not a silver bullet, but they do tell you a lot about where to expect support and resistance because the chart has a very good memory, and you can see this play out on pretty much any instrument, including cryptocurrencies. I follow NYSE:GME closer than any other ticker, so this video is about my philosophy on the fib channels that I have been using on the GME chart and talking about on the Echo Chamber Podcast. Hopefully this adds a little more context to that discussion, how the flat price levels are not always the only thing that matters, but taking time-based trends into account can make a big difference in your analysis and understanding of price movement. Happy to hear people's thoughts on my crayons 🖍️ which color should I eat next? Since this is a bit of a longer video, here's an AI summary of the content with timestamps: Introduction 00:00-01:05 I introduce the topic of explaining my TradingView chart, which has many colorful lines. I clarify that I didn't manually draw all the lines, but used Fibonacci channels that only require selecting 3 points. Explaining Current Chart 01:05-04:33 I show my current GameStop chart, explaining various trend lines and Fibonacci channels. I demonstrate how to adjust the Fibonacci channel points to analyze different price movements. Fresh Chart Walkthrough 04:33-11:57 Moving to a clean chart, I explain global chart items, including trend lines from major tops and bottoms. I discuss dividend-adjusted vs non-adjusted charts and explain the "Gandalf line" of support. Fibonacci Channels Explanation 11:57-24:54 I provide a detailed explanation of how Fibonacci channels work, demonstrating how to draw them and interpret the resulting lines. I show how these channels can describe price action across long time periods. Additional Examples 24:54-33:44 I show more examples of Fibonacci channels applied to GameStop's entire price history. I discuss how these channels can provide insight into potential future price movements and support/resistance levels. Conclusion 33:44-34:40 I summarize my thoughts on GameStop's current price action in relation to the Fibonacci channels and support levels identified. Some Quotes "I find them mathematically interesting." 11:54 - Referring to trend-based Fibonacci tools. "Math is your friend here. But you don't have to do the math, you just can use tools that will help you." 17:19 "Price is fractal in nature in that patterns are repeating and Fibonacci is everywhere." 17:19 "Things like history repeats itself. It's just a question of when, not if." 24:30 "The point I want to drive home here is that when we start to get a little bit more granular here, and this is why I have lots of crayons on my chart." 28:34 Key Tips/Concepts Fibonacci channels can be powerful tools for technical analysis, providing insight into potential support and resistance levels. These channels can sometimes describe price action across very long time periods, even when drawn based on recent price movements with thoughtfully selected endpoints. The importance of considering price, time, and volume in technical analysis, as demonstrated by the "Gandalf line". The value of using multiple timeframes and chart types (dividend-adjusted vs non-adjusted, trading hours only vs extended hours included) to gain a more complete picture of a stock's price history. (Editorial note: something I didn't cover in the video, but the difference between log scale and linear scale sometimes will make for an interesting story on trendlines and fib channels too. I prefer to keep my chart in log scale, but will toggle between log and linear occasionally to see if there's something interesting there in the lines already drawn.) The concept of fractal nature in price movements and how patterns tend to repeat over time.
NYSE:GMEEducation
by BoilerPaulie
7
Liquidity Voids: Where Price Runs Through Empty Space█ Liquidity Voids: Where Price Runs Through Empty Space Big moves don’t just “happen”, they happen because either buyers or sellers step aside and let price run. A liquidity void is what’s left behind when that happens: an area on the chart where price traded with very little volume, leaving a ‘hole’ in market participation. This is not just another fair value gap. A typical FVG can form on normal volume during strong momentum. A liquidity void specifically signals a displacement under thin conditions, meaning the move was too easy, and price often comes back to check that area later. █ What Exactly Is a Liquidity Void? Think of the order book as a ladder of bids and asks. Normally, price moves step by step as orders fill at each level. But when there aren’t enough orders (low liquidity), price jumps levels and that jump is your void. On a chart, it shows up as: A large, one-directional candle with very small or no wicks overlapping neighbors. Little or no volume relative to the move’s size (thin participation). Price displacement that looks almost “too clean” — no hesitation, just a straight run. These clues tell you price didn’t just move on heavy buying/selling, it moved through empty space. ⚪ Liquidity Void Detector Use this free Liquidity Void Detector indicator to spot liquidity voids. It signals when the market makes a relatively sharp move on comparatively low volume, helping you spot these voids in real time. █ Why Low Volume Matters ⚪ Not All Gaps Are Voids A fair value gap can form on high participation, think of a breakout candle with heavy volume and institutional backing. That’s an accepted price move. ⚪ Voids Are Different A liquidity void happens when the market skips prices because there was no one there to trade. It’s an inefficient move that the market often wants to revisit and “fill in” once participation returns. ⚪ Volume as the Filter When volume is below its own average (or below a trend baseline), it tells you this wasn’t a “healthy” move, it was a thin-book displacement. █ How Traders Use This ⚪ Mark the Zone Draw the high and low of the candle(s) that created the void. This is your “inefficiency zone.” ⚪ Wait for the Return Voids often act like magnets. Price often reverses and retests or fills the void, but it can just as easily slice through the zone once revisited, as thin liquidity offers little resistance. █ What Research Show Academic studies on price gaps find that immediate fills are rare, but the probability of fill rises over time. Downward voids (panic selling) fill faster on average than upward voids. Crypto traders track CME Bitcoin gaps and report over 80–90% eventually get filled, but timing is unpredictable. Volume-adjusted strategies outperform simple gap-filling because they focus on inefficient moves, not every gap. The key is filtering for thin participation. █ Bottom Line Liquidity voids are not just gaps, they are evidence of skipped prices under low participation. They tell you where price moved “too easily,” leaving behind unfinished business. Learn to filter for low-volume displacements, mark those zones, and watch how often price comes back to rebalance them. This turns a random candle into a predictive level, one that can guide your mean reversion trades or act as a support/resistance flip in trending markets. ----------------- Disclaimer The content provided in my scripts, indicators, ideas, algorithms, and systems is for educational and informational purposes only. It does not constitute financial advice, investment recommendations, or a solicitation to buy or sell any financial instruments. I will not accept liability for any loss or damage, including without limitation any loss of profit, which may arise directly or indirectly from the use of or reliance on such information. All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, backtest, or individual's trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs.
OANDA:NAS100USDEducation
by Zeiierman
What no one will reveal to you about volume. Theory and PracticeFor Richard W. Schabacker, whom I consider the father of Technical Analysis in the West, rigorous technical analysis must combine the study of price and volume. Paradoxically, volume was the last piece of data I effectively integrated into my trading, due to the scarcity of practical information. In this article, I will explore the classical view of using volume and then my personal approach, based on logic and accumulated experience. Whether you are a novice or an expert in the markets, and whether or not you use volume to clarify your analyses, reading this article will enrich your perspective on this topic. The Ichimoku indicator values displayed on the screen are personal variations, resulting from my research. I hope they are useful to you. What is Volume? In the context of financial markets, volume represents the number of shares, contracts, or lots traded in an asset over a specific period of time. Volume reflects the intensity of market activity and is represented as a histogram just below the price chart. "Volume is a relative matter; that is, when we speak of high volume, we refer to a transaction volume greater than what has prevailed for some time before." — Richard W. Schabacker, Technical Analysis and Stock Market Profits Classical View of Volume: Generally, the main proponents inShannon proponents in this discipline see volume as useful for the following purposes: 1. Confirming the Strength of a Trend: Volume should accompany the strength of a trend, and if volume is weak, it is likely that we can anticipate a reversal, as low volumes in a trend indicate a loss of interest among participants. 2. Analyzing Support and Resistance: Most major proponents tend to view weak volume as a signal for potential reversals, while recommending validating breakouts of support and resistance with increased volume. 3. Analyzing Continuation or Exhaustion Patterns: The classical approach suggests that before entering continuation or exhaustion patterns (such as accumulations, distributions, head and shoulders, double tops and bottoms, triangles, etc.), there should be a depletion of volume, followed by a breakout of the pattern with a significant increase in volume to confirm the presence of participant interest. This approach is solid in theory, but in practice, it can lead to subjective interpretations and errors if not properly contextualized. Personal View: May the Force Be with You In my experience, volume should not be primarily interpreted by observing weakness, as this can lead to misreadings and premature market entries. Instead, I recommend focusing on detecting strength as the decisive factor. High volume reveals the massive entry of participants or large orders—whether from large investors or institutions—leaving a clear footprint in the market. These large orders, whether buy or sell, indicate real commitment and potential for sustained movements. On Volume and Trend Analysis: Why base a reversal on the weakness of a trend when the key is to identify the context and strength driving the change? A clearly weakened price action backed by low volumes can extend in the direction of the trend, draining our accounts if we base our entries on volume weakness. Whether trading with or against the trend, the turning point must be supported by robust volume. This spike in activity confirms the presence of large investors or institutions in action, translating into greater interest and liquidity. As technical analysts, our goal is to capture fluctuations or trends, not to diagnose whether a trend is "healthy." Weakness is relevant information for detecting exhaustion, but it is strength, in the right context and with proper confirmation (through patterns), that will increase our success rate and improve our risk-reward ratio. In Figure 1.1, we can see how volume spikes generally predict pauses or reversals in trends. Figure 1.1 Tesla. Daily Chart In Figure 1.2, we can observe how weak volume could indicate a loss of interest from participants (1 and 2), but it is an increase in volume combined with a Japanese candlestick pattern (3) that can confirm a likely effective entry. Figure 1.2 BTC/USDT Daily Chart On Volume in Support and Resistance Analysis: As mentioned earlier, weakness is relevant information, but strength is essential to validate a trend reversal or continuation. According to the classical approach, a breakout of support or resistance should be backed by a significant increase in volume. However, experience has taught me that the high volume detected during a breakout often represents common bull or bear traps, where buyers or sellers get trapped. There are several reasons for this: supports and resistances are psychological zones that are constantly evolving, making it easy to confuse breakout volume with rejection volume. Additionally, during breakouts of significant supports or resistances, large institutions often manipulate or protect their positions by executing large buy or sell orders. How can we avoid falling into bull or bear traps, or even use them to our advantage? Personally, I recommend not seeking breakouts of supports and resistances based on volume. Price compressions around supports and resistances are more useful for this purpose, as they reveal the intent and dominance of buyers or sellers while offering a superior risk-reward ratio. High volumes generally indicate rejection, even if the zone appears to have been broken. Without prior compression—or accumulation or distribution—it is never advisable to chase breakouts. In Figure 1.3, we can observe two phenomena in one: the breakout of a consolidation pattern and the breakout of a resistance ($110,000) following a price compression (3). Notice how buying forces intensely defended the $100,000 zone, as evidenced by volume spikes and large engulfing patterns that preceded them (1 and 2). The price compression at the $110,000 zone reveals the bullish intent to break the resistance in a context where buying strength is dominant. On the other hand, in Figure 1.4, I show you what a bear trap looks like. Observe how what appears to be a confirmed breakout with volume at a defended support level ended up being a significant rejection by large investors or institutions (1). At this point, I will make two clarifications: The volume histogram is represented with colors on some investment platforms to facilitate the visual detection of patterns, but volumes themselves do not have color. Whether a volume is bullish or bearish does not depend on whether the accompanying candlestick is bullish or bearish, but rather on the real-time interpretation of the technical analyst and, above all, on the subsequent development of events. In the example of the false breakout in Figure 1.4, we observe a bullish rejection volume. Another vital aspect is that supports in strong and healthy uptrends will generate more false breakouts than reliable ones, so I recommend taking more long entries. Additionally, during the euphoria and hope characteristic of a bullish market, short entries will be extremely risky. In the articles “Bear and Bull Traps” and “Double Pressure: The Key to Successful Breakout Trading,” I describe these phenomena in detail. Figure 1.3 BTC/USDT Daily Chart Figure 1.4 BTC/USDT 4-Hour Chart On Volume in Continuation or Exhaustion Patterns: While it is often recommended to ensure a decrease in volume prior to the breakout of an exhaustion pattern, I recommend ensuring the detection of large volumes within the exhaustion pattern itself and confirming entries based on price compressions at the boundaries of the accumulation or distribution range. Large volumes in continuation or exhaustion patterns indicate that many participants or strong institutions are partially or fully closing their buy or sell positions, which can lead to a correction. Even investors like Thomas Bulkowski have noted that the success rate increases in patterns where large volumes are present. On the other hand, contrary to the classical approach, I recommend avoiding confirming entries based on pattern breakouts with large volume, as exhaustion and trend continuation patterns often generate strong bursts of volatility. In the best case, this may cause you to miss the trend, but in the worst case, it will expose you to entries with poor risk-reward ratios. Price compressions are a safer option for making entries and capitalizing on volatility bursts. In Figure 1.5, you can observe the effectiveness of price compressions in the right context and how volume is a key factor in determining the presence of large investors. Figure 1.5 BTC/USDT Daily Chart Some Additional Examples: An ABCD pattern offers excellent opportunities to take entries based on volume, always with confirmation from price action. In Figure 1.6, you will observe how I would effectively use bear traps (D), which are very common in strong uptrends. Figure 1.6 BTC/USDT Daily Chart Relevant Data on Volume: Volume in Forex and CFDs Both the Forex market (currencies) and CFDs (contracts for difference) operate in a decentralized, over-the-counter (OTC) manner, meaning there is no centralized exchange where all trading volume is recorded. In Forex, the volume displayed on platforms does not represent the "true" total volume of the global market, but rather the flow of trades within the liquidity pool of the broker or its liquidity providers. CFDs, being OTC derivatives offered by brokers, follow the same pattern: the visible volume is specific to the broker and its liquidity network, not the total volume of the underlying market. Brokers aggregate liquidity from multiple providers (such as banks or dark pools), but traders only see a fraction of this, which may not reflect the actual volume of the underlying asset (e.g., a CFD on stocks does not show the total volume of the stock exchange). Volume in Centralized Stock Exchanges Stock markets like the NYSE are centralized, meaning all transactions are executed and recorded on a single regulated exchange. This allows for consolidated, real-time reporting of the total volume of shares traded on that exchange. The volume reflects all executed trades, including the total number of shares bought and sold. Under strict regulation, the data is standardized, audited, and publicly accessible. Volume in the Cryptocurrency Market The cryptocurrency market is decentralized and fragmented, similar to Forex: transactions occur across multiple global exchanges (such as Binance or Coinbase) without a unified central record. This makes the total volume an aggregation of data reported by each platform, introducing inconsistencies and potential manipulations. Personally, I recommend prioritizing data from Binance, as it consistently leads in spot and derivatives trading volume globally, representing a significant portion of the market (approximately 30-40% in recent aggregated metrics). Volume and the S&P 500 Although the S&P 500 index, being a composite indicator and not a tradable asset itself, does not record transaction volume, a smart strategy for analyzing volume related to this index involves monitoring the trading volume of the SPY ETF (SPDR S&P 500 ETF Trust). This exchange-traded fund closely tracks the performance of the S&P 500 and attracts a high level of trading activity, providing a valuable metric for assessing market interest, liquidity, and potential volume patterns during bullish or bearish trends. In Figures 1.7 and 1.8, you can see how S&P 500 readings can be cleverly combined with SPY volume data. Figure 1.7 S&P 500 Daily Chart Figure 1.8 SPY Daily Chart Final Note: If you’d like to take a look at my analysis record, you can check out my profile in Spanish, where I transparently share well-defined market entries. Send your good vibes if you enjoyed this article, and may God bless you all.
AMEX:SPYEducation
by Especulador96
The Compression Break: Identifying the Spring Before ExpansionDifficulty: 🐳🐳🐳🐋 (Intermediate) This article is for traders who want to recognize and trade explosive moves that form after periods of tight price compression. Perfect for those familiar with structure, volume, and volatility concepts. 🔵 INTRODUCTION Price doesn’t move in a straight line — it breathes. It expands when there’s imbalance, and it compresses when the market is building energy. The most powerful moves often start with a compression phase — a tight, controlled price range — before a sudden breakout. Learning to spot these “springs” before they snap can give you trades with excellent risk/reward ratios and clear invalidation points. 🔵 WHAT IS COMPRESSION? Compression occurs when price volatility shrinks, and each swing becomes smaller than the last. It looks like price is being “squeezed” between converging support and resistance levels. Common causes of compression: Liquidity build-up before a major session open Market waiting for a news release or key event Institutional positioning before a drive The tighter the range, the bigger the potential release. 🔵 WHY IT MATTERS Compression is important because: It reveals where the market is balanced and undecided It creates a high-energy environment — a small push can trigger big moves It offers tight stop-loss placement and clear breakout targets Think of it like a coiled spring: the more it’s compressed, the more explosive the release. 🔵 HOW TO IDENTIFY COMPRESSION 1️⃣ Price Action Clues Consecutive smaller candles with overlapping ranges Lower highs + higher lows (triangle formation) Reduced wick size in the final stages before breakout 2️⃣ Volume Clues Declining volume during the squeeze Sudden volume spike as breakout begins 3️⃣ Volatility Clues ATR (Average True Range) dropping to local lows Bollinger Bands narrowing (optional) 🔵 TRADING THE COMPRESSION BREAK Step 1: Define the Box Mark the high and low of the compression range. This will be your breakout reference. Step 2: Wait for Volume Confirmation Avoid jumping in on the first tick outside the box. Wait for a volume surge or strong close beyond the boundary. Step 3: Trade in the Breakout Direction Entry: After confirmed breakout close Stop Loss: Inside the compression range Target: Equal to the height of the compression box or previous swing high/low 🔵 EXAMPLE SCENARIO Price compresses for more then 10 bars into a tight range Volume steadily declines → ATR hits a local low A big body bullish candle breaks above range high with 2× average volume Entry at breakout close, stop inside range, target = box height projected upward or 1:2 RR 🔵 ADVANCED TIPS Align with higher timeframe trend for higher probability Watch for false breakouts (liquidity sweeps) before real move Combine with order blocks or VWAP to refine entries Use session timing — many compression breaks happen at market opens 🔵 CONCLUSION Compression is the market’s way of loading a trade with potential energy. When you spot it, you’re seeing the buildup before the burst. Trade it with patience, volume confirmation, and proper structure, and it can become one of your highest-probability setups. Have you traded compression breaks before? Share your best example in the comments!
Education
by BigBeluga
11
How to Read COT Data: Understanding Big Players’ Order FlowHey whats up traders, today Im going to reveal my COT approach. If you’re serious about finding higher timeframe bias based on what the big players are doing, then COT data is a tool you need to know. It offers unique insights into the positioning of institutional traders—and if read correctly, it can help you align with real market momentum rather than noise. Before we break it down step-by- step. I want to mention that this is my personal approach. Larry Williams is doing it differently and I have seen some other approaches. This is what works for me, might you find it also usefull. What Is COT Data? The Commitment of Traders (COT) report is published every Friday by the CFTC (U.S. Commodity Futures Trading Commission). It shows the open positions of various market participants in the futures markets as of the previous Tuesday. This data is based on the requirement that large traders must report their positions once they pass a certain threshold. In short, we’re peeking into the order flow of institutions—excluding high-frequency trading and market making noise. Hope you already recognized small disadvantage to us as retail traders. Big players report data on Tuesday and it's published on Friday. So we basically have it late and we dont know what has happen in last 3 days. But no worry I will show you my trick how to read between the lines. COT helps us: • Understand HTF (Higher Timeframe) bias • Spot shifts in institutional positioning • Identify trend continuations or potential reversals • Avoid getting trapped in retail sentiment traps It’s not a standalone entry tool, but rather a macro confirmation layer for swing or position trades. Huge advantage by following large players is that they are trading on fundamentals and you dont need to worry about that - you just follow them. But you must follow the right participants, because there is few. Who Are the Market Participants? The COT report breaks down traders into several categories. Each one has a different motive and behavior in the market: 1. Commercials • Think of them as hedgers. • These are producers, manufacturers, and institutions trying to lock in prices for raw materials or currencies. • They are usually contrarian at extremes. When they reach record net long or net short positions, reversals often follow. 2. Non-Commercials (Speculators) • These are institutional funds, hedge funds, and large speculators. • Their goal? Profit. • Often, they follow trends and their positioning reflects the broader market sentiment of the big money. 3. Dealers • Mostly big banks and institutions facilitating trades. • They manage risk rather than speculate heavily, so they typically take the opposite side of speculative flows. 4. Leveraged Money • Hedge funds using high leverage. • Their positions often reflect short-term speculative behavior. • Watching their net positioning and changes week-to-week can give clues on momentum exhaustion. Now you might think which one to follow and Yes you can build your strategy on following any of them fore example Larry Williams - been trading base on Commercials Anton Kreil - suggest following Leveraged money I tried both but for me works best - Non commercials ( Speculators) Again here you cant say definitely which one is right or wrong. What works for you is right. Thats it. There are multiple versions of the report, but here are the most commonly used, Im using - ✅ Traders in Financial Futures (TFF) • Focused on financial markets like forex, bonds, and indexes. Where to find COT data? It's free and you can find it on the SEC website there is simple week to week format. As you can see below. Many traders are watching this. I dont say this is wrong but you dont have complete data - missing big picture. As you can see here these data below are clearly giving you a picture about an order flow and positioning changedsvn the positions which can confirm trend or help you spot potential reversal you need to watch bigger data sample. Institutions doesnt reverse market in a week, they need to of load positions and I it takes them some time. Which will explain later. Im collecting the data to the collums. I want see longs, shorts of commercials and from that I calculate. Following Longs % exposure Shorts % exposure Net positions 13 weeks average Historical Highest positions Historical Lowest Positions Relationship between these numbers helps me justify whats going behind the price action, but also spot strong levels. I will show you how to put it together with the context of the charts and then I will show you few order flow patterns examples, it's not difficult but it requires a bit of practice. Bullish Pattern - Longs growing / Shorts being closed This is the strongest COT patter and clean sign of buying This is classing pattern what we have just seen on the EURUSD Notice how longs has been growing constantly and net positions confirms that. In may been able to see rapid shorts closing, which and confirmed bullish trend and we can look just for the bullish setups. Now lets look to the USDJPY chart it will be tricky because it's all red and looks tricky but focus to the numbers and price action, how longs are growing while shorts being closed. Very weak JPY. Bearish consolidation Shorts being build Massive shorts being added int he consolidation phase longs doenst move at all. Further big drop coming. This is now happening on the AUDUSD. Look at this tight price consolidation and let's read what is happening. just look at the COT its clean longs around 23K constantly while they are building massive shorts. Whats gonna happens next is clear. Profit taking move This ofter occurs when we can see sharp move above the highs but without real longs being added, rather they being closed. As on our example below on the gold. We can see massive profit taking on longs while price was moving up. But they were not been adding shorts. What doest it tell us. They do not want to trade full reversal - not building short position, but market is overheated and they taking profits to buy later for lower or price can go to the consolidation where they will be building short, but definitely its late for us to go long. Here is another example on USDCHF Notice longs positions in the moment where there was 46K long and then next week change -12K net. It's a huge change which has started Sell off. But look in to Shorts , there is no heavy shorting, price simply go down based on huge longs profit taking. This is why its important to look in to bigger picture because if you look only in to week to week data. You will still see bigger longs than shorts and it will give you bullish opinion. Hope it's clear. And by the way now we can see 2 weeks with more then +3.4K longs. Its getting bullish IMO. Now lets look to the another example on the USDCAD Now we will use one of my past analysis where based on the data I predicted further move. And here I want to mention one thing. Even though we can see COT being bearish. It doesnt mean that price cant go up in short term (can be be 2- 3 weeks) There for you still need to use price action and dont just blindly short, but short run above the highs, because this is where big players add shorts. Not on the lows. P rice moving up shorts being added - Reversal coming This is showing positions building for the sell. In this case you can see both growing longs and shorts remember. Big players are hedgers, they are taking longs to move price up so they build shorts. Once they got their positions they close longs and sell of starts. Lets look to my TV analysis where I have seen shorts grown recently while GBP was moving up close the Monthly Order block , but notice the shorts colum how the shorts were growing recently and also longs dropped from 110K to 100K. Clena signs of the reversal but again I waited for a pullback above the weekly highs. Click to open a chart bellow This was a prediction from few week ago. Now let's look how the data looks right now. On the GBPUSD chart below we can see reveal in the data. Long significantly dropped by 50% and shorts increased by 50%. This is a clean reversal pattern in the COT. Look at net positions it clearly flipped to the bearish and big drop is coming. Few more tips Remember they know we are watching this data and what we see is what they want us to see, so they are often trying to hide their positions as long as possible. Thats why intra-week reversal are happening on Wednesday after they report their positions. They cannot hide the data forever, follow the data week by week to keep in track whats happening. It will increase your winning ratio. Every 3 months there is a new futures contract. The must close the positions and reopen them in to the new contract, They are using it for reversals. Also some if there is some US holidays on the day when report should be released to the public its delayed to the next week. And thats when they do biggest positions changes secretly. COT data isn’t a magic crystal ball—but it’s a powerful tool if you know how to combine it with technical analysis. You need to use your mechanical system. It perfectly fits with my CLS strategy and It's suitable for swing traders. Think outside the box. Even when you see bearish COT - dont be stupid to sell low. It's not NOD order flow for intraday scalping, you have time. But if you something is clearly bearish every run above weekly and daily highs is high probability Sell in the smart money trend. Dont hesitate to ask any questions and follow. I share COT weekly updates. “Adapt what is useful. Reject whats useless and add whats is specifically yours.” David Perk aka Dave FX Hunter
TRADENATION:XAUUSDEducation
by David_Perk
46
Scalper’s Paradise Part 3 – The Power of Order Flow and DOMWelcome back to Scalper’s Paradise! In this third part of the series, I want to take you into one of the most powerful tools in professional trading: Order Flow and the Depth of Market (DOM). I chose this topic because during my time as an institutional trader, this was our entire world. We didn’t use indicators. We didn’t guess. We traded exclusively based on what we could see happening live in the DOM and Time & Sales. Every decision was made tick by tick, based on real market activity. That experience shaped the way I view markets forever—and today, I want to share that perspective with you. What Is Order Flow, Really? To me, Order Flow is the most honest information the market can give you. It doesn’t predict, it reveals. It shows who is actually making moves right now. When I was sitting at my institutional desk, I didn’t look at moving averages or oscillators. I looked at who was being aggressive: were market buyers lifting offers, or were sellers smashing the bid? Watching the tape (Time & Sales) and the footprint chart was like watching a fight unfold in real time. No filters, no guesses. Just raw interaction between buyers and sellers. That’s where real decisions are made. The DOM: My Daily Reality as a Trader The DOM (Depth of Market) was the first thing I looked at every morning, and the last thing I closed at night. It shows all visible limit orders resting at each price level. But there’s a catch: not everything you see is real. In the institution, we were trained to spot real interest versus manipulation. Stacked bids might look strong, but if they disappear the moment price drops tells you that there was never a true intent. Iceberg orders were more interesting, when price gets hit again and again and doesn’t move, that usually meant someone was absorbing quietly. Reading the DOM is like reading an X-ray of the market’s intentions. And yes, there’s a lot of noise, a lot of deception. But once you learn to read through it, it’s the most powerful tool you’ll ever have. How We Used Order Flow on the Institutional Side At the institution, we never chased price. That was rule number one. We let the market come to us (meaning: we used Limit Orders as often as possible) and we used Order Flow to guide every decision. One of the most important concepts was absorption . If we needed to build a large long position, we didn’t just slam the ask. We would let sellers come in and hit our bids again and again and again. If price didn’t break lower, that told us we were in control. On the flip side, when we needed to move the market , we switched gears. We used market orders aggressively to push through key levels, forcing reactions, triggering stops, and creating follow-through. And yes, there were times when we intentionally created traps . We’d push price into obvious zones, make it look like a breakout, then fade it, because we knew how the market reacts afterwards. Order Flow was the only way to read those games in real time. How You Can Use This as a Retail Trader I know what you might be thinking: “I’m just a retail trader, how can I possibly use tools like Order Flow or DOM the way institutions do?” The good news is: you don’t have to compete with institutions, you just need to read their intentions. Here’s how I would approach it today: 1) Open a footprint chart and look for imbalances, areas where one side is clearly more aggressive. Watch for absorption or sudden volume spikes. 2) Watch the Time & Sales feed. Is there a flurry of trades hitting the ask, but price isn’t moving? That’s someone selling into strength. 3) Use the DOM around key areas like VWAP, previous day high/low, or liquidity clusters. Are orders getting pulled? Is size appearing suddenly? These are all signals. You don’t need to be early. Let the big player act first, then confirm what you’re seeing across Order Flow and DOM. When everything aligns, that’s your edge. Bringing It All Together In Part 1, I shared how we used VWAP and Volume Profile as benchmarks to evaluate execution quality. In Part 2, I showed you how I identify institutional activity using raw volume and 10-second charts. And now, in Part 3, you’ve seen the real-time decision-making tools: Order Flow and DOM. These aren’t indicators. They’re not theories. They’re the actual battlefield where institutions operate and where I learned to trade. My goal with this series has always been simple: to give you access to the same mindset I used at the institutional level, but through a lens that makes sense for your reality as a retail trader. Don’t try to outsmart the market. Observe it. Align with the big players. Let their behavior guide your decisions. That’s how I learned to trade professionally—and it’s exactly how you can start thinking and acting like a pro, even without the size. Part 1: Part 2:
CME_MINI:NQ1!Education
by Marco_Boesing
28
Mastering Delta–Volume Divergence 🎓 Mastering Delta–Volume Divergence: How to Read Institutional Absorption and Trap Setups ⸻ 1️⃣ What Is Delta? Delta measures the net aggression between buyers and sellers: • Market Buys: traders lifting the ask • minus • Market Sells: traders hitting the bid ✅ Positive Delta indicates stronger buying pressure. ✅ Negative Delta indicates stronger selling pressure. Delta shows who is initiating trades, not just that trading is occurring. ⸻ 2️⃣ What Is Volume? Volume measures the total number of contracts traded, regardless of who initiated them. Every matched buy and sell contributes equally to volume. Volume reveals activity, but not who controls the move. ⸻ 3️⃣ What Is Delta–Volume Divergence? Delta–Volume Divergence occurs when: ✅ Volume is high (lots of trades happening), ✅ But Delta is near zero (neither side dominates). This signals: • Intense two-sided activity between buyers and sellers, • Strong participation on both sides, • Passive absorption—institutions quietly filling large orders without moving price significantly. ⸻ 4️⃣ Chart Breakdown – Bar by Bar Below is a clear example of this concept in practice, reviewing each daily bar from your footprint chart: ⸻ 🔴 June 24 • Delta: -8,240 (strong net selling) • Volume: 575,720 (very high) • Interpretation: • Heavy, aggressive selling. • Clear trend-confirming action. • No divergence. ⸻ 🟢 June 25 • Delta: +4,650 (net buying) • Volume: 343,990 (moderate) • Interpretation: • Counter-trend buying or short covering. • Less volume and less conviction. ⸻ 🟢 June 26 • Delta: +2,690 (mild net buying) • Volume: 416,820 (higher) • Interpretation: • Rising volume but weaker delta. • Early sign of balance developing. • Possible absorption beginning. ⸻ 🟨 June 27 (Critical Bar) • Delta: +272 (near zero) • Volume: 540,310 (very high) • Interpretation: • Huge volume churn. • Neither buyers nor sellers in control. • Likely institutional absorption of aggressive orders. ✅ This is a textbook example of Delta–Volume Divergence. ⸻ 5️⃣ Why This Matters Professional Insight: • Sellers had been aggressive for several sessions. • Suddenly, volume remained elevated, but delta flatlined. • This suggests: • Exhaustion of selling aggression, or • Institutional accumulation and passive positioning. This often sets the stage for: • A trap reversal (short squeeze), or • A continuation flush if sellers regroup and push lower. ⸻ 6️⃣ Confirmation Scenarios Scenario A: Bearish Continuation • Watch for renewed strong negative delta (e.g., -5,000 or worse). • Price remains below the last support (~3,250). • Confirms absorption failed and sellers remain dominant. Scenario B: Short Squeeze Reversal • Price reclaims the VAL (~3,285–3,300). • Delta flips strongly positive (+5,000 or more). • Trapped shorts begin covering, driving price back toward supply. ⸻ 7️⃣ Common Misinterpretation ⚠️ High volume alone does NOT mean momentum. Key Point: If delta is flat, high volume simply means churn, not directional energy. This is why inexperienced traders often get caught: • They see heavy volume and assume a breakout is underway. • In reality, the market is absorbing liquidity to trap both sides. ⸻ 8️⃣ Professional Tips for Trading Divergence ✅ Wait for confirmation before entering: • Clear delta shifts, and • Price reclaiming or rejecting key levels. ✅ Be aware of stop zones: • Under recent lows if buyers fail, • Above recent range if sellers get exhausted. ✅ Avoid trading during pure churn without clear follow-through. ⸻ 9️⃣ Quick Recap ✅ Delta–Volume Divergence: High volume, flat delta, no clear directional control. ✅ Typically signals absorption and position buildup. ✅ Requires confirmation before committing to trades. ✅ Recognizing it helps you avoid traps and false breakouts. ⸻ 🔟 Final Thought Learning to read divergence is what separates professional traders from retail: “Volume tells you how hard the market is working. Delta tells you who’s winning.” Combine both to see the hidden game behind every price bar. ⸻ ⚠️ Disclaimer: This lesson is for educational purposes only. Nothing here constitutes financial advice.
FX:XAUUSDEducation
by ICHIMOKUontheNILE
3
How to use VWAP the right-way on TradingView 1️⃣ What Is VWAP (Volume Weighted Average Price)? VWAP stands for Volume Weighted Average Price. It's a tool that shows the average price an asset has traded at throughout the day, adjusted for volume. That means it gives more weight to prices with high trading volume. ✅ It helps traders and investors see if the current price is above or below the average price paid. ✅ It’s often used by institutional traders, such as mutual funds and pension funds, to enter and exit positions without causing major price moves. VWAP = (Sum of Price * Volume) / Total Volume 2️⃣ Why VWAP Matters I (Traders) often use VWAP as a dynamic support or resistance zone. - Price below VWAP: considered undervalued by some 👉 may act as support - Price above VWAP: considered overvalued 👉 may act as resistance It acts like a magnet for price, especially in trending markets. VWAP is also used as a benchmark for large players want to buy below VWAP or sell above it. 3️⃣ Anchored VWAP (AVWAP) Anchored VWAP is a more advanced version of VWAP. Instead of starting at the market open, you anchor it to a specific candle (pivot high or low). 🔍 Why use it: - Lets you analyze the average price from key market turning points - Helps spot institutional interest near pivots - More accurate for swing trading When you anchor VWAP to a major high or low, it gives you clean zones where smart money might enter or exit. 4️⃣ How I Use Anchored VWAP I personally anchor VWAP from: - Major pivot highs/lows - Breakout points - Strong reversal candles Then I watch how price interacts with it. ✅ Works well on 30m and 4H charts for intraday or swing setups ✅ Can be combined with fixed range volume profile for extra confluence If you haven’t read my guide on fixed range volume profile, scroll below — it’s linked there. 5️⃣ Common Uses ✔️ Support and resistance zone in trending markets ✔️ Institutional entry/exit level benchmark ✔️ Reversion-to-mean setups VWAP is used across timeframes. I use higher timeframes like 4H to spot trend zones, then zoom into 30m or 15m for entries. Setting and more information VWAP Explained by TradingView: www.tradingview.com Anchored VWAP Explained by TradingView: www.tradingview.com 6️⃣ VWAP Limitations ⚠️ VWAP doesn’t work well in all cases: - In sideways/choppy markets, it can lose value - It is not an exact entry/exit signal, but rather a dynamic zone - In FX markets, it’s unreliable due to lack of centralized volume data Also, treat VWAP as a zone, not a line. Large players fill big orders in that area, expect false moves or liquidity grabs. 7️⃣ Mistakes to Avoid ❌ Entering blindly on VWAP touches ❌ Using VWAP without confirmation from price action or volume ❌ Assuming it always gives perfect levels It works best when combined with other tools, such as market structure, support/resistance, and volume profile. 8️⃣ Final Thoughts VWAP is a powerful tool to see where price is relative to volume-based value. Anchoring VWAP to key levels adds precision and insight. Used properly, it helps: - Spot where institutions might be active - Confirm high-probability zones - Improve entries/exits when paired with other tools Examples are provided below to show how VWAP works in real-time setups. This guide is educational and for learning purposes only. VWAP Zone and a Example trade CRYPTOCAP:BTC Example Stock Market NASDAQ:AAPL Example Resistance NASDAQ:MSTR VWAP (Volume Weighted Average Price) helps traders see the average price weighted by volume. It's commonly used by institutions to identify good entry/exit zones. Anchored VWAP takes this further by starting from key points like pivot highs/lows for more accuracy. It's most useful in trending markets and works best when combined with tools like fixed range volume profile or support/resistance. While powerful, VWAP isn’t perfect it should be used as a dynamic zone, not a fixed level, and always with other confirmations. Disclaimer: This is not financial advice. Always do your own research. This content may include enhancements made using AI.
Education
by Risk_Adj_Return
4
Volume Speaks Louder: My Custom Volume Indicator for Futures My Indicator Philosophy: Think Complex, Model Simple In my first “Modeling 101” class as an undergrad, I learned a mantra that’s stuck with me ever since: “Think complex, but model simple.” In other words, you can imagine all the complexities of a system, but your actual model doesn’t have to be a giant non-convex, nonlinear neural network or LLM—sometimes a straightforward, rule-based approach is all you need. With that principle in mind, and given my passion for trading, I set out to invent an indicator that was both unique and useful. I knew countless indicators already existed, each reflecting its creator’s priorities—but none captured my goal: seeing what traders themselves are thinking in real time . After all, news is one driver of the market, but you can’t control or predict news. What you can observe is how traders react—especially intraday—so I wanted a simple way to gauge that reaction. Why intraday volume ? Most retail traders (myself included) focus on shorter timeframes. When they decide to jump into a trade, they’re thinking within the boundaries of a single trading day. They rarely carry yesterday’s logic into today—everything “resets” overnight. If I wanted to see what intraday traders were thinking, I needed something that also resets daily. Price alone didn’t do it, because price continuously moves and never truly “starts over” each morning. Volume, however, does reset at the close. And volume behaves like buying/selling pressure—except that raw volume numbers are always positive, so they don’t tell you who is winning: buyers or sellers? To turn volume into a “signed” metric, I simply use the candle’s color as a sign function. In Pine Script, that looks like: isGreenBar = close >= open isRedBar = close < open if (not na(priceAtStartHour)) summedVolume += isGreenBar ? volume : -volume This way, green candles add volume and red candles subtract volume, giving me positive values when buying pressure dominates and negative values when selling pressure dominates. By summing those signed volumes throughout the day, I get a single metric—let’s call it SummedVolume—that truly reflects intraday sentiment. Because I focus on futures markets (which have a session close at 18:00 ET), SummedVolume needs to reset exactly at session close. In Pine, that reset is as simple as: if (isStartOfSession()) priceAtStartHour := close summedVolume := 0.0 Once that bar (6 PM ET) appears, everything zeroes out and a fresh count begins. SummedVolume isn’t just descriptive—it generates actionable signals. When SummedVolume rises above a user-defined Long Threshold, that suggests intraday buying pressure is strong enough to consider a long entry. Conversely, when SummedVolume falls below a Short Threshold, that points to below-the-surface selling pressure, flagging a potential short. You can fine-tune those thresholds however you like, but the core idea remains: • Positive SummedVolume ⇒ net buying pressure (bullish) • Negative SummedVolume ⇒ net selling pressure (bearish) Why do I think it works: Retail/intraday traders think in discrete days. They reset their mindset at the close. Volume naturally resets at session close, so by signing volume with candle color, I capture whether intraday participants are predominantly buying or selling—right now. Once again: “Think complex, model simple.” My Daily Volume Delta (DVD) indicator may look deceptively simple, but five years of backtesting have proven its edge. It’s a standalone gauge of intraday sentiment, and it can easily be combined with other signals—moving averages, volatility bands, whatever you like—to amplify your strategy. So if you want a fresh lens on intraday momentum, give SummedVolume a try.
CME_MINI:NQ1!Education
by QuantByBoji
2
Understanding VWAP In TradingWhat is VWAP? VWAP is a price benchmark that gives more importance to prices where higher trading volume occurs. Unlike simple moving averages, which treat each price point equally, VWAP provides a volume-weighted perspective, making it more representative of market activity. Traders use VWAP to gauge market trends, confirm trade entries and exits, and measure the quality of executions relative to the market's liquidity. How Institutional Traders Use VWAP Large financial institutions and mutual funds execute large orders over time to minimize their market impact. VWAP helps them: Achieve better execution by ensuring their orders are filled at a price close to the session's average. Reduce market impact by avoiding aggressive buying or selling at extreme price points. Gauge liquidity and time their orders efficiently. Role of VWAP in Algorithmic Trading VWAP is integral to algorithmic trading strategies that automate order execution. Algorithms use VWAP in: VWAP Trading Strategies: Algorithms execute orders in line with VWAP to avoid moving the market. Mean Reversion Trading: Traders look for deviations from VWAP, buying when the price is below and selling when it is above. Liquidity-Based Order Execution: Algorithms track VWAP to execute trades more efficiently, particularly in high-frequency trading (HFT). Why VWAP is a Critical Benchmark for Intraday Traders For short-term traders, VWAP provides key insights into market behavior: Trend Confirmation: If the price is above VWAP, it indicates bullish sentiment; below VWAP suggests bearish conditions. Entry and Exit Points: Traders use VWAP as support/resistance for trade decisions. Institutional Footprint: Retail traders track VWAP to understand where large orders might be executing. Since VWAP resets daily, it remains a highly relevant indicator for gauging intraday momentum and trend strength. Calculation Where: Price = (High + Low + Close) / 3 (Typical Price for each period) Volume = The total number of shares/contracts traded in the period Understanding How VWAP is Calculated: Calculate the Typical Price (TP): TP=High+Low+Close/3 Multiply TP by Volume for each time period to get the Cumulative Price-Volume product. Sum the Price-Volume values cumulatively throughout the day. Divide by the cumulative volume up to that time. Since VWAP is cumulative from the market open, it resets at the start of each trading day. Difference Between VWAP and Moving Averages VWAP Volume-weighted Resets daily Determines fair value in a session Reacts to volume spikes Moving Averages (SMA/EMA) Equal-weighted (SMA) or Exponentially weighted (EMA) Continuous across multiple sessions Identifies overall trend direction Reacts to price changes How to Interpret VWAP When the price is above VWAP: It suggests that the market is in an uptrend, and VWAP may act as support if the price retraces. When the price is below VWAP: It signals a downtrend, and VWAP may act as resistance if the price attempts to rise. Reclaiming VWAP: If the price moves below VWAP but then breaks back above it, this could signal a bullish reversal. The opposite is true for a bearish scenario. VWAP and Market Trend Identification Uptrend: If the price remains consistently above VWAP and VWAP itself is sloping upward, the market is in an uptrend. Downtrend: If the price stays below VWAP and VWAP is sloping downward, the market is in a downtrend. Sideways Market: If the price oscillates around VWAP and VWAP remains flat, the market is range-bound. VWAP Standard Deviations (Bands) and Their Significance First Standard Deviation (VWAP ±1σ) Represents a normal fluctuation around VWAP. Prices bouncing within this range indicate balanced market activity. Second Standard Deviation (VWAP ±2σ) Suggests stronger price movement. A move beyond this level may indicate an overbought (above VWAP) or oversold (below VWAP) condition. Third Standard Deviation (VWAP ±3σ) Extreme price movement; rarely sustained. A reversion back toward VWAP is highly likely. Misinterpreting VWAP Signals Many traders assume that VWAP alone dictates market direction. However, simply being above or below VWAP does not automatically mean the market is bullish or bearish. Market structure, momentum, and external factors such as news events or institutional order flows must also be considered. How to Avoid It? Look for Confirmation: Use VWAP in combination with price action and other indicators, such as volume, market structure, and momentum oscillators (e.g., RSI or MACD). Check the Trend of VWAP: If VWAP is sloping upward and price is above it, this signals strength. Conversely, a downward-sloping VWAP with price below it indicates weakness. Observe Price Interaction with VWAP: If the price consistently bounces off VWAP and continues in the trend direction, it confirms its role as dynamic support or resistance. If the price frequently crosses VWAP back and forth without clear direction, it signals a choppy, range-bound market. Strategies VWAP Bounce If the price pulls back to VWAP and holds, traders may look for a long entry (in an uptrend) or a short entry (in a downtrend). Stop-loss orders are often placed slightly beyond VWAP in case of a trend reversal. VWAP Breakout If the price consolidates near VWAP and then breaks out strongly, traders may enter in the direction of the breakout. A sustained break above VWAP signals strength, while a break below VWAP signals weakness. VWAP as a Reversion Point Traders monitor price deviations from VWAP. If the price moves too far from VWAP, a reversion trade back toward VWAP may be expected. Key Takeaways VWAP Represents Fair Value – It calculates the average price of a security, weighted by volume, giving traders insight into where most of the trading activity has occurred. Intraday Benchmark – VWAP resets daily and is primarily used by intraday traders and institutions to assess whether prices are trading at a premium or discount. Support and Resistance Tool – VWAP often acts as dynamic support in uptrends and resistance in downtrends, helping traders make entry and exit decisions. Institutional Trading Guide – Large institutions use VWAP to execute orders efficiently, minimizing market impact and ensuring better fills. VWAP vs. Moving Averages – Unlike moving averages, which continue across multiple sessions, VWAP is cumulative from the market open and resets each day. Trend Confirmation – Price above a rising VWAP signals a strong uptrend, while price below a declining VWAP suggests a downtrend. Avoid Over-Reliance – While useful, VWAP should be combined with volume analysis, price action, and other indicators to avoid false signals. VWAP Bands for Overbought/Oversold Levels – Standard deviation bands around VWAP can help identify price extremes and potential mean reversion setups. VWAP is more than just an average—it's the heartbeat of market sentiment, revealing where true liquidity and fair value align. Stay sharp, stay ahead, and let’s make those moves. Until next time, happy trading!
CME_MINI:ES1!Education
by CandelaCharts
4
How to Use Fixed Range Volume Profile on TradingView 1️⃣ Why Fixed Range Volume Profile Matters ✅ It helps you spot real price structure where traders were active, not just where price passed through. Useful for: Identifying Supply & Demand zones Understanding nstitutional activity (volume concentration = likely smart money involvement) Analyzing range-bound markets Confirming pullbacks or entries in trending setups There are two different tools: one is called Volume Profile, and the other is Fixed Range Volume Profile. To learn more about them, check out the link below. Volume Profile Indicators: basic concepts: www.tradingview.com Fixed Range Volume Profile: www.tradingview.com 2️⃣ What is Volume in Trading? Volume refers to the total number of units (e.g., shares, contracts, coins) traded during a specific time period. It measures the market's participation. ✔️ High Volume = strong interest and confirmation of price moves. ❌ Low Volume = weak conviction, indecision, or potential false moves. Volume is calculated by counting all completed trades in a candle both buying and selling. Learn more about volume here: www.tradingview.com 3️⃣ What is Fixed Range Volume Profile? Fixed Range Volume Profile is a tool you can draw on your chart to check how much trading happened at different price levels, but only within the range you select. You pick the start and end point, and the tool shows volume activity just in that area. It shows three main levels: 🔴 Point of Control (POC): the price where the most trading happened 🟢 Value Area High (VAH): the highest price in the area where most trades occurred (about 70% of total volume) 🔵 Value Area Low (VAL): the lowest price in that same area These three levels show the price range where most trading took place also called the value area. 4️⃣ Why Fixed Range Volume Profile Matters It helps you spot real price structure where traders were active, not just where price passed through. Useful for: Identifying Supply & Demand zones Understanding institutional activity (volume concentration = likely smart money involvement) Analyzing **range-bound markets Confirming pullbacks or entries in trending setups 5️⃣ How to Use Fixed Range Volume Profile on TradingView Steps: 1. First, look for a clear range on your chart. A range is a sideways movement where price is mostly moving back and forth instead of trending. 2. I like to use the 4-hour chart for this, but you can use any timeframe. Using candles with clearer shapes can help you see the range more easily. 3. Once you see a range, go to the left-hand toolbar and select the Fixed Range Volume Profile tool. 4. Click at the beginning of the range, then drag your mouse to the end of the range. 5. Let go of the mouse, and the volume profile will appear on that section of the chart. Analyze: POC: Price may often return to this level because it's where most trading happened VAH: Price could have a harder time moving higher if it reaches this level may act like resistance VAL: Price may find support around here — traders bought more in this area 1. Find the Range 2. Draw your Profile 3. You should treat your volume range like a basic support and resistance level. What you want to see is a flip between support and resistance. 4. If the price breaks above the volume profile and keeps going higher, you want it to come back and retest that same range this time acting as support. 5. Your entry should be near the support. Your stop-loss should be placed above the high of the breakout or a logical structure. Of course, setting a stop-loss always depends on more context, like the overall market structure and your risk management plan. 6️⃣ Practical Scenarios ✔️ Use it during sideways or quiet market phases (called consolidation) to see where most of the trading happened before the market moved ✔️ Try it on pullbacks in trending markets to check if price is returning to an area of high volume ✔️ Draw profiles on different price swings to spot areas where volume keeps showing up again and again Example: ⚠️ Limitations Fixed Range Volume Profile might not work well when: The asset has very little trading volume (like new coins or very small stocks) There’s a big news event causing unexpected volume spikes The market is moving fast in one direction, and the volume zones don’t hold ⚠️ A couple of common mistakes traders make when using Fixed Range Volume Profile: They apply it in trending markets. This tool works best in sideways or ranging markets, not when price is trending strongly up or down. They include breakout volume. Breakouts often include forced liquidations or trapped traders this can create misleading spikes in volume. 7️⃣ Summary Fixed Range Volume Profile helps you see where most trades happened in a specific part of the chart. It highlights price zones where traders were most active, which can help you understand possible support, resistance, or value areas. ✅ Good for: Markets that are going sideways Double-checking volume around key levels Spotting price zones where support or resistance might appear Disclaimer: This is not financial advice. Always do your own research. This content may include enhancements made using AI.
Education
by Risk_Adj_Return
Follow the Flow: Trading with Liquidity ZonesLiquidity is where the market breathes. The Liquidity Zones indicator by BigBeluga helps traders visualize where large players may be hiding orders—revealing the zones where price is most likely to react, reverse, or accelerate. Let’s break down how this tool works, how we use it at Xuantify, and how you can integrate it into your own strategy. 🔍 What Is the Liquidity Zones Indicator? This open-source tool identifies pivot highs and lows filtered by volume strength and plots them as liquidity zones —highlighting areas where buy/sell orders are likely to accumulate. Key Features: Volume-filtered pivot detection (Low, Mid, High) Dynamic or static liquidity zone boxes Color intensity based on volume strength Liquidity grab detection with visual cues These zones act as magnets for price , helping traders anticipate where reactions, reversals, or stop hunts may occur. 🧠 How We Use It at Xuantify We use Liquidity Zones as a contextual map for structure and execution. 1. Entry & Exit Planning We align entries near untested liquidity zones and use them as targets for exits—especially when confirmed by structure or momentum. 2. Liquidity Grab Detection When price pierces a zone and reverses, it often signals a liquidity sweep . We use this as a trigger for reversal setups. 3. Volume Context Zones with higher volume intensity are prioritized. These are more likely to attract institutional activity and generate stronger reactions. 🧭 Dynamic vs. Static Zones The indicator offers both dynamic and static zone modes: Dynamic : Box height adjusts based on normalized volume, showing how much liquidity is likely present. Static : Consistent box size for cleaner visuals and easier backtesting. Why this matters: Dynamic zones reflect real-time volume strength Static zones offer simplicity and clarity Both modes help visualize where price is likely to “grab” liquidity ⚙️ Settings That Matter To get the most out of this tool, we recommend: Volume Strength = Mid or High for cleaner zones Enable Dynamic Mode when trading volatile assets Use Color Intensity to quickly spot high-liquidity areas 🔗 Best Combinations with This Indicator We pair Liquidity Zones with: Market Structure Tools – BOS/CHOCH for context Momentum Indicators – Like RSI or MACD for confirmation Fair Value Gaps (FVGs) – For precision entries near liquidity This layered approach helps us trade into liquidity , not against it. ⚠️ What to Watch Out For Liquidity zones are not signals —they’re context . In fast-moving or low-volume markets, price may ignore zones or overshoot them. Always combine with structure and confirmation. 🔁 Repainting Behavior The Liquidity Zones indicator is designed to be non-repainting . However, due to waiting for pivot confirmation, the zones are plotted in hindsight. This makes it suitable for real-time execution . ⏳ Lagging or Leading? This tool is partially lagging —it waits for pivot confirmation and volume validation before plotting a zone. However, once plotted, these zones often act as leading levels , helping traders anticipate where price may react next. 🚀 Final Thoughts The Liquidity Zones indicator by BigBeluga is a powerful visual tool for traders who want to understand where the market is likely to move—not just where it’s been. Whether you’re trading reversals, breakouts, or mean reversion, this tool helps you stay aligned with the market’s hidden intent. Add it to your chart, test it, and see how it sharpens your edge.
Education
by Xuantify
1
Why Volume Bar Colors Can Mislead You█ The Truth Behind Volume Bars — What Do Green and Red Actually Mean? Most traders learn early on that green volume bars mean bullish activity, and red bars mean bearish pressure. But is it really that simple? What does volume truly reflect, and are we making assumptions that can mislead us? █ What Volume Actually Is Volume represents the number of shares/contracts traded during a specific time interval. Every transaction includes both a buyer and a seller. So, volume itself doesn’t distinguish whether a trade was bullish or bearish. Instead, platforms color volume bars based on price movement: Green: If price closed higher than it opened. Red: If price closed lower than it opened. Some platforms, like TradingView, allow you to color volume based on whether the price closed higher or lower than the previous candle’s close. So YOU, as a trader, have the chance to decide whether to assign volume bars either bullish or bearish! It’s a setting parameter anyone can change. Traders around the globe might look at the same volume bar, but some interpret it as bearish, while others interpret it as bullish. What is the most correct way? █ The Assumption Behind the Color This coloring assumes that: A rising price means buyers were more aggressive (lifting the ask). A falling price means sellers were more aggressive (hitting the bid). This is a proxy — an approximation. It simplifies market pressure into a binary outcome: if price goes up, it's bullish volume; if it goes down, it's bearish. But the market isn't always so binary. However, the assumption is only an approximation of buying vs. selling. In reality, every single trade involves both a buyer and a seller, so volume itself isn’t inherently “buy” or “sell” – what matters is who initiated the trades. As one trading expert explains, talking about “buying volume” vs “selling volume” can be misleading: for every buyer there is a seller, so volume cannot be literally split into purchases and sales​. Instead, what traders really mean by “bullish volume” is that buyers were more aggressive (lifting offers) and drove the price up, whereas “bearish volume” means sellers were more aggressive (hitting bids) and drove the price down​. The colored volume bar is essentially a proxy for which side won the battle during that bar. █ Why This Can Mislead You Price might close higher, not because there were more buyers than sellers (there never are — every trade has both), but because buyers were more urgent. And sometimes price moves due to other forces, like: Short covering. Stop-loss runs. Liquidity vacuums. This means a green bar might not reflect strong demand, just urgency from the other side closing their positions. ⚪ Example: Take the well-known GameStop short squeeze as an example. If you looked only at the volume bars during that rally, you’d see a wall of strong green candles and high volume, which might suggest aggressive bullish buying. However, that interpretation would be misleading. Under the surface, the surge wasn't driven by fresh bullish conviction — it was massive short covering. Traders who were short were forced to buy back shares to cover their positions, which drove prices even higher. The volume was categorized as bullish, but the true intent behind the move had nothing to do with new buying pressure. This demonstrates why relying solely on volume color or candle direction can lead to false conclusions about market sentiment. Does this simple up/down volume labeling truly reflect buying vs. selling pressure? To a degree, yes – it captures the net price outcome, which often corresponds to who was more aggressive. For example, if many buyers are willing to pay higher prices (demand), a bar will likely close up and be colored green, reflecting that buying interest. Conversely, if eager sellers are dumping shares and undercutting each other, price will drop, yielding a red bar that flags selling pressure. Traders often use rising volume on up-moves as confirmation of a bullish trend’s strength, and high volume on down-moves as a warning of distribution, which indeed aligns with traditional analysis​ That said, the method has important limitations and nuances, documented both anecdotally and in research: ⚪ Volume is not one-dimensional: Since every trade has both a buyer and seller, one cannot literally count “buy volume” vs “sell volume” without more information. The green/red coloring is a blunt classification based on price direction, not an actual count of buys or sells. It assumes the price change direction is an adequate proxy for the imbalance of buying vs. selling. This is often true in a broad sense, but it’s not a precise measure of order flow. ⚪ Intrabar Dynamics Are Lost: A single bar’s color only tells the end result of that interval, not the story of what happened during the bar. For instance, a 4-hour candle might be red (down) overall, but it could have contained three hours of rally (buying) followed by a steep selloff in the final hour that erased the gains. The volume bar will be colored red due to the net price drop, even though significant buying occurred earlier in the bar. In other words, a large red bar can mask that there were pockets of bullish activity within – the selling just happened to win out by the close of that period. Without looking at smaller time frames or detailed data, one can’t tell from a single color how the buying/selling tug-of-war progressed within the bar. ⚪ Gap Effects and Criteria Choices: The choice of using open vs. close or previous close can alter the interpretation of volume. As discussed, a day with a big gap can be labeled differently under the two methods. Neither is “right” or “wrong” – they just highlight different perspectives (intraday momentum vs. day-over-day change). Traders should be aware that colored volume bars are an approximation. A green volume bar under one method might turn red under the other method for the same bar. This doesn’t mean volume changed – it means the classification scheme changed. For example, a stock that closes below its open but still higher than yesterday will show a red volume bar by the intraday method but would be considered an “up-volume day” in OBV terms (previous close method). ⚪ No Indication of Magnitude or Commitment: A single color also doesn’t convey how much buying or selling pressure there was, only which side won. Two green volume bars might both be green, but one could represent a modest uptick with tepid buying, whereas another could represent an aggressive buying spree – the color alone doesn’t distinguish this (other than one bar likely being taller if volume was higher). Traders often need to consider volume relative to average (e.g. using volume moving averages or looking for volume spikes) to judge the significance of a move, not just the color. █ Summary The coloring of volume bars is a visual shortcut, not an exact science. It’s a guess based on price direction — useful, but imperfect. Understanding this helps traders avoid reading too much into what a green or red volume bar actually means. ----------------- Disclaimer The content provided in my scripts, indicators, ideas, algorithms, and systems is for educational and informational purposes only. It does not constitute financial advice, investment recommendations, or a solicitation to buy or sell any financial instruments. I will not accept liability for any loss or damage, including without limitation any loss of profit, which may arise directly or indirectly from the use of or reliance on such information. All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, backtest, or individual's trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs.
COINBASE:BTCUSDEducation
by Zeiierman
27
Scalper’s Paradise Part 2 – Insights on TransactionsThis is my second post and the continuation of the Scalper’s Paradise series . In this installment, I’ll dive into transactions—more commonly known as volume . While everyone is aware of it, few truly utilize it effectively. From a retail trader’s perspective, volume is often misunderstood and misused. That’s why today, I’ll break it down and provide exceptional insights, drawing from my institutional experience as a professional trader. First, let’s clarify what volume really is. Volume is simply the total number of transactions between buyers and sellers. For example, if one buyer wants to purchase a single stock and a seller is willing to sell that stock, the transaction is recorded as one, meaning the volume reflects 1. Now, if we see that the volume for a given period is 1,000 traded stocks, this means there were 1,000 buyers and 1,000 sellers. It’s crucial to understand that there are always an equal number of buyers and sellers in any transaction. With this in mind, we can debunk a common misconception: when we see high volume and price movement, it’s incorrect to say there were "a lot of buyers" or "a lot of sellers"—because both sides are always equal. The real reason behind price movements is a different story, and one that I’ll cover in a future post. Now, let’s take a look at a chart that’s particularly useful for day trading, especially when combined with the volume indicator. Here, you can see a 10-second chart, which is particularly effective for spotting algorithmic trades used by institutions. Now, I’ve marked the high-volume areas with a vertical line. Remember, high volume indicates a significant level of market activity. Now, I’ve marked the candles that had the highest relative trading volumes. But what can we do with all this information? Why is high volume so important? First , high volume disrupts the market. It clearly signals that a major player is in need of liquidity. The reasons behind this can vary, as discussed in Part 1 of this series, but for now, let’s focus on the key takeaway: big players need volume. When a market participant requires large volume, their activity becomes visible in chunks, revealing parts of their trading strategy. This is exactly why we use 10-second charts—to spot these institutional trades more easily. Once we identify them, we can determine the price levels where they are beginning to accumulate or distribute their positions. The second reason is more of an institutional strategy rather than something easily executed by retail traders—but I’ll explain it anyway. During my time as an institutional trader, my performance was often evaluated based on how efficiently I could accumulate volume over time. This required finding other large players in the market. Let’s say I needed to take a long position. To do so, I required sellers on the other side. If I spotted a large player selling, I could use their selling pressure to gradually accumulate my position around their activity. This strategy allowed me to secure better prices over time by executing fewer, larger trades instead of aggressively chasing liquidity. Ultimately, this is the core objective of an institutional trader—maximizing position size while maintaining optimal pricing. How Can Retail Traders Use This Information to Improve Their Trading? 1) Identify high-volume areas on a 10-second chart. 2) Mark these levels on your chart. 3) Wait for a breach of these levels and trade in the direction of the breakout. If there is no breakout, you can align yourself with the large player instead. For example, if a big player is accumulating buy orders, mark that level and observe whether they continue to hold their position. If they do, you can go long alongside them. However, if other traders (as I did in my institutional trading days) start pushing against that big player, wait for a breach of your marked level and look for short opportunities instead. Keep in mind that we are talking about day trading and scalping, meaning these are short-term trades. The goal is to capitalize on immediate price movements rather than holding positions for extended periods. Here, you can see the levels we discussed earlier. Notice how the market clearly reacts to these easily identifiable levels—though trading them successfully is not as simple. I always use order flow and Level 2 data to confirm my trade ideas. Wishing you good luck and plenty of valuable insights from my post! Marco
CME_MINI:NQ1!Education
by Marco_Boesing
41
How to Use the VRVP Tool – A Complete Guide for All TradersThe Visible Range Volume Profile (VRVP) is a powerful tool on TradingView that helps traders identify key price levels where significant trading activity has occurred. It offers a unique view of market structure by highlighting the volume traded at specific price points within the visible range of the chart. Understanding how to effectively use the VRVP can significantly improve your ability to identify important support and resistance levels, spot potential breakouts, and make better trading decisions. This comprehensive guide will take you through everything you need to know about the VRVP tool, including its features, setup, and how to use it in your trading strategy. What is the VRVP Tool? The VRVP (Visible Range Volume Profile) is a technical analysis indicator that shows the distribution of trading volume at different price levels within the visible range of your chart. Unlike traditional volume indicators, which show volume over time, the VRVP focuses on volume by price, allowing you to see where buyers and sellers have been most active. It is displayed as a horizontal histogram along the side of the price chart, with high-volume areas indicating key support or resistance levels and low-volume areas often signaling potential breakout points. Why is the VRVP Tool Important? The VRVP tool provides several benefits to traders, regardless of their experience level: Identify Key Support and Resistance Levels: High volume nodes (HVNs) often act as strong support or resistance zones where price tends to stall or reverse. Spot High and Low Liquidity Areas: Low volume nodes (LVNs) can highlight areas where price may move more quickly due to the lack of market participants. Predict Breakouts and Reversals: By identifying volume concentration, you can anticipate areas where price may break out or reverse. Confirm Trends: By analyzing the Point of Control (POC), you can determine the market’s prevailing trend. Refine Entry and Exit Points: By combining the VRVP with other tools, you can pinpoint optimal entry and exit points for trades. How to Add the VRVP Tool on TradingView To start using the VRVP tool on TradingView, follow these steps: Open your TradingView chart. Click on the “Indicators” button at the top of the screen. Search for "VRVP" or "Visible Range Volume Profile" in the search bar. Click to apply it to your chart. Adjust the settings by clicking on the gear icon next to the indicator name. Recommended Settings: Row Size: Set between 150-250 for more detail (more rows provide more granularity). Volume Area (%): Set to 70% to highlight where most trading activity has occurred. Color Up/Down: Choose contrasting colors for buying and selling, making it easy to distinguish between bullish and bearish zones. Point of Control (POC): Enable this to highlight the price level with the highest volume. How to Read the VRVP Tool The VRVP tool consists of three key components: High Volume Nodes (HVN): These are price levels where a lot of trading activity has occurred. They often act as strong support or resistance, and the price may bounce off these levels multiple times. Low Volume Nodes (LVN): These are areas with little trading activity. Prices tend to move quickly through these zones as there are fewer market participants. They often indicate potential breakout or breakdown points. VAL and VAH VAH (Value Area High) Definition: The VAH is the price level at the upper boundary of the Value Area. The Value Area represents the range where a set percentage (usually 70%) of all trading volume has occurred within the visible range. Significance: The VAH is the price point at which the volume profile starts to show less concentration of volume. It is a level above which price has shown less activity compared to the Value Area. When price approaches or breaks through the VAH, it often signals potential resistance and could be a critical level to watch for a reversal or continuation. VAL (Value Area Low) Definition: The VAL is the price level at the lower boundary of the Value Area. It represents the lowest price point where around 70% of all the trading volume has occurred within the visible chart range. Significance: The VAL is a key support level, as it marks the price level where most trading volume has taken place on the downside. A price approaching or breaking below the VAL can signal potential support or a breakdown, indicating where buyers and sellers are actively engaging. How VAH and VAL Work Together Value Area: Together, the VAH and VAL define the Value Area, which contains the range of price levels where the majority of trading volume took place. In a healthy market, the price tends to stay within this area. If price breaks out of the Value Area, it could indicate the start of a strong price move in that direction (either upward or downward). Relevance in Trading: The VAH and VAL act as key levels for traders to monitor: Above VAH: Price moving above the VAH suggests bullish sentiment, with the next resistance potentially forming above the VAH. Below VAL: Price moving below the VAL suggests bearish sentiment, with the next support potentially forming below the VAL. Example of the VAL and VAH: Point of Control (POC): This is the price level with the highest trading volume within the visible range. The POC is often used as a key reference point for future price movements. If the price is trading above the POC, it suggests bullish market sentiment; if below, it suggests bearish sentiment. Example of the POC level: How to Use the VRVP Tool in Trading Identifying Support and Resistance Levels High Volume Nodes (HVNs): These levels often act as support or resistance. When price approaches an HVN, it is likely to either reverse or consolidate before moving further. If the price is above an HVN, that level may act as support, while if it's below, the level may act as resistance. Spotting Breakout Zones Low Volume Nodes (LVNs): These are areas where price can break out or move rapidly due to the lack of significant trading activity. If price enters an LVN, it may continue moving in the direction of the breakout with minimal resistance. Using the Point of Control (POC) The POC acts as a market balance point where the most volume has been traded. If the price is trading above the POC, it signals a bullish market trend, and if below, it signals a bearish trend. Watching the POC can help you gauge the overall market sentiment and potential future price movements. here is another example of the POC Confirmation with Other Indicators To increase the accuracy of your trades, combine the VRVP with other technical indicators such as: Moving Averages (MA): These help confirm the trend direction and potential reversals. Relative Strength Index (RSI): This can identify overbought or oversold conditions, which can be used in conjunction with the VRVP to confirm price action. Candlestick Patterns: Look for reversal or continuation patterns at key volume levels. Trendlines: Use trendlines to confirm whether price is bouncing off or breaking through key support or resistance levels. Example Strategy Step 1: Use the VRVP tool to identify a high volume node (support zone). Step 2: Check the RSI to see if the market is oversold. Step 3: Wait for a bullish candlestick pattern (such as a bullish engulfing or hammer). Step 4: Enter a buy trade with a stop loss placed below the low volume node, which serves as a breakout or breakdown zone. How to Plan Trades with the VRVP Here are some scenarios you might encounter when using the VRVP tool: Price near HVN (Support): Buy with a stop loss placed just below the HVN, as it is likely to act as support. Price near LVN: Wait for confirmation of a breakout or rejection before taking a position, as price may move rapidly through this area. Price at POC: Look for reversal or breakout signals. If the price is near the POC, the market may change direction or continue in the current trend. Price above POC: This indicates a bullish trend continuation. Look for buying opportunities. Price below POC: This indicates a bearish trend continuation. Look for selling opportunities. Tips for Beginners Wait for Confirmation: Always wait for confirmation from price action, other indicators, or candlestick patterns before entering a trade. Combine with Trend Indicators: Combine the VRVP with trend indicators such as moving averages to ensure you’re trading in the direction of the overall trend. Use Volume Spikes: Look for volume spikes alongside the VRVP to confirm breakouts. Practice First: Start using the VRVP tool on a demo account before risking real money to get a feel for its nuances. Tips for Experienced Traders Use Multiple Timeframes: Use the VRVP tool on both longer (daily) and shorter (hourly) timeframes to identify the strongest support and resistance levels. Track the POC Shifts: Observe how the POC moves over time. An upward shift suggests a bullish market, while a downward shift suggests a bearish market. Combine with Fibonacci Retracements: Combine the VRVP with Fibonacci retracement levels to identify confluence zones, where high volume areas coincide with Fibonacci levels, increasing the likelihood of price reactions at these levels. Conclusion The VRVP tool on TradingView is a versatile and powerful tool that offers valuable insights into market structure by analyzing trading volume at different price levels. By understanding how to read and use the VRVP tool, you can identify key support and resistance levels, predict potential breakouts, and refine your entry and exit strategies. Whether you’re a beginner or an experienced trader, the VRVP can be a valuable addition to your trading toolkit. Start practicing on a demo account and gradually incorporate the VRVP tool into your strategy. With time and experience, the VRVP will help you gain a deeper understanding of market dynamics and improve your overall trading performance. ------------------- I hope you found this guide on the VRVP tool helpful and that you’ve gained some valuable insights to improve your trading strategy. If you learned something new, don’t forget to give a like! If you have any questions or need further clarification, feel free to leave a comment below. I’d be happy to help!
KRAKEN:BTCUSDEducation
by TehThomas
12
Understanding Volume In TradingVolume is one of the most crucial yet often overlooked aspects of trading. It represents the total number of shares, contracts, or lots traded in a given period and provides insight into the strength of price movements. By analyzing volume effectively, traders can identify trends, confirm breakouts, and detect potential reversals before they happen. Unlike price action alone, volume adds a critical layer of confirmation. A price move supported by high volume is more likely to be sustainable, while a move on low volume may indicate weakness or manipulation. Institutions, hedge funds, and large market players leave footprints through volume, and understanding these patterns can give traders an edge. Volume Types 🎯 Volume Buy/Sell Volume Delta Volume Cumulative Delta Volume Relative Volume Cumulative Relative Volume Open Interest Volume Profile 01. Volume 🔥 In trading, volume refers to the total quantity of assets traded during a specific time frame, whether they are stocks, futures contracts, options, or currencies. It measures the activity level of a security and provides insights into the strength or weakness of price movements. Key aspects: Market sentiment: High volume often indicates strong interest in a security and can signal the strength of a price move. Conversely, low volume may suggest a lack of interest and can indicate that price movements may not be sustainable. Liquidity: High volume generally indicates better liquidity, meaning it is easier to enter and exit positions without significantly impacting the asset’s price. Low volume may lead to higher slippage and greater price volatility. Volume spikes: Extremely high volume after a prolonged trend may signal the end of that trend (blow-off tops or panic selling bottoms). Market types: Volume can vary by market type. In stock markets, it is usually reported in shares. In futures and options, it is reported in contracts, while in Forex, it is often measured by tick volume (the number of price changes). Impact on market orders & liquidity High Volume = Lower Slippage: Large orders can be executed more efficiently in high-volume environments. Low Volume = Higher Volatility: Thin order books in low-volume markets can lead to erratic price swings and wider bid-ask spreads. 02. Buy/Sell Volume 💹 Buy volume and sell volume are key metrics that indicate the level of buying and selling activity in a market. They help traders assess the strength of price movements and market sentiment. Buy Volume Buy volume represents the number of shares, contracts, or lots traded at the ask price (or higher). It occurs when buyers are willing to pay the seller’s asking price, indicating buying pressure and potential bullish sentiment. How buy volume is measured: Transactions that execute at the ask price are counted as buy volume. In some cases, aggressive market orders (where buyers take liquidity) are considered buy volume. Buy volume is often compared to total volume to determine demand strength. Sell Volume Sell volume represents the number of shares, contracts, or lots traded at the bid price (or lower). It occurs when sellers accept the buyer’s bid price, indicating selling pressure and potential bearish sentiment. How sell volume is measured: Transactions executed at the bid price are counted as sell volume. Market sell orders (where sellers take liquidity) contribute to sell volume. Higher sell volume relative to buy volume suggests downward price pressure. 03. Delta Volume ✨ Delta Volume (often referred to as Volume Delta) is a key order flow metric that measures the difference between buy volume and sell volume over a given period. Calculation Delta Volume is defined as: Delta Volume = Buy Volume − Sell Volume Where: Buy Volume is the total volume transacted at the ask price (aggressive buying). Sell Volume is the total volume transacted at the bid price (aggressive selling). Interpretation Positive Delta (Buy Volume > Sell Volume): Indicates more aggressive buying, suggesting bullish momentum. Negative Delta (Sell Volume > Buy Volume): Indicates more aggressive selling, suggesting bearish momentum. Near Zero Delta: Indicates a balance between buyers and sellers, often seen in range-bound markets. 04. Cumulative Delta Volume ⚡ Cumulative Delta Volume (CVD) is an advanced order flow metric that tracks the cumulative sum of Delta Volume over time. Calculation CVD t ​ =CVD t − 1 ​ + (Buy Volume − Sell Volume) Where: Buy Volume = Volume transacted at the ask price (aggressive buying). Sell Volume = Volume transacted at the bid price (aggressive selling). CVD*t = Current cumulative delta value. CVD\*{t-1} = Previous cumulative delta value. Interpretation Rising CVD (Positive Delta Accumulation): Buyers are dominating, indicating bullish momentum. Falling CVD (Negative Delta Accumulation): Sellers are in control, signaling bearish momentum. Flat or Divergent CVD: A divergence between price and CVD can indicate potential reversals or absorption by large traders. 05. Relative Volume 📉 Relative Volume (RVOL) is a key trading metric that measures current trading volume compared to its historical average over a specified period. It helps traders assess whether a security is experiencing unusual trading activity and provides insights into liquidity, volatility, and potential price movements. Calculation Relative Volume is typically expressed as a ratio: RVOL = Current Volume / Average Volume Over A Given Period Where: Current Volume = The total shares/contracts traded in the current period (e.g., 1-minute, 5-minute, daily). Average Volume = The average volume over a past period (e.g., 10-day average, 50-day average). A higher RVOL (>1) means the security is trading at above-average volume, while a lower RVOL (<1) indicates below-average activity. Interpretation RVOL > 2: Indicates significantly higher-than-normal volume, often linked to news events, earnings reports, or breakout trends. RVOL around 1: Suggests normal trading activity with no unusual volume spikes. RVOL < 1: Indicates low trading activity, which may lead to weak price movements and lower liquidity. 06. Cumulative Relative Volume 💥 Cumulative Relative Volume (CRVOL) is an advanced volume metric that tracks the total volume traded throughout a session relative to its historical average at the same time of day. Calculation Cumulative Relative Volume compares the ongoing total volume at a given point in time to the average cumulative volume at that same time over a historical period. CRVOL = Cumulative Volume at Time X / Average Cumulative Volume at Time X over N periods Where: Cumulative Volume at Time X = The total volume traded from market open up to time X. Average Cumulative Volume at Time X = The average total volume at that point in time over a selected historical period (e.g., 10 days). N periods = The number of historical sessions used for comparison. A CRVOL > 1 indicates higher-than-normal trading activity, while CRVOL < 1 suggests lower-than-average activity. Interpretation CRVOL > 1.5: Significantly higher trading activity than usual, often linked to news events, earnings reports, or institutional participation. CRVOL ≈ 1: Normal trading volume, suggesting typical market conditions. CRVOL < 0.8: Below-average trading volume, often indicating low liquidity and reduced volatility. 07. Open Interest 📊 Open Interest (OI) is a key metric in derivatives markets (futures and options) that represents the total number of outstanding contracts that have not been settled or closed. It is an important indicator of market activity, liquidity, and trader commitment. How it works? Open Interest increases or decreases based on the interaction between buyers and sellers: OI Increases: When a new buyer and a new seller enter the market, creating a fresh contract. OI Decreases: When an existing buyer and seller close their positions (either by offsetting trades or expiration). OI Unchanged: If an existing contract is transferred between traders (one trader closes, another opens an equal position). Interpretation Rising OI + Rising Price: Suggests strong buying interest, indicating a bullish trend with conviction. Rising OI + Falling Price: Indicates strong selling pressure, confirming a bearish trend. Falling OI + Rising Price: Signals a short-covering rally or weakening trend, as traders close positions. Falling OI + Falling Price: Suggests a lack of commitment to further declines, indicating potential trend exhaustion. 08. Volume Profile 🎢 Volume Profile is a powerful market analysis tool that plots trading volume at different price levels over a specific period. Unlike traditional volume indicators, which show volume per time interval, Volume Profile reveals where the most buying and selling activity occurred, helping traders identify key support and resistance levels, market structure, and potential price reactions. Components Volume Profile is displayed as a histogram on the vertical axis, showing the amount of volume traded at each price level. It is built using tick data or intraday price action and is often calculated for different timeframes (daily, weekly, monthly, or custom sessions). Key components of Volume Profile include: Point of Control (POC): The price level where the highest volume was traded, acting as a major support/resistance zone. High Volume Nodes (HVN): Price areas with heavy trading activity, indicating consolidation zones where price is likely to stabilize. Low Volume Nodes (LVN): Price areas with little trading activity, often leading to fast price movements as there is little resistance or support. Value Area (VA): The price range where 70% of the total volume was traded, representing the "fair value" zone of the market. Value Area High (VAH) & Value Area Low (VAL): The upper and lower boundaries of the Value Area, acting as dynamic support and resistance levels. Types Session Volume Profile: Analyzes volume for a single trading session (daily or intraday). Composite Volume Profile: Covers a longer period (weeks, months, or custom-defined ranges). Fixed Range Volume Profile: Analyzes volume for a specific price range or custom-selected area. Developing Volume Profile: Updates dynamically throughout the trading session to show real-time changes in volume distribution. Interpretation POC as a Magnet: Price tends to revisit the POC due to high liquidity and market agreement at that level. Breakouts from Value Area: If price breaks above VAH with strong volume, it signals a bullish trend; if it breaks below VAL, it signals a bearish trend. Reaction at LVN: Price moves quickly through LVN areas but may reverse or stall when approaching HVN. Rejections at VAH/VAL: If price rejects VAH, it may return to POC or VAL, and vice versa. 09. Indicators 📦 Volume indicators help traders gauge market strength by analyzing the number of shares or contracts traded. Volume (Default) – Displays the total volume traded per candle, often color-coded based on price movement. Volume Profile (Fixed Range, Session, Visible Range) – Shows volume distribution across price levels to identify support and resistance zones. Volume Weighted Average Price (VWAP) – A dynamic support/resistance line that calculates the average price based on volume. On-Balance Volume (OBV) – Measures cumulative volume flow to detect price trends and confirm breakouts. Money Flow Index (MFI) – A volume-weighted RSI-like oscillator that identifies overbought and oversold conditions. Volume Delta – Measures the difference between buying (ask) and selling (bid) volume. Cumulative Delta Volume – Tracks the cumulative sum of volume delta over time to assess buying/selling pressure. Relative Volume (RVOL) – Compares current volume to historical averages to highlight unusual trading activity. Key Takeaways 📋 Volume is a crucial market indicator that reflects trading activity and liquidity, often preceding price movements. High volume confirms trends and breakouts, while low volume can signal weak or false moves. Volume Profile identifies key support and resistance zones, with High Volume Nodes (HVNs) acting as strong barriers and Low Volume Nodes (LVNs) allowing fast price movement. Relative Volume (RVOL) highlights unusual market activity, while Delta Volume and Cumulative Delta reveal buying and selling pressure. VWAP serves as a dynamic support/resistance tool commonly used by institutional traders.
CME:BTC1!Education
by CandelaCharts
9
Understanding Buy The Dip In TradingBuying the dip is a trading strategy where you take advantage of temporary price drops in an overall uptrend. The goal is simple: enter the market at a lower price before it resumes its upward move. It sounds easy, but knowing when and how to do it makes all the difference. In this guide, we’ll explore key setups, ideal market conditions, and smart risk management techniques to help you trade dips like a pro. 🚀 1. Understanding Market Structure 🏗️ Before jumping into a trade, it’s crucial to understand how price moves. A strong uptrend is characterized by higher highs and higher lows—this is where buying dips can be very profitable. But beware: not every drop is a buying opportunity. Some dips are part of a pullback, a temporary retracement before the trend resumes, while others signal a complete reversal—the last thing you want to buy into. Key levels to watch include support zones, Fibonacci retracement levels, and high-volume areas. These zones act as potential turning points where the price is likely to bounce. 2. Proven Setups for Buying the Dip 🎯 🔢 Fibonacci Retracement Support When the price pulls back within a strong trend, it often lands on key Fibonacci levels like 38.2%, 50%, or 61.8%. These act as natural support points where buyers step in. If a strong bullish candle appears at one of these levels, it can signal a solid dip-buying opportunity. Combine this with an oversold RSI and rising volume, and you have a strong case for entry. 🎭 Liquidity Grab (Stop Hunt) Markets love to shake out weak hands. Sometimes, the price dips below a previous low, triggering stop-loss orders before reversing sharply. This is called a liquidity grab—smart money accumulates positions while retail traders panic. If the price quickly reclaims the level it just broke, it’s a strong buy-the-dip signal. Look for big buy orders, a sharp recovery, and bullish candlesticks to confirm entry. 📊 Anchored VWAP Test Institutions often base their trades around VWAP (Volume Weighted Average Price), especially when anchored from a significant swing low. When the price revisits this VWAP in a strong uptrend, it’s a potential dip-buying zone. Watch for bounces off VWAP, rising volume, and confluence with other support levels for confirmation. 🔥 Point of Control (POC) Revisit Markets move towards areas of high liquidity. If the price revisits the Point of Control (POC)—the price level where most volume is traded in a range—it often serves as strong support. When price pulls back into the POC and finds buying interest, it’s a great spot to enter. Look for strong reactions, failed attempts to move lower, and confluence with Fibonacci levels. 📏 Previous Range Support A breakout from a trading range is significant, but the price often returns to retest the range high as new support before continuing higher. If this happens on low selling pressure and aligns with moving averages or VWAP, it can be a golden buy-the-dip opportunity. Look for bullish reactions, buying volume, and strong candles off the level. 3. When Buying the Dip Works Best ✅ Not all dips are worth buying. The best setups occur when: The market is in a strong uptrend, making higher highs consistently. 📈 Volume is high, showing that buyers are stepping in. 🔥 Macro conditions support upside movement, like favorable economic news. 📰 4. Risk Management: Protecting Your Capital 🛡️ Even the best traders take losses. What matters is how you manage risk: Set a Stop Loss 🎯: Always place a stop below key support levels. Position Sizing 📊: Never risk more than a small portion of your capital per trade. Have an Exit Plan 🚪: Know where you’ll take profits, whether it's at a resistance level or a trailing stop. Scale In and Out 🎢: Enter gradually instead of all at once, and take profits along the way to lock in gains. Key takeaways 🎤 Buying the dip can be a powerful strategy—when done correctly. The key is patience: wait for strong trends, allow price to reach significant levels, and confirm with volume and momentum. Combine technical analysis with solid risk management, and you’ll improve your chances of success in the markets. Happy trading! 🚀
CME_MINI:ES1!Education
by CandelaCharts
6