The Volume Profile Setup That Never Gets Old

This is the first Volume Profile setup I ever started trading, and it is still one of my favorites today. In this video, I’ll show you how to trade it, why it works, and why this setup never gets old. So, let’s get to it.

This setup is based on the fact that big trading institutions need to place their orders in a rotation. The reason is that they control massive volumes and massive capital, which they need to allocate in the market, and they can’t do it when there’s a trend because they want to do it slowly and unnoticed. They want to hide their actions and their intentions, right? So, they do it when there is a rotation. When there is a rotation, they can slowly and unnoticed place their orders, and when they are done with that, they manipulate the price into a trend. All right. So, with this setup, the first thing you want to do is look for a rotation that is followed by a trend. The reason is that in a rotation, heavy volumes, heavy institutional volumes, got accumulated. Big guys entered their positions, and then they pushed the price. In this case, they pushed the price downwards.

Now, if you look at this picture, then this gives us very useful information that we can use in our trading. We know that in this rotation, big trading institutions, the big guys, were entering their positions, right? We see that on the Volume Profile. You can see that there were massive volumes there. You see that the Volume Profile is very wide there, right? Then there was a sharp sell-off and a downtrend. So, this tells us that those guys were entering shorts slowly and unnoticed, and then they manipulated the price downwards. That’s the information we have now. How do we work with that? You identify where the heaviest volumes got accumulated in the rotation area. In this case, I hope you can see it. It was in here. This is where the Volume Profile was the thickest. All right. So, you draw a line there and wait for the price to return to this level again. In other words, you wait for a pullback. It doesn’t really matter how long you wait. Markets have great memory. What you do is you simply draw the line there, set an alarm or set a limit order, and wait for the pullback.

When there is a pullback, you want to enter your trade at first touch, and you want to enter the trade in the direction of the trend. So, there was a downtrend right in here. That’s why you want to place a short from there. And that’s the whole thing. That’s the whole setup. Just make sure that you use the flexible Volume Profile in the whole rotation area. This whole rotation area, right? Because you want to see how the volumes were distributed throughout the whole rotation area.

Now, this is the setup, but let me now show you the reasoning behind the setup. Let me tell you why it works. So, this is another example of the Volume Accumulation Setup. There was a rotation in here with massive volumes created and traded at this price level. Now, from that, there was strong buying activity and an uptrend. This is the first step of the Volume Accumulation Setup, right? Find a rotation followed by a trend.

So, what happened in here? First, strong buyers were accumulating their positions in a rotation right there. Those are the strong buyers. Then, strong buyers are pushing the price aggressively upwards. That’s the uptrend. Then, sellers took over, and the price went downwards towards this level. What happens when the price makes the pullback to that level, to this zone where the strong buyers were? Those buyers want to defend this zone. If the price goes past it, then those guys will start losing money. This zone is important for them. They accumulated their positions there, and then they pushed the price upwards from there, right? So, they don’t want to see the price go below the place where they placed their positions, right? So, what they do is those strong buyers aggressively defend their long positions and push the price higher. This is strong buyers defending their long positions.

So, this is the first factor that drives the price upwards from the heavy volume zone. But there’s also a second factor. We can’t really tell which factor is stronger, but there are always two factors that help to move the price away from the heavy volume area. So, this is the same picture again. Buyers, uptrend, pullback, and this is the second factor. Sellers are getting rid of their selling positions using buy orders now. What does that mean? Those sellers are pushing the price downwards, right? But when the price hits this important area, this heavy volume area, the sellers from this zone don’t really want to risk a fight with the strong buyers from this place. So, what they do is they quit their positions. They don’t want to risk the fight. So, they quit their short positions. They quit them here. They don’t want to risk the fight. When somebody is short and they want to quit their trade, they need to buy, right? And when they buy, they help to drive the price upwards. That’s the buy order that helps to drive the price upwards, right?

So, that’s the second factor. The first factor is buyers defending their longs. The second factor is sellers getting rid of their shorts. Both factors are pushing the price upwards from heavy volume areas, right? Now, this doesn’t only apply to the Volume Accumulation Setup. It also applies to other volume-based setups because that’s sort of universal logic, right? Every heavy volume area is a very strong support or resistance zone, and it applies everywhere.

Now, let me give you some more examples of the Volume Accumulation Setup so you get more acquainted with it. In here, what you can see is a rotation followed by a strong trend. So, what you do is you use the flexible Volume Profile to look into the rotation and see if there were heavy volumes there and how they were distributed there. The heaviest volumes in this zone were in here. So, you draw the line there, set an alert or a limit order, wait for a pullback, and go short at first touch. There’s no need for any sort of confirmation. You just enter the trade. If there is no macro news when the price hits this level, then you can just enter it and go short right away, right?

So, next example. This was AUD/JPY. Heavy volume area in this rotation. Massive volumes right there. And from there, crazy strong buying activity. So, that’s the Volume Accumulation Setup, right? Strong buyers were building up their positions in here, and then they pushed the price upwards. So, this is the important support marked by those heavy volumes. What do you do? You wait for a pullback. When the price hits the level, you go long, right?

Another one. This is a short trade scenario. Again, there was a rotation that was followed by a really strong sell-off. So again, this is a sign that strong and aggressive sellers were building up their shorts in here, and then they pushed the price downwards. So, what you do is you wait for a pullback, and when the price hits that level, you go short. Now, maybe you’re looking at those lines that I have in here, those gray and yellow lines. Now, those are not Bollinger Bands or standard indicators. That is, in fact, the VWAP indicator, which is another volume-based indicator that I like to use as a little addition to Volume Profile. Volume Profile is my main trading tool, and VWAP is sort of an additional tool that I like to use to complement the Volume Profile with. So yeah, I just wanted to mention that if you are wondering, those are not Bollinger Bands. This is another volume-based indicator that I like to use with Volume Profile. But anyways, this webinar is about my main trading tool, my most favorite trading tool, which is Volume Profile. So, let’s focus on that.

Now, this is the last example of the Volume Accumulation Setup that I have here. This one was on EUR/GBP. There was a rotation, a pretty tight rotation in here, and in that rotation, you can see that there were massive volumes traded. All right. From there, there was strong buying activity. This one. So, buyers were building up their longs, and then they pushed the price upwards. What do you do? You wait for a pullback, and then at first touch, you go long, right? That’s how the setup goes.

So, that’s about that, guys. I hope you liked the video. I hope you like the Volume Profile setup. And if you want to learn more about my way of trading and get your hands on my custom-made Volume Profile indicators, you want to visit my website, which is trader-dale.com. And if you click this button here, which says Trading Course and Tools, then you can browse my trading education and custom-made trading tools there, right? So, thanks for watching the video, and I’ll see you next time. Until then, happy trading.