Skip to main content

Strategy High Winning Potential Volume Profile Trading Strategy

Subject

#1
Volume Profile strategy is claimed to be one of the dynamic trading strategies as it is the representation of the current volume of buyers and sellers that are participating in moving the price high or low.

I have used volume profile from TradingView charts in this example which is a paid indicator.

You can use Volume Profile Indicator and Market Profile Indicator for MT4 for this strategy and they are free.

Just starting with the simple basics of the best volume profile trading strategy. For every Buy, there was a sell in the market and for every seller there is a buy. Volume represents the number of contracts or shares traded. Volume is mostly preferred while trading stocks or futures. This can be considered in Forex too. As forex is traded Over The Counter, It is difficult to get the full volume details of any currency. However, the majority of forex traders prefer volume as criteria for their decision.

Yes, the volume helps to decide the price direction dynamically. You may get lot of posts, books and videos on this topic. 

As this strategy mainly deals with volume profile tool, let me just give a basic detail on this. The volume profile tool helps in identifying where the majority of volume of trades are traded. 

There are three important things to remember in volume profile trading.

1. The POC- Point of Control represents the price where there was high activity of trading. There are majority of traders who always rely on POC for decison.
2. The Value Area- This represents where the 70% of trades are happened. Price tens to attract to this area.
3. The Low volume nodes- This area represents where there was very less volume or less trades traded. Price doesn't stay for long time in this area as it will be trying to find a fair value.

Refer to below image

[Image: VProfile.png]

The Strategy:

Every day at the end of day session/NewYork session, I will search if there is any pair which is closing at the low value area. If the last closed candle/price closed in the low volume area, I would consider taking a trade towards the value area. The major idea behind this strategy is "The price always tends to move towards the fair price where sellers and buyers are in agreement". This is based on volume profile intraday trading strategy where traders performs trades based on the previous volume area high and low to decide the direction of price. Session volume profile strategy is also similar to this but this strategy is mainly based on end of the day price position.


Refer to below example of buy trade in 1HR chart

[Image: BuyTrade.png]

Price closed in the low volume area in 1hr chart @1.16729. Price tends to reach the high value area. Open a buy trade with Take profit as last node in low high value area. Regarding stop loss, I will discuss in the money management.

Below will be the trade I will take Buy @1.16729 and TP @1.16917 near low of value area.
  [Image: VProfileLong-2.png]



Below is the example for sell opportunity

[Image: VprofileSell-1.png]

The days last candle closed at the low value area @1.18573. Sell @1.18573 with TP to Value Area high.

[Image: VolProfileSell.png]


FYI volume profile is a paid indicator on Trading view. However, you can try for free. Also there are many brokers providing volume profile in their Trading platform and multiple meta trader indicators available for Volume profile which you can try.


Money Management:
Always use 1% or 2% of your margin.

StopLoss: You can use either 1:1 ratio or use grid to place trades based on the pips you are targeting. I personally use grid for this to always reach the profits or use breakeven.

 
you may try to identify trades on multiple pairs to get multiple opportunities. Also this can be used on Stocks and futures works but please use tight SL incase of stocks and futures or crude oil.

Also some of the brokers my charge high spreads during first candle open time. So I actually place the trades 10 or 15mins before the last candle close to avoid high spreads.
Reply

Create an account or login to comment

You must login to comment

or
Task