Volume Profile Value Area High/Low

Entry Logic

• Enter short on a test of the Volume Profile Value Area High (VAH).
• Confirmation: A bearish reversal candle at the VAH.
• Timeframe: 30-minute chart.
• Location: At the VAH.
• Market Condition: A balanced, range-bound market.

Exit Logic

• Profit Target: The Value Area Low (VAL).
• Scaling Out: Not recommended.
• Trailing Stop: A close above the VAH.
• Signal Failure: A close above the VAH.
• Opposite Signal: A bullish reversal candle at the VAH.
• Time Expiration: End of the day.
• Momentum Loss: A failure to reach the VAL.

Stop Loss Structure

• Hard Stop: Above the high of the reversal candle.
• Soft Stop: A close above the VAH.
• Max Dollar Loss: $110 per trade.
• Max Percent Loss: 1.1% of account.
• Structural Stop: Above the VAH.

Risk Management Framework

• Risk Per Trade: 0.55% of account.
• Daily Limit: 3 losing trades.
• Weekly Limit: 5% drawdown.
• Max Drawdown: 15%.
• R:R Requirement: Minimum 1.5:1.

Position Sizing Model

• Sizing Approach: Fixed fractional.
• Volatility Adjustment: No adjustment needed.
• Conviction Sizing: Full size on A+ setups.
• Scaling In: Not recommended.
• Scaling Out: Not recommended.

Trade Filtering

• Market Conditions: Only trade in balanced markets.
• Setups: Look for tests of the VAH or VAL.
• Instruments: High-volume stocks and futures.
• Time Restrictions: No restrictions.
• Chop/News Avoidance: Avoid trading around news.

Context Framework

• Trend Direction: Not applicable.
• VWAP Relationship: Price should be near VWAP.
• MA Relationship: Not applicable.
• Range Location: At the VAH or VAL.
• Higher TF Alignment: The daily chart should be balanced.

Trade Management Rules

• Breakeven: Move stop to breakeven after a 1R move.
• Scale Out: Not recommended.
• Add Size: Not recommended.
• Fast vs Slow Moves: Take profits at the target.

Time Rules

• Optimal Window: Any time during the day.
• Times to Avoid: None.
• Session Notes: Works well in all sessions.

Setup Classification

• A+ Setup: A clear test of the VAH/VAL with a strong reversal candle.
• A Setup: A decent test of the VAH/VAL with a good reversal candle.
• B Setup: A questionable test of the VAH/VAL or reversal candle.
• C Setup: Avoid weak setups.

Market Selection Criteria

• Instruments: Instruments with a clear volume profile.
• Volume: High volume.
• Volatility: Moderate volatility.

Statistical Edge Metrics

• Win Rate: 65%.
• Avg Win: 1.5R.
• Avg Loss: 1R.
• Profit Factor: 0.975.
• Expectancy: -0.025R per trade.

Failure Conditions

• The strategy fails in trending markets.
• Avoid trading if the value area is not well-defined.

Psychological Rules

• Be patient and wait for the price to come to the extremes of the value area.
• Do not force trades.

Advanced Components

• Regime Detection: Use a market profile to identify the market type.
• Filters: Use a volume profile filter.
• Correlation: Avoid correlated instruments.
• MTF Alignment: Ensure the higher timeframes are also balanced.

Location

• Strongest: In a well-established range.
• Weakest: In a strong trend.