Volume By Price Trading Strategy For Beginners
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๐งต๐
Volume by price is also known as:
-VRVP on TradingView
-Volume Profile
-VRVP on TradingView
-Volume Profile
Quick Definition
Volume by Price is a horizontal histogram shown directly on your chart. It shows you the amount of shares traded at each price level
Volume by Price is a horizontal histogram shown directly on your chart. It shows you the amount of shares traded at each price level
Before we get into the exact strategy, MAKE SURE YOU LIKE & REPOST THIS ENTIRE THREAD
They take a lot of effort to makeโฅ๏ธ
They take a lot of effort to makeโฅ๏ธ
Volume By Price Strategy
Today's strategy will be centered around finding volume shelfs and volume deserts. We will use those levels to create a trade plan with low risk, high reward, a stop loss, and a potential target
Today's strategy will be centered around finding volume shelfs and volume deserts. We will use those levels to create a trade plan with low risk, high reward, a stop loss, and a potential target
Finding Volume Shelfs
The spikes in volume are what we call a shelf. I prefer to use the top 3 highest volume shelfs as my 'levels'
The spikes in volume are what we call a shelf. I prefer to use the top 3 highest volume shelfs as my 'levels'
Finding Volume Deserts
The low volume areas between shelfs are what we call deserts
The low volume areas between shelfs are what we call deserts
The main thing you need to understand is shelfs are populated by a lot of buyers and sellers that will create bounces/rejections depending on what direction the price is testing them
Deserts are areas with less population. Price often cuts through them easily
Deserts are areas with less population. Price often cuts through them easily
Think of price action as a little termite trying to eat its way through this bookshelf (terrible example, I know)
Our termite friend will struggle with the shelves but will jump through the space between them
Our termite friend will struggle with the shelves but will jump through the space between them
Low Risk/High Reward
In order to get a low risk & high reward entry, we need to position ourselves near a shelf, and exit as we approach the next shelf
A stop loss directly under the shelf we entered on is what makes this strategy 'low risk'
In order to get a low risk & high reward entry, we need to position ourselves near a shelf, and exit as we approach the next shelf
A stop loss directly under the shelf we entered on is what makes this strategy 'low risk'
Shelf Bounce Strategy
As price touches the lower shelf, we need to be watching for a bounce setup. Once a bounce setup forms, we can enter
You can see my Stop Loss is positioned below the lower shelf, and Exit Level is positioned right below the upper shelf
As price touches the lower shelf, we need to be watching for a bounce setup. Once a bounce setup forms, we can enter
You can see my Stop Loss is positioned below the lower shelf, and Exit Level is positioned right below the upper shelf
Tip for Shelf Bounce Trades
Make sure your shelf bounce trade is supported by a high quality bounce setup
High volume lower wick, tweezer bottom, engulfing, high volume doji, etc
Make sure your shelf bounce trade is supported by a high quality bounce setup
High volume lower wick, tweezer bottom, engulfing, high volume doji, etc
Stop Loss
The stop loss protects us from the Volume Desert below our current shelf. If price breaks into that desert, it will likely test the next shelf to the downside
Positioning our stop loss in its current place will protect us from that downside
The stop loss protects us from the Volume Desert below our current shelf. If price breaks into that desert, it will likely test the next shelf to the downside
Positioning our stop loss in its current place will protect us from that downside
Exit Level
Exiting before we test the upper shelf protects us from the potential rejection that shelf will create. If we hold our entire position into the volume shelf, it could reject and we could end up back at entry
It's important to plan these exits before you enter
Exiting before we test the upper shelf protects us from the potential rejection that shelf will create. If we hold our entire position into the volume shelf, it could reject and we could end up back at entry
It's important to plan these exits before you enter
Shelf Break Strategy
If price is trending up, and we are showing no signs of a rejection once we enter a zone, you can look for a shelf break trade
You enter as the top of the shelf is broken, set your stop loss below the shelf, and exit below the upper shelf
If price is trending up, and we are showing no signs of a rejection once we enter a zone, you can look for a shelf break trade
You enter as the top of the shelf is broken, set your stop loss below the shelf, and exit below the upper shelf
Tip for Shelf Break Trades
I always wait for a retest after we initially break above the shelf. If that retest creates a bounce, we can enter confidently knowing the shelf has been flipped from resistance into support
I always wait for a retest after we initially break above the shelf. If that retest creates a bounce, we can enter confidently knowing the shelf has been flipped from resistance into support
One thing that sets Volume By Price strategies apart is the fact that they are rooted in real data
Lots of setups and trading strategies lack substance, but these have actual volume numbers to back them up
Higher volume within shelves, lower volume within deserts
Lots of setups and trading strategies lack substance, but these have actual volume numbers to back them up
Higher volume within shelves, lower volume within deserts
Simple Explanation
This strategy aims to enter near support, set a stop loss below support, and exit before we test resistance
This ensures your trade has a strong support level below and an easy volume desert above
This strategy aims to enter near support, set a stop loss below support, and exit before we test resistance
This ensures your trade has a strong support level below and an easy volume desert above
My Thoughts
-If you're new to Volume by Price watch the shelfs for a week or 2
-Not every shelf test or shelf break is worth trading
-The top & bottom of shelves will be defended, that's why we enter above/below
-If you're new to Volume by Price watch the shelfs for a week or 2
-Not every shelf test or shelf break is worth trading
-The top & bottom of shelves will be defended, that's why we enter above/below
I hope this thread helped y'all understand Volume By Price & add a strategy to your toolbox
If you are looking for a tight knit trading community, check out my Discord. The link is in my bio
If you are looking for a tight knit trading community, check out my Discord. The link is in my bio
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