AXIA Futures: Volume Profile

Inside Profile: Profile que tiene la mayoría de su volumen dentro del VA del día anterior. A continuación, un ejemplo.
• Posible Setup: Luego de un Inside Day es muy probable que al romper la zona de volumen continúe la extensión
dejando una zona importante sin trades. La idea es esperar el breakout y entrar largo o corto en el testeo de la zona.

Initial Balance:

• In side day:
• Mirar el initial balance para determinar movimiento junto con el contexto. Si rompe la zona formada por el perfil
del dia anterior es muy probable que continúe en línea con la tendencia.
• Si por algún motivo no logra romper la zona es muy probable que haga un fuerte reverso buscando el otro extremo.
Buying or Selling Tales:
• Agresivamente sube o baja generando una cola. Es muy probable que continue cuando inicie el segundo TPO.

Weekly Profile:
• Muy probable que al acercarse al High or Low de la semana es muy probable que falle al cruzarlo y que genere un
fuerte reverse.
Strategies for potential reversal
1. Loss of momentum (less frequent): Volume simple dries up at the extreme as if everyone is now fully committed
and no one left to participate. The transfer of control is relatively calm before reversal occurs.
2. Excess (Frequent): Market makes a dramatic move higher or lower on lower volume before the action process is
quickly reversed V-reversal. Strong auction reversal process (high or low volume).

3. Strongest reversal: Combination of volatility, volume and excess prices. Powerful bottoms and tops result. There
are strong risk reward metrics in identifying these opportunities.
Types of Opening

• Open Drive
• Open test drive

• Open rejection reverse

 • Open Auction

PRE-open routine
Trade Location

• Open in value area

• Open Outside value/in range

• Open Outside value

Normally markets tend to trend from a balance distribution, within range and then start trending. Control variables are
key small or big distributions/accumulation. Looking for a tail.

Potential entry point after breaking IBH or IBL, high initiative means no or small pullbacks leaving away from those prices
and leaving a low volume area.

Normally in P or b profiles after selling or buying initiation there is a V reversal, strong rejection.
For P: After V rejection wait for test in VPOC or VAL of current or previous day and go with fresh shorts. Then Start
playing the accumulation buying and selling.

For b: After V rejection wait for test in VPOC or VAL of current or previous day and go with fresh longs. Then Start
playing the distributions selling and buying.
Type of Volume Areas
Lowest Level of conviction:

• No trending nor momentum strategies

• Look for reversal, anomalies, distribution strategies. Any kind of strategies with short momentum
Overlap VA

• Evaluate which % of overlapping is happening. Keep a track of that information

• A little bit more conviction that previous example

• No overlap
• One time Framing
 • Showing who is in control in the short term

HVA & LVA

The way to trade a HVA, like the below example, is when the price moves towards the VA trade in direction to the other
VA.
Strategy 1:
• Important to evaluate trade location: In balance, Out Balance.
• Single prints generating LVA
• Size of the single prints. Wider indicates bigger initiative.
• We need to see a pick up of the volume & volatility.

• When it breaks we expect to see an extension of least 100%.

• Understand why LVA is being created, fundamental or technical.
 • With such level of initiative, we don’t fade the main trend direction.
• Execution 1:
o After markets has shown initiative
o We enter in the first Pullback. In front of single print.
o Execution aggressive. Very likely at market order.
o STOP: Above single print.
• Execution 2:
o After first pullback
o We enter more passive. Potential rotation lower or higher vs previous pullback.
o Execution passive. Very likely limit order.
o STOP: Above single print.

In both type of executions, we expect the market moves fast in the initiative direction. We should see either aggressive seller or
buyers. Watch out: If markets start consolidating, potential indication of failing.

Total movement expectation should happen in Max of 3 TPOs, if markets is not reaching in this period of time then we exit.
3 Types of LVA:
1. More aggressive move with big initiative
2. Previous P or b profile. We start looking for either selling or buying opportunities within the previous
volume area.
3. Previous day in value and during overnight session moves out value. Less confident move
Strategy 2:

• Connected with first strategy. When market start filling LVA we move from strategy 1 to 2. Moving from LVA to
HVA strategy.
• When market starts filling LVA we can see a 2-way trade.
• Time is important, filling process could happen the same day, the next day or the following.

Execution:
• Filling process can be slow from 1 dome (HVA) to the other or with big initiative going directly to the other HVA
and then rotate to keep filling the area. Depending of the movement and location is how we are going to execute
this trade.
• For a market filling up the LVA we are looking for buying opportunities in the first & second pullbacks.
• In terms or STOP and R/R, this trade is 1: 1.
• STOP should go below or above the line of breakout.
• For this strategy we are looking buying opportunities in the low HVA and selling opportunities in the high HVA.
• Market can fail to fill the LVA and then tend to keep going down or up in direction of the initial initiative.
• If that happens we can wait for first pullback and enter in the direction of the breakout.
Strategy 3
• Looking for opportunities in the first pullback
• Pullback 38.2% as reference, specially see if new buying/selling initiative appears.
• STOP 50% of the day.
• Rules: Open price is an absolute line that must not be tested, otherwise making Long or shorts from there can be
rejected.
Strategy 4:
• In confluence zones. Examples: Weekly high/Low with Daily high/Low, Previous day high/low with Initial balance
High/Low. Multiple confluence points.
• Initial range inside previous day range.
• Breaks with initiative, volume and volatility = Momentum.
• Changing 2way trades to one side trade only (One time framing).
• Multiple participants looking for these confluence levels.
Execution
• Entrance is aggressive at market.
• We stay in until not seeing clear reversal initiative.
• STOP is below or above the breakout.
• Tight risk and big opportunities.
 • When markets return and breaks previous breakout in opposite direction we should start looking for
buying/selling trades and using the previous breakout level as R or S.

Strategy 5:
• Consolidation can be days, weeks or even months

• If consolidation fails to hold, we would start looking for aggressive reversal back to consolidation area expecting to
last until other side.
 Execution
• Consolidation or inside day, 1 vs 2. Breakout up or down, that's the place to enter.
• STOP above/below breakout level.
• If breakout happens against the short-term trend is more powerful.
• We must see initiative to confirm breakout.
• Volume pickup & volatility.
• We expect to see control areas, LVA.
• When consolidation is longer in time the breakout range is bigger in extension
3 types of consolidation

1. Multiples days consolidating one to the other, having a inside day every day.
2. In side day. Less powerful than the previous scenario
3. Days consolidating close to important R or S. Not necessarily has to be an inside day

Strategy 6:

Reason for wide IB:

• Fundamentals: New fundamentals hits the market overnight.

• Technical: Open beyond an important technical level touching stops and initiating the movement.
• Early initiative from long term participants.
• SMA can be utilized to see the average range and confirm the wide initial balance.
2 Options,

• Having a Wide IB the market goes in one extreme fails and keep distributing making a P or b profile.
• Second option Market opens within IB and keeps distributing within that wide IB the rest of the day.

Execution:

• We are looking for the market making a breakout and failing to continue and then we enter long or short.
• Extension can be an important portion of the wide IB.
• STOP is below/above the market breakout extension.
• R/R depending of the type of market is bigger or lower. When market makes the move but keep doing a P or b
profile R/R will be lower. If market makes a balance profile trade extension can be much higher.
Trending Strategies

• All time frame initiates in one direction

• One-time framing
• Market is not waiting to much time on important levels
Strategy 7:
• All participants trading in the same direction.
• Very infrequent occurrence, 5%-25% of the time.
• Very likely trend will be present more than 1 session.
• Phases: Early – Mature – Late.
• Lack of prices overlaps / Lack of respect for levels.
• Volume, momentum and range expansion.
• It can be created by fundamentals or technical reasons.
• Fundamental trending can be uncomfortable to trade due to excess of volatility.
• Trending occurs in an early stage of the session, 2-3hours Max.
• Trend day last the entire day

Early identifies:

1. Potential engulfing prints

2. Taking the IB high/low and missing to re-enter
3. Markets creates a LVA with single prints.
4. It can be identified as double distribution profile; main difference is timing. Market moves in early stage.
5. Another difference is VPOC starts moving in the directions of the trend. (up or down)

Execution:

• Market leaves small areas of distribution/accumulation before continuing

• That’s the zone for entering
• STOP below consolidation area
• R/R: Unlimited, depending of fundamental/structural initiative
Strategy 8:
• High probability if the first trending days was created by fundamental initiative is to have a second trending day
• If trending day was created for a technical reason, then the high probability is to have a distribution day type.
3 types of second days:

1. After first trending day the market attend to extend it fails and makes a distribution area.
2. Second option, market fails to extend and starts distributing, in side day.
3. Market breaks previous day range and shows strong initiative to extend and makes a second trending day.
Execution:

1. Retest of the previous day high. Highest probability.

2. Market breaks previous high but fails to hold so we should enter short/long against the initial market direction
looking for a strong rotation.
3. Looking for a pullback and new Initiative wave. New initiative is created for those not entering in the first day not
willing to pay a too high or too low price but willing to pay in pullback.
Strategy 9:
• Engulfing = Volatility
• Second day covers the previous value area.
• Reason for engulfing
o Positing change, from buyers to short control.
o Fundamental shift changing trending direction.
• Market close is key. It helps to identify early market sentiment, not direction. Also, is very likely during next session the
market will retest that market extreme based on closing position.
Execution
• Relative passive execution.
• When market breakout an extreme of the engulfing day we take the trade
• STOP above the breakout level
• Look for initial initiative but remember movements are not so aggressive in these days.
 • We look for rallies pullbacks and small extension.

Reversal Strategies
Strategy 10
• Going counter the prevailing trend
• Imperative to manage the risk
• GAP: Created for fundamentals and technical reasons
• Fundamental GAP not always fills up.
• On the other hand, GAP due technical reasons very often get filled the same day of the day after.
• BIAS in the market, positioning

• Rules:
• Does the market fill the GAP?
• Does reenter the range?
• Does the market reenter the previous day VA? Key for this strategy

In GAP day 3 options can happen

1. Markets starts with high volatility, fails to fill the GAP and continues the initial movement making a distribution.
2. Markets re-enter the previous day range and keep distribution in that area
3. Markets fills the GAP, reenter previous day range and reenter previous day VA.
Execution:

1. After 3 rules we enter long/short with target on the other VA extreme.

2. We enter only if we close a TPO (candle) inside VA.
3. STOP goes either below high or above low from the previous day.
4. If GAP comes from a fundamental higher probability to have a much stronger reversal.

Strategy 11
1. We look for a Tail, single or hidden TPO
2. Higher the tail bigger opportunity
3. Symmetrical Tail or Non-symmetrical Tails. For first option execution is more aggressive.
4. We need to wait until candle close to confirm the Tail.
Execution

• Having the candle close and confirm tail we identify either symmetrical or non-symmetrical tail.
• For symmetrical tail execution is more aggressive with initial STOP above the highest tail price.
• For this execution we can use a trailing STOP or move the STOP because the market shows more aggressive initiative.
• For non-symmetrical tails we should enter more passive and maintain STOP in the original position until market shows a non-
return movement.
• We should stay in the trade until either aggressive buyers or sellers enter in the market.

Non-symmetrical Tail example:

• Enter when tail is confirmed, STOP is above or below the tail

• Movement is slower than symmetrical tails
Symmetrical tail and hidden tail examples:

• When TPO close (candle) and second candle open we enter aggressive to the opposite direction.