Price & Volume, Knowing Oneself, and Riding the Next Wave

Morad Askar AKA “FuturesTrader71” gives us an inside look at his use of Volume Profile analysis.  As a proprietary futures trader, FT got his start as a member of the SOES Bandits before turning to the world of online trading with the goal of training retail traders in the same style as his prop traders. The main goal of this new venture would be to help traders become successful by using a more personal approach with an emphasis on the psychological and emotional aspects necessary for consistency in profitability. From a technical perspective, FT explains the market as an auction and the evolution of his own trading leading up to the Volume Profile analysis.  Traditional market indicators are derivatives of time, price, and/or volume, while the Volume Profile records only price and volume, eliminating time as a factor. Value of a market is constantly being perceived higher or lower as it prices-in new information, and is in search of an area where buyers and sellers agree on price. Being able to plot this data in a histogram form allows a trader to see many things including the most traded price or VPOC (Volume Point of Control), as well as accepted value and the strength or weakness of the highs and lows, for example. A trader can also see the aggregated volume for a specific number of balanced sessions (micro-composite profile) or all days in a range (composite profile) to see where price is being accepted or rejected on a larger timeframe.

The second part to this video identifies potential issues for a struggling trader. While one trader might be undercapitalized and unable to take enough trades to expose his/her edge, another may be dealing with issues related personality and risk comfort level. A trader is a high-performance athlete, and to be successful he/she must be disciplined and focused. Just like the road to becoming a professional athlete, there are no real shortcuts to success. That includes investing in the best tools available to you and not settling for lesser-quality software or data feeds because they are cheap, for example. It’s also important to document, journal, and do your own homework in order to remain consistent and be prepared. Then let the market speak to you and trade your predetermined hypothesis that seems to fit what the market is trying to do. Like a surfer, you want to align yourself with the next wave, plan your entry, and just ride it. No matter your success rate with surfing, remember that there are only two outcomes on the next wave; you either fall off, or you don’t. It’s important to remember that the next trade is not yet part of the data set on which your probabilities are based. The outcome is still a coin toss, fifty-fifty.

“Risk is your #1 job. If you take care of risk, everything else takes care of itself.”

-FuturesTrader71