Tracy Volume Profile Flashcards

1
Q

What are are components of the volume profile?

A
Value area
value area high
value area low
high of day
low of day
point of control (POC)
Low volume node
High volume node
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2
Q

Value Area

A

This is where 70% of all trading activity took place

another way of looking at it, is this is the average price zone

You want to buy a car model. it sells for anywhere between 1000-2000$

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3
Q

High volume Nodes

A

These are areas where interest picked up

They will be slow down points

They can be great areas for targets or resest areas

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4
Q

Low volume nodes

A

This is an area where there was not a lot of interest

Price will usually move quickly though these areas

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5
Q

How do you know if an LVN will be support or if price will move quickly through it?

A

you dont…

Look at the bigger picture

if things are trending then likely the LVN will act as support

If things are consolidating between two LVN then LIKELY price will pass through quickly.

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6
Q

Volume profile helps us understand what?

A

Where the support and resistance is and also as it hits these spots again as in a retest or will it drop.

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7
Q

Point of control and why is it important?

A

This is the point where THE MOST volume took place during the session. (accumulation or distribution area) For BIG MONEY…they take time to get in and out of a position. If price moves up from the POC then the volume was strong buyers (accumulation) and if the price moves down from the POC then the volume was strong sellers (distribution). THIS MAKES THEM VERY STRONG SUPPORT/RESISTANCE LEVELS. BIG MONEY…tend to defend their positions.

Daily & Weekly POC’s - MOST important for intraday trading

Monthly & Yearly POC’s - Most important for swing trading

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8
Q

What is the devPOC? Why is it important?

A

During a session the POC is still developing. The devPOC shows where the POC was as it develops.

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9
Q

Every reversal contains three components.

A

absorption

sellers fading (at support) buyers fading (at resistance) pressure dying

Buyers stepping in (at support), sellers stepping in (at resistance) pressure increasing

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10
Q

absorption vs consolidation

A

They look the same as far as the candles

the major difference is type of action (seen in volume)

this has to do with the pressure applied during absorption vs consolidation

consolidation is a resting state

absorption is a battle

(high volume)

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11
Q

Naked point of control.

A

Where a point of control has not been tested

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12
Q

D profile

A

Temporary Balanced Volume

Completed Auction

Ready to move into new price discovery

Balance between buyers and sellers

Sentiment: speaks rest, agreement, calm, non-emotional nor exited

point of control is smack dab in the middle

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13
Q

she uses the volume profile before the one developing until that one is done

A

The DevPOC, POC and in the afternoon only then can she use the volume profile

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14
Q

Initial Balance

A

the range created within the first hour of trading. Regular session.

Zone or trading range of the completed 1st HOUR of trading

9:30 am EST to 10:29 am EST (NYSE, NASDAQ, US Based instruments) 8:30 my time

24 hour markets (use the time when volume enters the market)

Primarily used in the futures markets.

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15
Q

Initial Balance - I use my statistics and knowledge of the IB to help hold or exit early

A

Large IB’s with large volume during the first hour typically leads to ranging days

IB range extensions make for great targets

Statistically speaking within the first hour of trading either the high or low is set for the day (typically around 75-80% of the time depending on the stock or index

Most trand days occur when the IB has broken within the second hour of trading (this is the first hour AFTER the IB has been formed)

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16
Q

In the morning what is going on if the range is big the first hour

A

The institutions have bought and are done

if the range is big its prob not going to to much more later that day. These are called “range days”.

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17
Q

What happens the second hour

A

Since the high or low is prob put in by first hour. if it breaks out of that first hour, it will generally become a trend day. If you can get a break outside of that range. the second hour needs to break out.

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18
Q

What is the difference between Normal Structure and Non TREND structure

A

Price rotates within the range set within the 1st hour of trading

2 Reasons for this:
Reason #1 all the business of the day has been taken care of within that 1st hour (typically larger IB’s with lots of volume in that 1st hour) - Normal Structure

Reason #2: Lack of interest (small tight IB’s with very little volume). Typically an inside day after a large directional - NON-Trend Structure.

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19
Q

What are Regular options?

A

Expiration is always the 3rd friday of every month. Anything else is a weekly expiration. Not all stocks have them.

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20
Q

If you sell puts and it goes to expiration

A

You have to buy the stock at the strike price

21
Q

anything not weekly on options is called?

A

regular. AKA 3rd Friday of every month. Youll see someone say RegularJuly or just July.

If tis’ a weekly they usually say July week 5

22
Q

IB

A

Range created within the first hour of trading. Initial balance

23
Q

VWAP volume anchored

A

Feb 2020 is where we are going in the market. George

24
Q

normal structure vs non trend structure. What are the concepts behind this.

A

volume is the difference between them
Normal and non trend are separate but look the same.

Price stays inside the high and the low for the first hour.

normal is business being taken care of the first hour
non trend is no one is interested. Days when you dont want to be trading. Volume is too low

These dont happen a lot, either one.

25
Q

Normal structure

A

Large IB
Lots of volume in first hour of trading
Price typically stays above or below the IB midpoint.
Initial Balance Breaks one side only. - IB breaks one side only. Close inside IB at the end of session (day)

26
Q

Non trend structure

A

Smaller IB
NO BREAK outside the IB
no VOLUME in the first hour of trading or throughout the session
Note price rotates across IB Midpoint (typically)

These tend to happen after days with big. moves in the market. Basically you will see the next day opening in the range of the day before ( inside candles).

27
Q

Normal variation structure

A

IB high is broken

Trend is not able to continue once outside the IB range and price rotates back inside

Ultimately closing inside the IB

Once there is a 30 min close back inside the IB, the likelihood of a normal variation increases.

28
Q

Neutral and Neutral Extreme Structure. What is the difference?

A

Initial Balance BOTH SIDES Break

Neutral Structure IB breaks on both sides with a close inside of the IB at the end of the session

Neutral EXTREME: the IB breaks on both sides with a close outside of the IB at th end of the session/day.

29
Q

Neutral Structure

A

IB High is broken

No trend is established and price fails at it retests the other side of the IB

Rotates back inside and closes inside the IB

30
Q

Neutral Extreme Structure

A

IB Low Breaks

Price reverse and trends through the other side of the IB

Trend continues and closes outside the IB

31
Q

Trend Day Structure

A

Initial Balance One Side Only Break
30 Min continuous trend during the morning sessions 12 EST

Close outside of the IB at session close

Close outside the IB on the 1/2 hour and never close back inside the IB with a 1/2 hour candle

you get a 30 min close outside of the IB and it never gets a close inside of tthat IB with a 30 min. It might put a wick in but the body will never close back inside the IB

IB LOW BROKE on the example
Close is OUTSIDE the IB
Trends nicely most of the day
Stays below the IB Mid and the VWAP
Dev POC trends continuously.
32
Q

What happens if it breaks out of the IB (3) 30 min candle

A

Trend day
Neutral structure
Neutral extreme

33
Q

How to know to stay in a trade/trend day

A

you can hold as long as POC is stair stepping and not shifting
30 min close outside of IB and hasn’t closed back inside
(if closes back into the IB could be a trend variation day. cant stay in long)
isn’t at a support or resistance yet
S curves working

34
Q

Trend Day/Normal Variation Structure. Key Features? Chop but you can find profit opportunities

A

Initial Balance One Side Only Break
Close outside the IB at session close
Does NOT close across the VWAP or IB MIDPOINT on a 30 min candle
30 min does not trend cleanly
These are hard to hold days that seem to keep grinding in one direction

35
Q

find out where she gets the statistics tool

A

She can tell how often a certain stock will break IB and retrace back to VWAP. SPY, QQQ pretty regular. AMD. not

36
Q

Double Distribution Structure

Key Features?

A

Initial Balance One Side/Both Sides Could Break

Very RARE
Price consolidates followed by some type of pick up in activity followed by additional consolidation
Usually a reactionary response after a news event

37
Q

Why do we want to know the different Structures and how they behave?

A

Help you relax during a trade
Note: the IB breaks to the high side
A trend Day closes outside the IB and then never closes back inside the IB with a 1/2 hour candle. So that’s your fail point. As long as we dont close back inside the IB we can continue to try for higher targets.

38
Q

One extension of the IB

A

Shes got a target here at one extension of the IB. The red line at the top. This is the same distance as the bottom of the IB I gues.

39
Q

with a normal structure it’s what?

Shes looking at the afternoon here. What is she showing?

A

Where the IB high and low didn’t break.

Later in day depending on how the day is forming can lead to additional high probability set ups.

EXAMPLE: IB is Large IB has not been broken Difficulty holding outside prior value

Current profile is looking fairly balanced

Sell at the current value area high and/or buy at the current value area low
She took the trade wheen it hit the high end of value - shorted.

40
Q

In order for a trend to establish itself…

A
  1. You have to break out of prior value.
  2. We need a big range
  3. lots of volume
  4. current profile is not developing with the normal distribution/balance.
    When you see balance, dont take trades. You have to short or buy at the very edges of value.

If you’re ranging you dont want to set up trades.
if you are in consolidation

If it’s morning. you use the profile from the day before

41
Q

Intraday layout. this is the statistics chart I htink

A

Shes working on alerts to select for dips too
She uses 10 ema as a stop management tool. Can move stop to an untested pivot.
You can build into the indicator for an alert that goes with a trend line!

42
Q

for her indicators turn off extended hours

A
43
Q

When we do open up inside prior days value there is a good chance that it’s going to retest the?

A

prior point of control

44
Q

Point of Control

A

Where most volume took place. A price
Accumulation and distribution area
typically for big money
POC is spread out a bit because they cant get filled all at one time. They have to buy and sell in big chunks (ice berg orders). Could be one order at once price. Or they continue to do it over time. - accumulation or distribution. This could take days, weeks or months.
If they get in or out all at once they would get a bad fill bc there may not be enough limit orders.
they have a tendency to support their position.
For day trading - pay attention to Daily and Weekly POC
Swing - monthy, yearly (and also weekly and daily)

45
Q

absorption

A

if the price is changing and then we reach a price of support. At this level the sellers can no longer chew throuigh the limits or passive participants. So their orders get absorbed.
If you see a lot of volume, it’s telling you that the buyers are absorbing a lot of that selling pressure.

46
Q

If market is going down and then we hit a consolidation and the volume goes down, what does this mean.

A

Amount of sellers is going down.

47
Q

Consolidation

A
  1. Price starts to stay in a the same general area
  2. If volume goes down the amount of buyers/sellers in that area are giving up
  3. there is going to be an increase in volume if the stock reverses. You get the break out volume but then you need to see the continuation volume as well.
48
Q

Confirmation stage

A

when Tracy sees a consolidation. She will get in and stay to see if there is a confirmation and ride with it. I assume she moves her stop closer also at this time if she sees things not going her way.