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0:00 Every trader has seen this, the sideways histogram on the side of their chart. This is the volume profile. And once you understand how to read it, not just look at it, your entire view of the market is going to change. You see, the volume profile isn't just some static indicator. It's quite literally a live map of where the auction has done the most business. It's showing us where it has accepted value and where it's rejected it. And when you combine this tool with the VWAP and its deviations, you're going to stop trading blind levels and start trading the auction itself. In this video, I'm going to show you exactly how the volume profile integrates with the VWAP wave system. It's the framework I use every single
0:45 day to trade the futures market and even stocks, options, and crypto with structure, context, and most importantly, with confidence. You're going to learn how each principle ties together. We're going to be using high volume nodes to discover fair value. We'll use deviations to determine when we're leaving into price discovery and ultimately using the volume profile for a horizontal story of the auction. And by the end of this video, you're going to see how this combination of tools defines every one of our four core setups. price discovery continuation, fade value area extremes, return to value, and the VWAP bounce. This video isn't just about theory. We go into the specific and detailed setups that have
1:31 built my consistency as a trader, helped hundreds of traders in our community to pass evaluations and get consistent payouts, and have turned their seemingly random trading into very structured decision-making. So, grab your notebook, open your charts, because we're going to be breaking down how professionals actually trade with the volume profile and how it fits seamlessly into the VWAP wave system. So, let's get started and let's dive into the charts. Okay, everybody. So, what you're looking at here is an hourly chart on the NASDAQ with a session volume profile. In futures, the session opens at 6:00 p.m. Eastern Standard Time. So, that's where the profile is starting and ends at the end of the market at 5:00 p.m. Eastern
2:16 Standard Time. We're going to go over some principles of the volume profile. We're going to talk about how to trade it and how it integrates into the VWAP wave system. So, how I generally like to start this conversation is by doing a little bit of principle on the volume profile. Right? So when you see the histogram on your side of your screen, right, you're going to see something that looks like this. Okay, this would be called what we have a high volume node, HVN. That's the peaks. And then we have the valleys, which we call low volume nodes,
3:01 LVNs. Okay. So, what this looks like on the actual chart, right? This is a high volume node, right? This is where most of the volume is taking place. And then we have a low volume node. All right? That's the valleys. And this is where the least amount of volume is taking place at each individual price level. So the VWAP wave system in and of itself along with volume profile is a very price levelbased system. We look at the market as an auction and the price action is either in one of two states. All right. When we see a high volume node, we call this a
3:47 balance area. Right? Balance. Right? when we're leaving and we have a thin profile, we call this price discovery. Okay, so the market is either in one of two states. We're either in balance where there's an agreed upon price and we'll tend to rotate or we're in price discovery where one side takes over and they move price to another area. And it's called price discovery because we are discovering a new value area where the big players will do business. And when they are done, we will then go into price discovery and find a new price area where business will then be done. And the market is in always one of these two states. And we repeat that process.
4:33 Add infinitum. And that's how the auction process works. It's the basic tenant of auction market theory. Okay. So we have a couple of principles that rule the volume profile. When you see a high volume node, all right, we often have a value area high, we have the value area low, and then we have the point of control. Okay, usually within the value area high and the value area low, based on statistics of a normal distribution, 68% of the volume will take place in this high volume area. Okay. Now, how price tends to operate
5:20 when in a high volume node, right? If we come up to the value area high and we cannot leave into price discovery and we reject, we can expect to go to the point of control, the PC. What is the P? This is the highest level of volume or the most popular price point in the high volume node, right? It is the peak of the peak. And this tends to act as a magnet, right? So as we return to the point of control, if we can't get past the point of control in a high volume node will tend to revisit the recent value high, right? If we can't get burst through again and we reject back to the point of control. Now
6:06 this time if we can get past the point of control, we would expect to go to the other side of value again. If we can't break out into price discovery and we reject, we can expect to go back to the point of control. And this process goes on add infinitum essentially as it continues to build a deeper and more pronounced high volume node in the profile until we ultimately get a break away and we leave the volume node in search of a new area where we'll do business again until we leave in search of a new high uh volume node to do business again and
6:53 that is ultimately the guiding principles of the volume profile. Okay. So on an intraday chart right I look at mostly in my intraday trading two volume profiles and then we'll add a third one at the end of the video. Okay, we use the session volume profile and I can start this at whatever time the market opens for the asset class I'm trading. So, in the New York stock market, right, we start at 9:30 a.m. Eastern Standard Time, and I'll start watching where the volume is taking place right? Right. So, I have those peaks
7:38 and from this we can draw low volume areas. for each of them. And that is my map for the the day's auction. Now, this is becomes a little more sophisticated to read when we're in a developing profile. All right? So, these levels can and will change. All right? So, this is probably the most difficult one to trade, but when you watch it enough, you can get some really good levels out of it. Right? You can see that the low volume node tends to act as a support or resistance line. Right? We had it here. We had it here.
8:24 We had it here. Okay? And the high volume nodes we can expect to rotate within right until we leave and discover a new value area of which we will trade and rotate in here. Okay. So I wanted to start with the most difficult but a a little way of reading this a little better is going to previous volume profiles. So here is a finished days full session profile from the beginning to the end. Okay. And what we can do here is we can decide where were the most important distributions. Okay. So this is one day right. So as
9:10 we're trading this day we can look back upon the previous day's profiles to give us some indication of where the auction wants to do business. Okay. So I can see in this market on Thursday, right, we had this clear distribution. We have a point of control. We have a value area high. We have a low volume node here. We have another point of control here that we chopped around, right? And interestingly enough, okay, in today's price action, all right, we held the high in the GlobeEx was below the value area low, right, which is also a low volume node. We came up to this LVN right here, right? We started to kind of reject a
9:55 little bit and then ultimately we ended where? At the previous day's point of control. Okay, so this gives us a lot of areas to watch for. If we have set a point of control on a previous session that we have not revisited yet, we call this a naked point of control. And like a gap fill, we expect them to eventually be revisited and provide some type of initial support or resistance. Okay. So where while the most part PC's or point of controls on the intraday profile tend to be spots that we rotate around previous days point of controls act as excellent destinations and temporary support and resistance.
10:41 Okay. But my favorite areas to trade off of are significant low volume nodes. Okay, these tend to act as excellent. Right? So here is a wonderful low volume node from this profile. Right? If I draw a line from this profile across, look how significant this level was for trading and subsequent trading sessions. Okay, LVN's act as great support and resistance levels to trade off of, expecting a temporary reversal. For day traders, they're excellent. You'll see me trading them on stream every day. And we do have the VWAP wave toolkit which
11:30 there's a link in the uh description of this video where we automatically plot previous days LVN's for you onto the current day's chart. Right? So you don't have to map them out. You don't even have to look. These will automatically be plotted out for you on your current chart. Okay. The last one we're going to discuss is now the composite profile. All right, the composite profile is where we take multiple days action. Right? So if we're trading here, right, I want to take the relevant range of price action. So a common question I get is Dale, how do I know how far back to look on the volume profile, the composite? Well, we want to capture the
12:16 relevant range, right? Right? If price is at 33, I want to catch the high, look back. I want to catch the most relevant low, look back, and then capture this area. Okay, if we were to scroll back here, right, this is a relevant price area, right? And it could be fairly big, right? We're taking weeks, if not months, of price data into the equation. All right. So, we're going to use our fixed range volume tool, right? And we're going to look back from the high. We're going to look back from the low. And we're going to capture this block.
13:04 Okay? So, I'm going to grab my fixed range. I'm going to start here. I'm going to bring it forward. And now, what I have is a composite volume profile. which allows me to see the most significant LVNs over the course of weeks and months. These are the best high timeframe levels to trade off of. If I can see one of these coming up, I'm almost always taking this level. All right, so we can use our little map tool to mark them out. All right.
13:49 And I want to know and then we have our point of control. So we we have the ultimate point of control. This is the highest amount of volume that we've done, right? This 24800 is a very popular price. Excellent price target. also a great area to to look for uh for um you know a bit of a a traffic jam because this is the most volume in the entire market for the last two months has taken place at 24,800, right? And this applies to gold. This applies to stocks. This applies to any asset you want to trade that has volume. These same concepts apply, right? And you can see that most of the price action has traded right among these
14:37 price levels, right? So once you start to understand the auction, you can really start to plan and anticipate great trade locations, right? And then here's other high volume nodes, right? That might not be the point of control, but these are also very popular prices. These can act as profit targets and temporary support and resistance levels, right? Right. So once I have these all marked out manually, right? Then I can jump to my five minute chart, right? And now I can see those same levels. I mean this is no joke, guys. Right? When we move through, we move through fast, holding as support, resistance, right? These are going to be some of the
15:22 strongest price levels you can possibly put on your on your chart are going to come off of that composite profile that we just drew. Okay, based on our VWAP wave principles, auction market theory. All right, we have balance, we have price discovery, and now how do we map this right with the VWAP and our deviations? All right, we marry them together. So another question I often get is Dale, right? How do I know which to trust? Do I watch the VWAP and its deviations or do I watch the volume profile? Which which which comes as priority? And the answer is neither of
16:07 them come as a priority. We marry the information together to develop a trade idea and and theory, right? And when we have confluence, right, two levels together, right, to give us a very high probable trade idea, right, that increases the grade of our setup to what could be a C or a B to an A+ setup. When we're able to take the information from the volume profile, right, our low volume nodes, our high volume nodes, and our principles, we marry them with the VWAP and our deviations. Okay. And the same process applies here, right? If we can't break out of the upper band, we go back to the po point of control, right? And if we break above, we can get
16:55 price discovery. Okay, we take all this information, we put it together, right, for our price discovery continuation long, right? We have our return to value, right? We have our fade value area extremes. We have our VWAP bounce, right? This is a textbook VWAP bounce. So, we marry the information from the profile, right? If we were to have our LVN's on our screen, right? This is where the toolkit comes in. All right, let me do the simpler version. This is probably a lot to most of you. I compare this to uh you know, a pilot sitting down in the cockpit of a of an
17:42 airplane. Right? If you don't know how to fly a plane or a commercial jet line jetliner and you sat down in the cockpit of a commercial 747, you would look at all these gauges and buttons and tools and you go, "How does anybody possibly know what all these buttons and dials do, but the pilot does." You could point to every single one of them and that trained pilot will tell you exactly what that's for. It's no different with the VWAP wave system. We do we trade level to level. I want to know the price levels, right? As an auction trader, an orderflow trader, I need to know the key inflection price points in the auction, right? So, each one of these levels has importance. And when we put them together, we have some of the most high
18:27 probability trade locations you can possibly imagine. All right? And this is with the VWAP wave toolkit. All right? You can check this out at vwapwave.comtoolkit. Okay, so this is a great way to get you started. Some of these lines that you're seeing are higher timeframe um VWAPS. This is the weekly upper deviation. This is the weekly lower deviation. This is the weekly VWAP. This is the monthly lower band GlobeEx VWAP. Right? Here's our weekly VWAP. Right? If you took this all off the screen, guys, I feel like you guys are trading completely blind to some of the most important auction levels.
19:15 All right, you naked price traders, good for you. But like, man, I have so much more information than you do, right? You're probably wondering, why can't price get through this area, right? Why is it bouncing here? You're just seeing a descending price channel, right? I see it. We have a low volume node. I know this is an unpopular price point in the auction based on my volume data. You price action traders are not looking at volume. We have three major pieces of information that the market gives us. We have price and time, right? As a price action trader, you're only looking at price and time. But the big factor that
20:00 most of you are missing is volume. Right? And how do we interpret volume to help us make major decisions in our trading, right? I see this as a deviation of VWAP, a low volume node, and the weekly VWAP. Right? I'm seeing more downside here. And why? And I have great levels to trade off with conviction because I know what's happening in the auction. So hopefully this is a great primer for you guys on using volume for your auction market trading with the VWAP wave system. This is just a beginning. I have an 8 course uh system that you can go through that's absolutely free. All you do is need a free trial, right? You can grab that in the free discord. There's a link for that in the description of this video as well for you to get started. I have a
20:46 best-selling book on Amazon called the VWAP wave system. So I encourage you to check that out. I have a lot of other great videos on this channel. I encourage you to subscribe and to start diving into my other videos. So, thank you traders for joining me today and I will see you in the next video.
