Our team often trades Bitcoin on Daily/Short term base based on the Value Area’s. We read them in Trading View and Exo charts, and we often show the Value Area on the charts we share with you in our Briefings and Daily updates.
The Value Area is a range of prices where most trading volume took place on the prior trading day. In specific, this area is the range where 70% of the prior day’s volume happened.
Why 70%? Because 70% is a rough approximation of one standard deviation on either side of the mean. In other words, the value area levels highlight where 70% of the entire volume occurred during a particular trading session.
The value area is approximately one standard deviation above and below the average highest volume price. With this knowledge, there are specific probabilities of market behavior you can understand to digest the value area. The value area gives an idea of where the smart money is trading and where the institutions are guiding the market. From this data, you can derive intra-day strategies that capitalize on market behavior.
Volume profile:
The Volume Profile value is constructed of 3 parts:
The Point of Control Trading Strategy (POC) shows the single price level at which the most amount of volume was traded. While the value area low shows the lowest price level within the value area and the value area high shows the highest price level within the value area.
The 80% Rule:
The 80% Rule states that when the market opens or moves above or below the value area but then returns to the value area twice for 2 30-minute periods, there is an 80% chance of filling the value area.
If the market opens above the value area and does not return to the value area this is a bullish signal. However, if the market opens above the value area and returns to the value area this is bearish.
The importance of the correct position size To find the correct position size is something that traders often forget to use. It is not unusual that many traders are using a random position size for their trades. They decide to use a bigger position if they feel that a trade is more likely to make […]
What is a trading journal? A trading journal is a kind of "diary" in which you keep track of your trades. Keeping track of a journal is a decisive factor in whether you will become a consistently profitable trader or not. It does not matter if you are a swing, day or scalp trader. Becoming […]
The importance of emotional risk management We are fully aware of the fact that we push you to the limit to fully understand risk management. In our briefings, here in the channels and also in our Trading Room. But there is even more! Have you ever heard of emotional risk management? Primarily it is about […]
What are DeFi tokens? For several months now, DeFi is a term which can no longer be ignored. You read about DeFi everywhere, but what does it mean and what does it stand for? DeFi is directly related to financial smart contracts, decentralised applications (DAapps), and protocols that are unique to Ethereum (ETH), the second-largest cryptocurrency […]
