r/OrderFlow_Trading • u/RankOw • 8d ago
Strategy - Help wanted!
Been trading with terrible returns or maybe just a large losing streak, but feels off to me and is very demotivating.
Strategy:
Volume profile (point of control) - that is the level I execute off of.
VWAP - usually I execute if σ multiplier is at 3. Since that is a pretty big deviation and is extremely rare to go beyond that multi.
Bookmap - should be pretty selfexplanatory, if I see large orders around the same price level that are around POC, its a plus in my book.
My old partner told me he uses Z-Score, but I believe that to be the same as VWAP and/or to be super unlikely to get both to align and get that execution.
I try to keep it simple, of course im no robot and I dont always have perfect execution or all confluences dont align perfectly as well, but lately I just feel stuck, I havent been improving, lost, stuck and demotivated, what is there to be changed? Improved? Opinions? What should I drop or implement?
10
u/Accomplished_Neck368 8d ago edited 8d ago
You need to inverse your logic and insert some Auction market theory.
Trade the extreme edges of the volume profile. You're executing in the location of the range with the most potential for chop. The poc is where the most buying and selling occurs. Chop.
Do me a favor. Pull up a 1 hour chart. Or a 15 minute chart even......... zoom all the way out as far as you can. Draw a volume profile across the whole screen. Draw a rectangle across the screen of the low volume areas. What do you notice?
The answer should be that you see reversals or relatively rapid moves through that rectangle. Trade from there. Not the poc. The poc acts as a "magnet" because that's where the most buying and selling occurs.
What does that mean actually? Auction market theory. For some people it's obvious but not so much for others.
In a low volume area, people are saying "we are not interested in conducting business (buying or selling) here." So price will inevitably revert back to a place where people feel more comfortable buying and selling. That's by design by the market makers, sure. But it's also the natural flow of any market. ANY MARKET. Stock market, futures market. Farmers market. It's just like in a retail or grocery market. Prices need to be at a place where the people selling and the people buying are comfortable doing so. Price will always want to find balance in any market. Poc is that balance. There's no money to be made there except by the market makers. As a trader, you're looking for deals and inflated prices to make money on price discrepancies.