📖 The Big Picture
Markets work like auctions - price moves between two states:
1. Balance - Price bounces around a fair value (happens 70% of the time)
2. Imbalance - One side takes control and pushes price to find new fair value
❌ The Problem
Most traders lose because they trade breakouts without checking if the market is balanced or not.
✅ The Solution
Only trade when three things align: Market State + Location + Aggression
📊 Setup 1: TREND MODEL
Ride the Wave
Follow strong moves in the direction of the trend
Best Timing
- New York session (NASDAQ, ES)
- Avoid London open (too many fake breakouts)
STEP 1: Confirm the Market is Trending
Look for clear momentum away from the previous range
If price is just bouncing up and down → Skip this setup
STEP 2: Find Your Entry Level
- Take the strong move that broke structure
- Apply Volume Profile to that move
- Find LVNs (Low Volume Nodes) - gaps where price moved fast
- Set alerts at these LVNs (don't enter blindly)
STEP 3: Wait for Confirmation
When price pulls back to the LVN, check for aggression:
- For Longs: Look for big BUY prints/imbalances
- For Shorts: Look for big SELL prints/imbalances
No aggression = No trade
STEP 4: Manage Your Risk
- Stop Loss: Just beyond the aggressive print + 1-2 tick buffer
- Position Size: Risk only 0.25% - 0.5% per trade
- Break-even: Move stop to break-even if CVD shows strong pressure
STEP 5: Take Profit
- Target: The POC (Point of Control) from the previous balance
- Exit: Close full position at POC
- Why? 70% of the time, price reverses from balance areas
🔄 Setup 2: MEAN REVERSION MODEL
Snap Back
Trade the snap-back when breakouts fail
Best Timing
- London session
- Compressed/summer market conditions
STEP 1: Confirm Market is in Balance
- Use previous day's profile as reference
- Watch for price trying to break out but failing
STEP 2: Wait for the Reclaim
Don't take the first move back - too risky
Wait for:
- Clear reclaim back inside balance
- A pullback after the reclaim
STEP 3: Find Your Entry
- Apply Volume Profile on the reclaim leg
- Mark the LVNs
- On pullback into LVN, check order flow for aggression:
- Big BUY prints after failed downside break
- Big SELL prints after failed upside break
STEP 4: Manage Your Risk
- Stop Loss: Just beyond aggressive print + 1-2 tick buffer
- Position Size: 0.25% - 0.5% per trade
- Rule: If wrong, you're wrong immediately - never widen stops
STEP 5: Take Profit
- Target: Balance POC (center of value)
- Exit: Full position at POC
- Don't stretch for other side unless conditions are exceptional
✅ Advantages
Clear Rules
No guessing, just follow 3 steps
Works in All Conditions
One setup for trends, one for ranges
Small Risk
Tight stops keep losses manageable
Many Opportunities
Lots of trades to build consistency
Prevents Overtrading
If conditions aren't right, don't trade
Good Risk/Reward
Typically 1:2.5 to 1:5, sometimes higher
⚠️ Things to Know
Multiple Small Losses Are Normal
You'll have losing streaks
Requires Full Attention
Need to watch during trading sessions
Lower Win Rate in Choppy Markets
Some days just don't work
Can Be Stressful
Managing positions requires mental strength
Important: These aren't disadvantages - they're just characteristics you need to accept and manage.
📝 Trade Checklist
Before entering ANY trade, confirm:
Market state clear (balanced or imbalanced)?
At key level (LVN from Volume Profile)?
Aggression confirmed (big prints in your direction)?
Stop loss placed?
Position size calculated (0.25-0.5%)?
If even ONE is missing → Don't trade
🎓 Key Terms Simplified
Balance
Price rotating in a range, buyers and sellers equal
Imbalance
One side dominating, pushing price directionally
POC (Point of Control)
The price level with most trading activity
LVN (Low Volume Node)
Price levels where volume was very low (fast moves)
Aggression
Large orders showing strong buying or selling pressure
CVD
Tracks if buyers or sellers are in control overall
💡 The Golden Rule
If the market isn't giving you clear conditions across all three filters (State + Location + Aggression), stay flat. Patience is profit.
