[Soultrader]

Trading video from Dec. 18th, 2006 based on value area and the previous days range. Feedback is welcome.

CLICK HERE TO VIEW VIDEO

Charts created by tradestation
Presented by Traders Laboratory

[TinGull]

Certainly is an interesting concept! Wish I knew that before going into a couple trades today....You say that usually when the HOD and LOD are within 10-20 points of value they usually do this?

[Soultrader]

Yea... 10-20pts seems to be the magic number. Ive been watching this concept occur over and over again. Im usually careful about playing breakouts of value when the previous days range is right above/below it.

Keep an eye on it next time.

[TinGull]

Very interesting...will do!

Thanks James

[Bfbusa]

Good observation Soul. I have noticed lately that the YM trade has changed of late. I haven't been trading then long enough to know if this is seasonal or just that what previously worked isn't working and something new has started. I'll start to watch for this pattern. Thanks. Good observation.

[traderbong]

I will definitely keep on eye on this too. Thanks soultrader

[Anonymous]

Nice video Soultrader. Thank you.

My perceptions is a bit different. Looking at that chart there was a great opportunity to use the 80% rule trade.

The 80% rule trades states: if price moves outside of the Value Area and then re-enters, 80% of the time it will trade to the opposite end of the Value Area. Here, we had price move out of value to the upside and then re-enter. There is an 80% chance price will trade down to the lower end of the Value Area. If one had shorted at the high, then no worries. However, if one did not and was looking for a high probability trade, shorting once price closed back inside value would be such a trade.

By no means is this criticism, just an alternative take on it.

[Soultrader]

Hello PivotProfiler,

Welcome to Traders Laboratory I understand what you are saying regarding the setup. I do also play the "80% rule" although I like to refer to is as price rejection. Usually if the previous days high/low is not that close to the VAL, VAH pivots I would look to short as price makes a breakout failure above value high. This would be the "80% rule" setup.

However, whenever I see the previous days high/low right above/below VAL and VAH, I may even fade these high/low price levels. Of course I dont place these trades blindly but I am a hardcore tape reader so I can see the flow of price on a breakout and determine if it is valid or a fakeout.

I hope this clears it up a little. Im glad you joined us here... could always use a market profile trader.