A hands-on options curriculum covering real trading concepts. Read the lessons, work through examples, and test your knowledge.
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Key terms in this lesson
Lesson 7: 11.7: Volume Profile Strategies
Execute proven trading setups, including the 80% rule, responsive trades, and initiative breakouts.
1. The 80% Rule of Value Area
The 80% Rule is a highly reliable profile setup:
If price opens outside of the previous session's Value Area, but then enters and gets accepted inside (confirmed by two consecutive 30-minute bar closes inside the previous VA), there is an 80% probability that price will trade all the way to the opposite side of that Value Area.
★ Execution: Enter when acceptance is confirmed, targeting the opposite VAH or VAL, with a stop just outside the entry boundary.
2. Responsive vs. Initiative Strategies
• Responsive Fade: In a balanced, ranging market, place limit orders to buy at VAL and sell at VAH. Target the POC and protect the trade with stops placed directly beyond the range edges.
• Initiative Breakout: If price approaches VAH on high volume and high delta, do not fade it. Wait for acceptance above VAH, then buy the breakout targeting the next major High Volume Node.
Click to enlargeInteractive Volume Profile Canvas
Volume profile plots the cumulative volume traded at specific price levels, revealing the Point of Control (POC - price of highest volume) and the Value Area (where 70% of transactions occur).
Profile Controls
KNOWLEDGE RECONNAISSANCE
What is the core condition to trigger the 80% Rule in Value Area trading?
More lessons in this module
- 11.0: Introduction to Volume Profile
- 11.1: Building a Volume Profile
- 11.2: Point of Control (POC)
- 11.3: The Value Area (VAH & VAL)
- 11.4: High Volume Nodes (HVN)
- 11.5: Low Volume Nodes (LVN)
- 11.6: Composite Profiles
- 11.8: Practical Application: Profile Playbook
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