Welcome to part 2 of the TPO series.
Prerequisites for this module are the completion of the Footprint and Volume modules, as these are extended within this lesson.
In part 2 you will review balance profiles and begin to understand the ST (Selling Tail) and BT (Buying Tail), and how they translate on candlestick charts such as Tradingview.
Upon reviewing correctly a trader can use TPO Balance Profiles to identify how balanced a trading session actually is.
Welcome to part 2 of the TPO series.
Prerequisites for this module are the completion of the Footprint and Volume modules, as these are extended within this lesson.
In part 2 you will review balance profiles and begin to understand the ST (Selling Tail) and BT (Buying Tail), and how they translate on candlestick charts such as Tradingview.
Upon reviewing correctly a trader can use TPO Balance Profiles to identify how balanced a trading session actually is.
When analysed with the right context ST and BT's can highlight SFP (Swing Failure Patterns) and acceptance into a range or trend.
As mentioned before; additional confluence will further reinforce your trading ideas.
Key Points of the Lesson
UTILITY
Distinguish between market balance and imbalance ⇒ Different trading approaches.
Understand the importance of well-respected parallel channels and naked Points of Control.
Use the 6 rules to assist you in making trading decisions.
IMPLEMENTATION
Specialized software needed such as Exocharts/Atas ⇒ TPO templates.
Define where the balance (range) is ⇒ Value Areas, Point of Control.
Determine acceptance or rejection (SFP) above and below balance ⇒ Combine with volume.
TRENDING DAY
Imbalance between aggressive buyers and sellers ⇒ Market orders.
Aggressive volume is increasing with each imbalance wave.
“Fair Value” moves up with the direction of the trend ⇒ Value area follows.
BALANCED DAY
Price remains range-bonus in the value area.
Tests of the VAH and VAL fail ⇒ SFP, counter-trade.
If there is an increase in OI and Volume ⇒ No trade, follow the momentum of that attempt with previous entry from the opposite side of the Value Area.
6 RULES
1. If price gains acceptance into an old balance (range), it is likely to retest the other side of the balance (VAH to VAL and vice versa).
2. Price inside a balance (range) is expected to reject from the VAH and bounce from the VAL.
3. When price moves from balance to imbalance, it will generally move into an old balance (range) ⇒ Don’t delete a well-respected channel!
4. If price rejects from an old range POC, rule #1 can be invalidated and the price will then return to the previous balanced area ⇒ Reason for marking naked POCs.
5. If Time, Delta and Open Interest build at the VAH/VAL of a balanced profile, it is likely going to break through ⇒ Market context is key.
6. First attempt to break balance without an increase in Delta + OI ⇒ Look to fade (SFP).
TIPS & TRICKS
It is key to analyze the TPO chart together with footprint statistics and order flow.
Always 3 trade options: long, short & no trade.
Trade with the high volume, not the specific transaction amounts.
TAKE HOME MESSAGE
Distinguish between market balance and imbalance.
Note well-respected ranges and naked POCs.
Combine TPO and order flow.
6 rules will assist you.