 Morning Traders. Welcome to the Traders Lab. I'm your host Tom B. Thanks for stopping by today. I stream live Monday through Friday, 11.30 to one piece in standard time. And this stream is about integrating book map order flow tools with auction market theory using a tool called the volume profile. And this is done in the intraday developing timeframe, taking a top down bottom up approach. Top down being intermediate timeframe on down into microstructure for potential triggers using a generic process of price discovery and participant behavior. This is not based on indicators. It's actually based on what happens inside the market participant behavior, which ultimately is the market. So this process is based on structure trades that are available to everyone in the book map discord trader lab chat. And you're all invited to visit the trader lab, download 60 PDFs of structure trade. So you can explore research and reverse engineer and see if they might have a place in your toolbox. In addition, there's a library of webinars that are in the discord trader lab chat that you can review, starting with a primer webinar of a high level overview of this process. The thing that's important about the business of trading is there's a couple of elements. One is that the market is dynamic. It changes. It goes from directional to rotational. Most traders don't understand context and it just might be one of the more difficult concepts to integrate into your thinking. Typically, traders go down the route of software package indicators and the rest of it trying to find a fit. And really it comes out to trying to basically put indicators on rotations and somehow think that that's trading. I'm going to suggest that's not what trading is. If it was what trading is both retail traders would be successful using that approach, but it's quite to the contrary. So you might want to think if you're not having the results you're looking for and I'm not saying you can't be successful using indicators. I just find that based on statistics of what other retail traders do, and even though we are all special and think we're different in reality if we're using similar approaches to other retail traders who don't succeed, it might not be realistic to expect a different outcome. It's maybe right. So if you're waking up with trade or groundhog day doing derivatives of a process that might not actually work relative to how the market works, it isn't about an indicator and fitting the market into your indicators. It's really more about understanding market mechanics and then doing whatever it is to align with the mechanics. And most traders never get to understand how the market works because they're focused on indicators translating the behavior just an opinion, but based on 43 years of experience. And of course your mileage may vary. General disclosure, all book map limited materials, information and presentations are for educational purposes only and should not be considered specific investment advice or recommendations. Risk disclosure, trading futures, equities and digital currencies involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results and please grab a pen and paper. I was giving you a couple of notes. I start out the same way. We had an important report this morning caused a bunch of gyrations, but let's step back a little bit from the last few days because reality is when we talk intermediate timeframe, we do need to be thinking about the larger or higher timeframe picture. So theoretically what is that? Possibly, possibly the market been going up. We had a big blowout and write this down and I'm always repeating the same things and there's a reason for it. How do you reinforce an understanding and something and transferring something from well, first of all, no competence. That's not, you know, I'm just saying from a learning point of view, no competence to conscious competence to unconscious competence. So in the learning process and I'm attempting to share some ideas and it's a form of education, though I'm not an educator and I'm not a vendor, the market goes up to go down and the market goes down to go up. It's very important. You always keep that in mind and if you have a trade plan, which is what I recommend you develop, this would be something you would review in the morning. The market goes up to go down and goes down to go up. So what did we do? We gapped out, had a big down day, right? Then we went lower turned around and what did we, are we doing today? We're coming back the other way into the down day. So the market goes down. So the market went up, gap lower went down. So the market goes up to go down. Then yesterday the market went down to go up. So we ended up squeezing the shorts from yesterday and we're beginning to squeeze the shorts that are in the leg from the gap down day. The market goes up to go down and goes down to go up and we're in the go up. Now this morning, what did the market do? The market went down and now go up, write it down, write it down. I hope it makes sense. Now I'm going to give you a couple of statistics and by the way, I want you guys to know, I broke a rule this morning and I want to tell you what I did there and I don't know if other quote vendors, I'm not a vendor, I'm just like you, I made an error this morning and it was huge and when I mean huge, you'll understand what it is. I want to tell you about it because we all make errors but I violated an error that it's an error, one of those where, you know, if I had a mallet sitting on my desk, I might beat myself with it and that might be a slight exaggeration but I want to tell you what I have. If in my rules, I have, if I am overtired or distracted, you know, something in my life or elsewhere that is interfering with my ability to concentrate and become one with the music or the language of the market, I am not supposed to trade. That's my rules and my platform, my major platform investor RT has been giving me some trouble. Bookmap's fine but I feed data in the book map and something that started going on the last few days or weeks and you guys know I've mentioned this before and it's been just crashing all kinds of stuff, breaking all kinds of stuff and I'm scrambling before the RTH open and I'm talking, I'm spending a few hours on this trying to get it working again so mentally I'm very distracted, I'm upset, I'm just letting you know. My mind was not completely focused and I paid for that by making errors, by missing trades that I normally take so and I think the lesson in that, now for me I hate when I pay again tuition for a class I've already taken but it's important you understand the mental state as well as everything else. Think about someone going out to play in a big game and they're distracted, they're just not in there because they got other things swirling in their brain even though consciously they can put themselves in the game but they're not able to be all there. That's what happened to me and I'm pointing it out to you because if you have that situation you need to have the discipline not to trade or to wait until you get back in the groove. So I got back in the groove but I will tell you there was no reason for it to happen so I this morning had to dig myself out and it's okay to take losses you know as part of overhead and cost of production. It is not okay to take losses because of oneself or errors. I just hope you get something out of that. So how did we open today and here's a couple statistics. We opened higher inside of yesterday's range. See 43 years of trading we're all subject to our humanity. So let's look at some statistics. There's an 82% probability that we'll get to the overnight volume point of control that's this that's a retail price in the ETH. I repeat this all the time so I'm going to try to go a little quicker. I'm assuming you guys know what all these things mean. I will give you the percentages of the levels. I'm not going to explain what they're all about. That's all available in the bookmap discord trade lab chat if you have interested in any of this. The previous value area high here I'm sorry there it is 4532 that one has a 70% probability. The previous close or settlement 69%. The ETH high called the overnight high this has a 69% probability. The first hour high which is called the IB high or is it there that has a 67% probability. The previous point of control 67% probability and I'm hoping my levels are correct because things have been blowing up over here. The previous value area low 58%. The previous high 54%. The overnight low 49% and it goes down there's more of them but that's good enough for me. Let's start okay and apologize if I had to make a point about the error because I think vendors want you to think that somehow they walk on water but if you're a trader and you do this is to say stuff happens and it happened to me and the point about it is it's not so much that it happened is that I broke a rule see everything happens but if you've got experience and you need to always document you need to understand what influences you and I will tell you for me lack of sleep lowers my ability to think you know quickly my cognitive function and also emotional states you know you have an issue at home you know with the significant other or your boiler or your furnace breaks down in the middle of winter not a good day to be traded just saying okay so our th open 830 central time my time this is a session volume profile it's going to show us all the volume price and volume as it through for the whole day as it develops this is only going to show us what's on the chart okay so the and the idea with using this and everything else that's available in book map is to see inside price and volume there's no indicators here all this does is show you the price and the volume and it's very simple in the sense of this process is based on what the purpose of the market is which is to figure out what something is worth it's auction it's called auction market theory and you do when you go shopping you're really doing the same thing there's a retail price that creates high volume you're willing to buy it at that price sellers willing to sell it at that price creates retail however there are times the market goes on sale and if it goes on sale and you perceive let's say up here is a fair price and the sellers move the price down because they want to move inventory or they just want you to buy more tuna if it's on sale and you perceive this volume here this retail is a fair price you'll buy a sale you've done that right and then the sellers are going to raise potentially raise the price back to retail and you'll still buy it at retail however if it goes too high you may go you know this is all it's worth i'm not paying a dollar fifty for this thing i'm going to go someplace else and shop now either the sellers lower the price back to retail and you're it's fair and you participate or you can't buy it here anymore and the sellers raise the price and now the participants perceive a new higher price is the new retail price and we start this rotational process again that's auction market theory and here's the interesting thing about it it happens in all fractals or timeframes now remember this is the retail price from the eth so if this is retail here this is like a russian doll microstructure well this was the last retail price in the last auction of eth so this is retail so this can be retail in a fractal and like a russian doll you got the little dolls and then as you go up in time frame or fractal we use higher timeframes i hope that makes sense if you have questions by the way post them i'll do my best to get back to you guys you know everybody everybody makes errors i gotta tell you the key to and by the way i have a tool that i created maybe in 2012 or 2010 i can't remember but and i've mentioned it in the trader lab it's called the error cost calculator when you make an error you should quantify the dollar impact that means fomo bailing out moving at stop doesn't matter you know all that stuff put in there because you may be a break even trader or even a losing trader and subject to your process assuming it has actually a statistical edge if you know you have an edge of course if you don't have an edge you won't can't define what an error is but if you understand the business of trading and you've vetted it and you know where your edge lies and that's the job of being in the business of trading just like how casinos operate they play games with an edge same thing we're in the same business really well then you can quantify when you break your rules that created your edge add up because you log them what that costs you write a check out and paste it to your monitor how would you feel if you're throwing five thousand dollars a week out the window as opposed to moving on to the next trade and not doing anything about it but blocking it out what do you think that would be worth so right here rth open make a note of that guys error cost calculator you can come to the trader lab i believe it's available there so market opens this is called the developing volume point of control and what this is showing is retail and remember what creates retail high volume now based on yesterday and based on statistics this is our first target overnight volume point of control has an 82 probability okay so this and and let's come back and yesterday's high overnight high all these are in the hip rate okay so you want to be thinking long because the squeeze so let's look too high too high too high break now this is suggesting downside rotation and i'm going to tell you i made an error here i went short and i'm supposed to i'm not supposed to take a short i'm supposed to be looking for a long and this is because two minutes before the cash open i was still dealing with problems and i'm very proud to tell you about this because sometimes you know i'm sharing with you what to do or what might work for you i'm also got to share with you what not to do and don't do this so this looks like a short to me okay however i'm looking for the squeeze so the market goes up that go down and goes down to go up this is the down i want to get long where i don't have a place to get long yet so let's look so this is called v park migration let's label these and what it is now remember at the top of the stream i was mentioning shopping what's too high what's too low and if you think of this this is volume profile right an auction market theory well what's the theory if the volume is here let's get into microstructure here's the volume i'm going to take you down now with the atomic subatomic the scalpel and the microscope remember what i said now i know now it'll make more sense watch this is where volume is volume is retail buyers and sellers agree but if we move away it is saying in the microstructure this is too low so as this moves higher it is suggesting higher but what happens here here's your retail price so too low looks going north lewis and then what the seller so what happens here is too high now the volume is moving down now this is very fast because it's right at the open this is saying too high this is suggesting lower why and why lower not a short unless it's in your plan but let's read it together so this is like the shoppers going and shopping here and going you know that's too high and then the shop the rest of the shoppers go now i'm not going to pay that it's that's too high now it moves down this is now the retail price this shoppers leave the store we come back to the store is it really too high yes i nap it's still too high let's go to a different store we leave the store we leave the store now retail is here watch the nuance so too high this is microstructure trading and fractals too high stop that too high sellers so in multiple timeframes too high too high in this this moves down this is an x fractal higher too high this is a theoretical short if it's in your plan and for me i took it and i should not have watched and where's the stops by the way here's the opening swing high i have this statistic so let's watch it so watch too high new retail price why volume what creates this chop what is chop an auction an auction retail too high watch it continues down at the moment this is saying lower okay and in the short if you're on this this is the target value area i'm just telling you i took this and i shouldn't have taken it but that's neither here nor there let's look at it 70 probability we're going to get here based on where we open so my plan was not to take this i took it so i'm in you know fine short fine and this is five seconds in you can this by the way is advanced because right here the short i'm just going to share something to you this is not anything i recommend this is in one second uh two seconds something like that this is five seconds this is not something i suggest anybody do it's an advanced process and the reason i do it not this one in particular but the reason i can do it is because i have what's called unconscious competence and it comes from years of doing this and it's no different if you want to perform at it because you need to recognize it i almost at an intuitive level think of it like uh playing a sport at a professional level or music you know reading music or translating a foreign language it's not you're not taking so you're incompetent then you can become consciously competent where you can recognize this but you can't react because there's another step in your mind then you'll get to a place with intentional practice replays and i mean a lot where you're no longer translating it's part of you does that make sense as far as learning goes guys are you guys with me but yes it's not no i'm checking make sure everybody's conscious you know i know because i don't know you know so anyway this is a short and i for me it was an error risk neutral target okay let's watch and you know what's going on retail shifts down retail this is suggesting everything is good at the moment looking good lewis too high let's watch vpok migration looking good lewis so you see these nodes here too high retail so we're leaving these higher levels behind that is suggesting maybe lower now watch right here this is retail this is the mid and the v-wap what might we anticipate let's watch selling let me show you there's the selling this right here now this is all micro and i'm just now i'm sharing structured trades and the not recommendations i'm just sharing you market mechanics because that's what the stream is about structured trades market mechanics this is a potential short and again the target's down below okay back here now let's this is the stop and iceberg detector let me show you how this might be a useful tool it's important to me right up here we come to location mid what's at the mid stops and the potential to squeeze what do we get right here right there right there you see a little node that's this volume now i am in a subatomic level and it's very fast this is 20 seconds in by the way coming up now but i have the location you see the key to this with structured trades is location we come up on by stops and maybe buyers who knows but right here only two stops come out and then we have a little rotation here this is retail mid v-wap this is the v-pock so this v-pock or volume point of control is your retail price so in the micro structure this little box that creates that high volume is the same as this except this is the volume for the entire developing time frame so it's everything it's right there so it's retail and in the fractal up here this little node is also the same thing in a shorter time frame and this is a trigger now here's what can happen now i'm not saying anybody should do this if you can't react it's there's no time this is the obstacle or the target so if this is too high and we see the seller then this is retail it can come back and check and then it needs to come below all this below down here to get to there so just so you know so let's look at the behavior back here so too high i'm not shopping here leave the store come back to the supermarket and is this price too high or is it fair if we this in this store too high back to the supermarket this is like your convenience store up the street right same as that same as that except it's over here back to here then to here that's the trade watch volume is here see if you see something familiar break pull back to the micro volume break target so these are your right here is your target if you get involved there's if it doesn't fit your plan which is fine because of risk reward you got a scale here if you can enter here you're looking at a scale that's you know what a point uh good luck with that this shifts higher that is saying potentially let's watch too low the volume is moving up watch see are you guys with me i'm showing you minutia because you can if you can read the auction remember there's no indicator what i am doing is looking at volume only and price and other there's other elements but basically this now is too low now we're going to label it and the reason and what happens during the day this moves around so these and this is all based on this participant behavior so it's dynamic it's changing and what we try to do in trading is see if we can understand what's too high what's too low and it's no different than support and resistance except i'm using a different process for that i'm using volume and participant behavior now here's the other piece let me take you back so make you crazy so put your crazy hat on this here is volume here let me show it to you now so let's think about this microstructure too high retail going south everything's wonderful right here is microstructure there's your buyer here's your test so let's just watch the behavior watch here's the volume here's your test if it doesn't break below here then you're seeing the retracement it has to clear this so the think of this like support and this was too high because there was the seller resistance resistance support so let's watch let's navigate let's navigate this thing so too low test test liquidity comes into the book push where was where's the next location to sell the mid watch see how this works here's the volume here's the divergence on the stops midpoint volume there you see it there's a potential exhaustion watch there's the seller this is now too high i'm going back over it i want you to see it this is now support now this is the same as that and that is the same in other words this and the test is a buying trigger and this and the volume and the break is a selling trigger retrace to the volume short retrace to the volume long that's just triggers they're not signals now here's what's important location setup short you see it back here then either down or nada and here's the so let's watch so now too high there's your seller okay so seller retracement scale if you if you have the range then you've got to clear this to go south volume point of control shifts higher suggesting potentially too low i hope you guys are seeing can you guys understand am i making sense with this as far as what i'm doing i am narrating yes this is 45 seconds into the rth open that's what's going on here and what i'm attempting to do underlined attempt is read participant behavior i do not using an indicator because if i understand this indicators of backwards looking price based and now lagging i can tell right here the potential and that's all you got of a downside rotation i can tell right here in the microstructure it's too high and i get the rotation i can tell here it was too low which gave me the rotation if i have a setup which is the mid then i know i can come here which is it did i know if i get below here i have a target below i know when this shifts up that i have to clear this in the fractal to go lower i know when i come back here that i have to clear here and here to go lower i test i go higher that's a problem this shifts higher that's a problem does everybody understand why it might be a problem this is so important because this is how you can stay in alignment at times with the market it and here's write this down if this then that if not then what this is how you narrate if this then that if not then what if this is too high and this moves lower so if this if we get a sell then what then down if this is too high then what it moves down then lower there's the volume and there's your seller if this is too low and we check it and we reverse off it then what then back here where's my next location for potential short if this is retail remember the shoppers oh that's too expensive i'm not paying that let's come back to retail this is why i go over this at the beginning of the stream but this is too low so if this is too low and we test then that if i come back here and this is too high after i take the shorts out and we get the mid sellers and here's my volume and i get the seller so if this is too high i get the volume and i get the seller too high and i come back and check is it too high then i have the potential for a short against here is it too high let's come back to retail the next higher time frame do you see how i'm doing it now i need it to go lower to clear this volume so if this and it breaks test then that this moves higher warning will robinson moment that's from a old tv program that means caution because now this is too low watch here's the volume up here where do we check here that's okay what do we have to do we got to get below here why it's too low fractals here's the rotation we don't get through it we don't get through this problem problem what happens watch if this is too high check seller then that if i pull back still too high i'm still in a short mode here but it now this shifts up problem retail was here now it's here it's moving higher it's called v poc migration write it down highest volume for the day as it develops which is suggesting this might be too low it's now an obstacle i come here so if this then that if not which means not then what then that if i get that and i can't get below here there's trouble in river city can everybody see it i'm spending the time and the reason is this is how you can trade in fractals and i'm not suggesting quote you trade in fractals i'm suggesting you narrate so you can tell when things are changing because the market is continually changing and what happened here is the short failed now taking the short was fine it's a structured trade i got risk neutral on this but my goal was to really be looking for long so i got it's an error for me because my brain was not engaged and i'm letting you know and here's the other part i didn't get long because i was all out of whack so it just this to me is an indication of a long potential because of this because i would see in fact i did but i didn't turn around i just got all this kabobulated watch too low break high pull back too low potential long that's what the trade i was supposed to be or i could be on the short but i should have reversed but i had while i'm trading i'm having errors being thrown by my other software i'm just going to tell you i deserve what i got because i brought it on myself and i'm you know i'm a little more sensitive to errors because you trade 43 years you would think you get over it right uh no still human so watch here too low remember retail is here now you would think if this is the fair price but who controls the price this is an important concept it logically i think we think it's the buyers it's not how do you like this it's the sellers isn't that counterintuitive well how did the sellers control the price if they raise the price and the buyers are willing to pay it they can keep raising the price see so if they don't raise the price you know then the buyers and sellers might interact i'm right we don't go anywhere but if the demand becomes here then the sellers are going to keep raising the price until the buyers won't pay for it then if the sellers want to sell s and p's they have to lower the price to attract the buyer just like your sale you know so if retail is here the reason the price is going up is because this is too low and the sellers are raising the price and the buyers are willing to pay it so the sellers can keep raising the price if the buyers perceive this is too low this is kind of what goes on in the store right so i know the following this right here is too low at the time we break above once we break out here this is a breakout of a consolidation so this right here and let's look here remember this was too high now we come above it we check it and we break above it this is a trigger now if it's not at a place you can interact but let's look at it chop chop now we break low looks like a short doesn't it but we're above we so you have to think about what happened well we rejected what was below and we have stats so right here is when this all right here is when everything changed and you don't know until hindsight when you come back and now this we can't get back here under here there's your buyer changes everything so now this is too low and now we're looking volume break now right here looks like a short okay but i can't do a short and i did not get positioned i'm gonna say i'm just letting you know here's the volume you can see it there see this i'm only looking at here i'm looking at fractal so this is showing only what's on the chart this is the whole thing we leave this below this is called the distribution and all it is is a consolidation and what i try to do is see inside these using the little microstructure but it's a consolidation and what's on each side of a consolidation is volume so when you come out there's stops on both sides right so when we come out that's what this is 119 stops okay now there's two possibilities of course this could be too high and we can come back here but right here this is called the low volume note and it's created by the urgency in other words the breakout of the stops now here's the thing if we exhaust here we could come back and mean revert however the volume now is here so think of this retail too low because it's the highest volume for the day so it doesn't move as quickly but now i broke out and now i'm rotating this now is a new retail price it's right there where the white line is you see it so i don't know right here it could come here but what does it do it holds this on a test and now this is retail so too low and right here is a maybe to go higher and there's another piece by the way this overnight volume point of control which has at the 82 probability and we have the overnight high at 69 probability this so just watch okay and remember we are thinking long so here right here is your volume watch looks like a short here outside edge volume is here break high here's your volume here's your test long watch statistic now i don't know this shifts higher retail looking good lewis yesterday's high overnight high yesterday's high statistic now you may find this maddening with these statistics but i want you to know i find it's useful to know if i'm going to aim the barge in a particular direction do i have a probability that works for me and uh hold on let's get this want to make sure this is my next statistic overnight high 69 probability i'm going for this okay you can see the long is that a yes or no now i understand that this is if you haven't seen this before i understand it's like you landed on mars however i don't use indicators and hey maybe i should i don't know but i used them i built my my business early on on indicators because i thought that was the thing to do when i started trading in 1980 indicators were just becoming available uh and then i went into system design which is another form of indicator and optimization all that jazz i spent years doing it and it would always break down didn't matter it would always break down because it was a curved fit process you know and i even understood that and i still couldn't overcome it but you can see by the way here the volume is here too low so too low think of these like this uh retail nah you can't buy it here anymore how about over here on sale too high on sale too high retail nope you can't buy it here anymore we're leaving stores how about the here too high too low too high too low retail leave it so sequentially what's happening here is this these are called outside edges of distribution remember on sale if this is the fair price in this fractal or consolidation which is where the high volume is and we go on sale to the outside and it's too low what might we do come back and if this whole area don't forget statistics is too low and i don't know and i leave it now i know it's too low now i come you know and i don't know how if where you know that's not part of trading to know anything i can prove to you i don't know i take stops that's how you know you don't know and stops are overhead and cost of production let me take into microstructure look further watch this is your volume there's your buyer this is volume break high too low microstructure here's your volume break high this you want to go subatomic let's do it too high watch this was too low i meant we come back and check it does this look familiar so this is too high here's your seller so this is too high the resistance that was support you know it's up to you what you want to do with this here's your volume break high too low outside edge watch break high volume break high outside edge volume break high target done ferrari goes back in the garage watch v pock migration too low let's label it i'm gonna try to speed along but now i do this i'm doing it like this extremely slow and by the way if you're in the bookmap discord trade lab chat you'll have this stream to review for the microstructure and you'll have it through the weekend until monday uh and that might be something that you find useful because if you can understand what's going on in this then you are in real time that's what i try to do and also here's the other thing suppose i was short i'm just saying i'm not this is a long right but let's assume for any reason i was short right here now i wouldn't be well let's here let's do it the right way this is a long or a long structure so microstructure see that little pimple right there at 44 that's high volume and with the electron microscope the buyers take it higher that's saying in this little minutia now it's not a tradable thing but you can read it because it's participant behavior in real time when you break away it's too low but anyway so here is volume see it there at yesterday's high thank you there's a buyer there's the buyer there's the buyer now suppose let me just show you suppose there's the buyer here's volume there's the seller so let's watch it we test it now if i take this out then it's going to potentially go lower i could exit my trade here if i'm trailing overnight high right but also here's the next piece i might only come out here it's on sale if this is retail so that's what i know i don't know what it'll do let's watch see where did it come it's on sale liquidity comes in the order book here's your microstructure here's your buyer here's your pullback in alignment with this this you see it that could be a long in alignment so this could be a trade management process or you're way back here this is where your trade plan comes in and you're under this outside edge and you're maybe down here under this that's what you have to vet this is another long if you think you know if that's what you want to do that's what you want to do i will tell you what i do i'm not saying it's good i have no idea i trade the targets primarily other than runners which and that's a different time frame but what i do most of the time and i'm not suggesting that anybody do this because i don't know part of trading so you understand guys once you understand market mechanics you adapt it to your let your psychology my psychology is kind of like a subway purse snatcher how do you like that um not really but basically i trade the targets and i just take what is what i perceive as the probabilities overnight high remember the probability was almost 70 in this configuration that's why i trade to a target that's why the overnight volume point of control wherever that went which is down below somewhere i forgot don't remember anyway oh it was here no it's not there 80 some odd percent so that was part of my plan also um so this trade is over for me now this now here's some other possibilities you do remember what was too low last time and when the volume point of control shifted it said too low so i have an option here i see this shift but i have hit my target and i'm above it so it's possible for me to add if i want and it would be against this volume at this outside edge now this is a very this is called mean reversion it is a context in the context so what it so you understand what the thought is in the developing daily time frame which is the whole thing this is where the highest volume is remember retail and it just shifts up from here which is saying potentially too low i'm going to mark it right variable high volume note so let's watch the behavior now remember in this stream i'm sharing behavior here's the thing now let's assume this is a structured trade it is and they're going to show up all over the place but when you have a trade plan the way i think of this is i'm looking for the behavior but if i don't have the range to get risk neutral it doesn't qualify so let's look let's come back here so target okay rotation now this is retail i'm anticipating coming outside somewhere and coming back to here if the deeper it is the more i like it because it gives me more range but structurally right in here is my outside edge for this and the way the market tends to work remember i was saying it goes on sale and it comes back to retail where's too low where's retail so this is what mean reversion is make a note mean reversion is rotational trading and it's a return to the mean and it's mean also but the mean is where the high volume is it does it in fractals and it does it in the whole daily time frame it's all generic remember so this is retail well that's the mean so if i pull outside to here the potential is to come back here and then continue and i'm looking at 50 now i'm just going to show it to you if it doesn't fit you don't do it you narrate it always because you want to imprint on your mind what it says remember we're interpreting language there's the volume right there there's the buyer here's the pullback to the volume let's watch there's the move okay okay where does this trade fail right under here so if you got long here's the high at the time so where might it go well there's two ways to play this this because that's the mean and you need to get scaled ahead of the high and then you're looking for 50 pullback test you still haven't gotten you're not under the bus yet watch see it see it see it are you guys tracking i hope you get something out of this and and i apologize for the detail i don't know what i should be doing for you guys um because since i don't use indicators i'm using actually the participant behavior i'm basically what i'm sharing with you is a way to understand really what's going on in the market not waiting for some backwards looking indicator to kind of tell you what's going on i can't wait for that if i'm a day trader if i can understand the long getting long here against this my stop is here i like that look where my stops my risk is portrayed i can afford to take a lot of shots on gold take stops like we all do i also understand how the market might work i know there's this liquidity and this is how book map is so helpful we got this sitting up here well and there's more let me show you what else i got here so if this is my target and remember i am clueless too low buyer support buyer stop is here watch vpok migration support moving higher the retail price is moving higher this is now a support location my stop can go under here and once i get the buyers it could go and this is subject to you vetting a plan under here or not the idea of the first trade by the way there's a minimum two lock configuration to get risk neutral in other words scale from entry to where it fails on the first contract whatever that range is if i get scaled before taking a stop the worst that happens to me if it comes back under here before my next target i scratch the trade this is important don't you think doesn't that give you the courage not to have uh your emotions take control doesn't it give you the courage then to just sit back and breathe instead of oh i don't want to give it back it's and you bail out and then it goes to target any of you ever done that i'm raising my hand be honest with yourself why do you do it it's your emotional state and the thing about emotions we and for years what i did i i kept i was going to get a paddle prod but i had read about behavior modification so i ended up getting a rubber band you know the thick rubber bands and every time uh i'd make an error i'd snap the rubber band and then when i thought about doing something i would snap the rubber band and i thought oh i'm gonna modify my behavior here's what i found out i can't change our wiring at least i couldn't none myself i tried how about for years and i couldn't do it so um i thought about it and i said you know i've got to change how i manage my trades because why am i making these errors here's why you make the errors i call it jekyll and hide hide is that unbridled emotions right you know hide jekyll is the scientist the doctor the intentional logical one when you were under contra and the thing about the i think it's the limbic system when you and i might that might not be what it is chemicals flood your brain these responses they're part of why we have survived as a species and it cannot differentiate between the pain you might experience with a stop or the pain you might experience giving back open trade profits it doesn't know whether that's a saber tooth tiger or your intentional trade the chemicals are still going to flood your brain and that's when as we say you go into twinkie land because you're no longer in control it's like driving under the influence of drugs because it is a drug it's a release of you know there's endorphins there's all this stuff that's going on in there and i'm not a physician but i'm saying is that's what's going on inside and uh how do you deal with that first of all you got to acknowledge it exists and it's not a function of willpower it's a function of understanding how you your brain works and why it might interfere because it's jobs to keep you from getting hit by the bus or run you know or eaten by the saber tooth tiger fight or flight so if you understand that the way to help manage that is to create a situation where you have a high probability of getting risk neutral so you can take better control of your emotional state does that make sense so let's continue so this is the target so if you took the long now so the initial trade was to here out here because and this is a key piece long buyer test it fails under here so your entry would be here if you're aggressive and it takes more patience it's hard to buy it you'd still be getting in around the same place your stop will be under here and this is your target your job is from entry to failure to get risk neutral which you would be stop stays here this shifts up looking good lewis you can stay under here or leave it in the original place going for this and you always leave some for the sweeper i always give it two three picks out out done then don't know it right what do i know to keep going not my job watch now i'm thinking it's going you know aren't we just going to keep going but i know we got to clear this no way to know let's look here seller volume seller it's like uh they're having a problem if this is the retail price in this fractal i've got sellers sellers sellers break below potentially too high let's watch see the seller see the seller now next trade now here's the thing so if you're long let me let me come back here i want to help you guys with this thing what what is this what do you do with this is it a short well if you're a counter trend trader i think the trend is up call me crazy don't call me crazy but at the moment this is moving higher and then this is heavy selling not you know and remember this is resistance and nobody knows it could have come back here checked or just here and made another leg higher that's why you saw this and we know it has to clear this volume so looks good from here held this too low looking good lewis another leg you might have taken along here and it has to hold this you would know the volume is here so this is your resistance if you remember if you can't operate in this you just don't bother you wait for a better trade this turns out to be too high it's always good in hindsight but you won't know that's why the stop goes here okay and you're done now what where's the x-trade well there's a couple locations v-wap and mid why we have a structured trade in the trader lab called v-wap the v-pock and mid they're they're same right here volume break low volume break high i took along here and i regretted it but i followed my plan i took a stop okay just letting you know my next location is here the mid and i know a couple of things here's what i know now this is structured trade i know this is retail i know that there stops at the mid and i know there stops here i know we could check the v-wap and come back to here and i know we can check the mid or whatever you know so let's watch so this is a trigger trade failed don't hold it against me this is traded gotta tell you you know i'm sharing what i what i do and i do take stops but here's the interesting thing at least i think so those of you who i use tight stops so for me volume seller looks like it's you know right right here so too high seller so i'm not getting long i have no location volume seller too high watch the narration here volume buyer here takes me out maybe i was too aggressive volume takes me out so this is the volume there's the buyer this is my trigger here's the test you see something familiar and um look and i buy it stop is here you know so it's not the end of the world you know it's probably around two points you know i mean i live with that now here let's look again location remember like real estate here's the volume you can see it there so i have my next location i have liquidity sitting in here and right now it's pretty clear and this is my trade here to here to there and then wherever let's watch so long there's my buyer pulls back this is where it fails under here i took a long here scale okay right so this is the vwap the vpok and it's mid it's the same trade at just different locations is everybody tracking then watch i'm thinking we're looking good here let's look at it volume seller i need to clear this to go higher this is retail so let's look at it what do we do seller so volume there it is seller we need to clear this to go higher and at this point volume buyer so support there it is resistance support resistance and of course i'm voting for right because everything looks north so too high seller i gotta clear the volume wham out okay it's a long into liquidity again remember bang okay test seller uh oh gotta clear this so you'd be out here or whatever subject to your plan this this is like what now so right here i'm thinking gee i got taken out and it's gonna go higher and then you get that okay and then it's south is everybody with me so far you know what i'm gonna do i'm gonna try it i'm gonna leave where we are i want to show you the low maybe not now there's something else at 930 and i'm gonna let's get back into this at 930 there's something called the initial balance and it's the first hour high or low i don't even know where we are at this point no clue right here so the market drops this now is the retail price so it looks like it's all over let's come back you get this thing okay but i want to show you i'd be remember the i'd be high the first hour high has a almost a 68 probability getting taken it and i suspect that we're going higher and this drop no clue now this is trading it's like oh that's nice um the first hour high is i think i lost it guys where's the i'd be high can you let me know where that is 50 75 okay right you're right 50 70 yeah it's right above this so this has that almost a 767 percent uh 68 probability past performance not in big results i'm getting above here so this shifts lower and this becomes really nasty in the sense of rotational trading so let me show you so this shifts up this is too low the way to operate with this remember if this is retail so this is outside resistance retail looks like everything's going lower the buyer comes in this is now too low label it variable high volume node but it's where this hvn is i'm going to get rid of this don't need and these are levels i don't want to forget that's why i do last chance on that okay so this was too high this now is too low this is retail and what's happening is we have a really a two-sided auction taking place so it's rotational and it's a paint you know it's it's a it's tough some days it's not this is so where's the outside edge so if we look at these these are distributions there's high volume if you leave it and now you're up in here this becomes your outside edge this is now mean reversion what you're looking for is to get outside and try to come back in let's watch so retail outside and it's not easy because is this the outside but this is where the volume is so where's the outside so here's volume see it there there's your buyer vpok migration suggesting higher your your i'd be high as hit here that was the target so too low retail outside edge buyer vpok migration too low you could be long if that's in your trade plan by the way you have to learn to recognize these things no indicator nothing waiting to crossover nothing just participant behavior so way now here let's look at it from here there's the volume there's the seller there's the test of the volume see it there's the seller now in the next higher fractal the volume moves here so this is retail and in the micro structure this is retail that's what gives you the rotation down so if i see this and i'm looking to get long i wait because i'm anticipate i can read it i see a counter rotation now i don't know you know to where i got to look over here where was it too low it's too low here and it's too low here when this shifts up it's saying now this is too low so this is still a short see it now it's shit now there's volume here and i don't know there's a buyer i don't know now this shifts up so now buyer buyer see the buyer this fractal higher time frame moves up suggesting retail and too low so potentially higher this is too low here too high seller come back and check it seller right here flat or under here subject to see are you guys with me that's it see so for me i could be out of this and not worry about it there's your volume there's your seller doesn't matter here's your volume there's your buyer i'm done now we have another trade in the bookmap discord trade lab let me explain to you it's called the ib continuation trade i don't think we got a setup here no we didn't here we take out the ib we pull back this is your structure here volume and there's a couple possibilities it's a long here or you're looking for it to come back above here for what's called the ib continuation trade it's a structure trade in the trade of left and it has not given you an entry so there would be no way in maybe i don't see a way in here you would have to be buying this this is not i can't operate so i can't buy it but this was a long and you really have to be very adept at this like here and you'd have to be like getting along here or this is hard okay so if you guys in the trader lab this is a structured trade if you weren't able to get on it don't feel too bad because if you're following a vetted trade plane you are trading with triggers and this see so too low this is a trigger but your obstacle is this if you take it out and you can see the buyers are very aggressive and remember we are looking for a continuous squeeze you have to always remember what we're looking for contextually it's north so this is a long here then you have to scale ahead of this then you hold the runner and there's another target of now this would take you out of the trade this is another target this comes into the order book see the pressure let's see if there's a reaction to it so let's narrate in real time now i'm not forgetting short okay uh trend is up right now this is a location an area to observe and we're still trending higher so watch microstructure buyers so i'm not into shorting i can't what i use these for is potential trade management so i see the selling it indicates to be potential rotation down i don't know and right here is the volume so for it to go higher it's got to clear this structure right here otherwise you can do this and if it does that my next layer of support will be down out here actually is the outside edge and then let's see what it does now there's no reason to get short at the moment and if you did get short it's countertrend that might not be in your plan you know that's really up to you if when you're building out the business side of trading remember trading is a business and you should be thinking of it as a business um the thing the thing about it is that um there's overhead and cost of production you need to build out a couple of metrics if you this is a business right and the comparison is how a casino works they play games um only that give where they have a statistical edge they deal cards that are random and the gamblers play the cards randomly they're in a completely random environment they depend on the statistics for the specific game our setups are is a comparison of games each setup is a game and here's the other piece that adds more complexity to it the setups are specific to the condition of the market they're not generic the triggers can be generic they are generic so once you understand this why this might be too high and you know that if we don't clear this volume we can do whatever or we just come out here and we continue higher right so that's what I know I don't know what it will be not my job but the games are specific to the context now las vegas if it's blackjack they just play blackjack they're not playing on top of when do you play blackjack and when don't you that's what vetting or trade planes but what are the components of a setup well you have the requirements what's the structure what's the context is number one in words are we going up we going down or now we going to change and transition to rotational trading this is the thing then is most confusing because it's a multiple time frame concept in other words the trend is up maybe and what's this this is a potential setup not as a short but as a potential counter rotation so if it's going to do that you might look at this and use it as a trade management process and just go okay this is too high and here's a counter rotation you might be out of it or or you accept the counter rotation and you look further in a different area and say you know what I'm willing to give this back to stay in or higher that's part of a trade plan but let's assume you know you just want to get in there and do your thing right here it's too high this might be too low you take this out you're getting something and getting a counter rotation here's the last place where we auctioned and it was too low so your stop could be here subject to your time frame that's where the vetting process comes in so the pieces you need are first of all what is the range to your obstacle to get risk neutral right if I was getting long which I'm not this is my obstacle so there's no trade for me here all there is for me in this situation is trade management okay but let's assume we got long wherever here well what's the distance this high is my distance so if I get long or here my stop goes under here and I'm praying literally that I get risk neutral if I did my stop goes under here now in the distance from my entry to failure is the range I need now if I had a structure here and right now there's a structure there there's a structure here selling so selling selling and if I don't break up I'm going down to where maybe here or maybe just here you see that's what I know and you can read it you see it now if I know that my trade plan which is already planned out knows the following if I get long risk neutral stop under here volume break high stop can come under here selling structure I'm out if it's your plan or I have a trail a trailing process and the way you establish the business other than the context and using setups that are in alignment the way you do that is you need statistics over a large sample size so you know how to manage your trade because it's not the last trade and I know how we feel emotionally we're attached to it you know oh I gave such and such back I should have well the answer doesn't lie in how you feel or hindsight it actually lies in the statistics because it's not one trade just like in the casino it's not one you know hand it's all of them so once you understand metrics and you can separate yourself emotionally from the outcome remember here say and you need range so too low fire counter rotation there's the counter rotation outside edge of a distribution which gives you mean reversion outside in see now can you operate in this should you operate in this that's up to you here's what I know I know this was too high so if I get long and I'm not saying anybody should operate in this here's the point what I'm doing in the stream I'm showing you how to read the auction and to help you understand how the market works then it's a matter of fitting now this is generic behavior the behavior of the market doesn't care about the range we do because where we enter where our stops go and we want to you know targeting a risk neutral we care market doesn't care if this was 10 points wide it's the same exact process does that make sense if you understand process then you wait for your structured vetted trades this is an outside in trade that's called mean reversion so if the trend is up how do I operate I'm looking for rotations outside to get back in alignment with the trend so trade management could be out or down here last place under here we come outside we hold the outside edge this now is too low we come back here and wherever that's traded I wanted to get into real time so you can kind of see how to narrow is this logical guys can you kind of see this process doesn't make some sense now remember this this takes time to learn to think this way and to relate to the market this but most of us are really using our indicators and that's all fine by the way if you're using an indicator and you actually are profitable it's not broke you don't need to fix it if you're doing a lot of that get the screwdriver out adjust this move this a little bit you know instead of a nine sma you're using a ma then you make it a 12 or you adjust your envelope on your kelton their channel or bolager pick one they're all the same stuff so it fits a little better you're in the curve fit game and I'm going to tell you it's a recipe for trader groundhog day you're going to wake up with the same issues you know keep doing the same thing that doesn't work that is the problem and it works for a while you know the thing is we all see behavior in the market and but we and it looks like it's going to be repetitive that's why we slam an indicator over a rotation and so next time we'll get it right well the thing about it is if you actually did statistics or metrics you might find that's a guaranteed loss over time we look at the outliers and our FOMO and everything else the needs to be right to be a winner make us gravitate towards that but it's a fallacy in the sense that it may be a guaranteed loser over 30 iterations 50 iterations you wouldn't do it if a casino plays a game where they lose over time even though some gamblers that big in the house gets the dollars but over time the dollars are going out I can assure you they won't be playing that game should we be any different so I can tell you for me I want to sit on the house side of the table the way to get to that is to understand you're in a random environment and that it's risk management risk management means getting a risk neutral knowing you have an edge to get risk neutral then you have a trade management process that over time gives you a yield what is the best way to do it over time what are the targets percentage wise if you want to trade that way or just a trailing process you see all that's all you need to do in my opinion and then of course if you have statistics it gives you the ability to better manage your emotions because you're in a random environment so let's think about this outside in now what's happened here so we have the seller the seller the buyer the buyer now we have the seller we're in two-sided trade here so what's now stops are sitting under here so you know so here's the thing if you got long you have to scale and it's there's not much stranger right this is too high this is too low outside edge stops here good chance they get taken out weekends this is resistance high volume you can see it right there and there that's where the volume is right here it's tracking the volume this so high of the day too low too high rotational trading it's going to break out right it's a distribution and what's on both sides of the distribution stops are out here stops are under here the market is long market goes up to go down and goes down to go up we have gone up we can't clear this and we come out under here you're going to see bang and then it's back here or wherever you know so let's watch it is this making some sense and it's not a pleasant day I've had more I've had more fun at the dentist but you know this is trading and we don't control what we control in trading just like the casinos is playing the game exactly the same way because they don't change the game you sit at the blackjack table it's always the same well setups are the same setups are games and I suggest you think of them not that we're playing a game the idea of a game or gaming is edge and probability casinos only play the games that give them the edge if that's the case shouldn't we think the same way shouldn't we run our business the same way so it's not only what you do to extract metrics you also understand you have no control over anything except what you do you know what does the casino control how they play the game they don't change it they don't get emotional they see losses is overhead and cost of production they know they've been playing blackjack for a long time and they know over a random distribution of hands that they have a statistical edge they don't know anything beyond that because it's all random see we're in the same world random world we don't know if it's going to hold this level I suspect it's going to go because of sell stops but I don't know it doesn't it can this is too high too low let's see what it does I'm inclined to think it's going to break down but that see the fact I think that I don't know it so how can I take action until it actually does it until it fails this level which tested this volume this outside edge it hasn't failed and I can tell you how many times when I put a trade on I always think I'm going to get stopped out and I always think I'm my trailing stop it's going to get it why I'm wired but instead of bailing out I think I have found that I just have to let the randomness play out I hope you got something out of this today and you know by the way if you're in the bookmap discord trade lab chat this stream is available for replay through the weekend and it's a good one I think the review for microstructure because I spent a lot of time in it the other thing is if you're there's a link in the bottom of YouTube where you can access 60 PDFs of structured trades that you can reverse engineer and this would be a good weekend um take a look at these because you're going to see the same thing I'm doing here now when the market is nasty it's nasty we have nothing okay these are trades you know this gives you all the background uh this is I think this is these are actual trades I take and these are just screenshots and it's I'm not a vendor I don't do any of that it's not my thing I'm just a trader and I've had the opportunity to make more mistakes than you have because I've been at it 43 years so I get more mistakes and what can I tell you and obviously I'm still making them just try to make less so for example long fullback target primary target you'll see these explanations context this is the hardest part for traders how do you trade this all right this is this actual trade took a long here long targets target was achieved long here scale back to the high volume node target number two mid scale right target number three was here all this will give you some explanations anyway there's a whole bunch of these there's 60 and a library of PDFs um you don't have to be a book map subscriber you won't be solicited and this is available to all of you as a gift from me to you towards better trading and again what I do it's just the piece the thing about trading is this can give you ideas and it might save you a lot of time because now you have something you can build off of and then you align it with your your psychology your mental state if you got something out of this guys give a thumb up in youtube I always appreciate it um come to trader lab there's a lot of additional free education you don't have to be a subscriber to book map now or ever never you'll never be solicited and the education is of course on order flow with a high care tool like book map you know icebergs uh stop sweeps absorption understanding the limit order book how it operates algorithmic behavior options um market maker behavior crypto swing trading I don't know everything else the kitchen sink and different streamers and professional traders who share their view as far as how to do their thing and it's not what I do this is one way to do it I find for me uh after going down many different paths and if we ever individually had the opportunity to speak you'd probably be shocked as far as what I've done in my journey and I still am learning I'm still trying to get better I still watch these streams every day after the market to see what I could do better I watch replays I I work on my execution it's just like a uh any kind of athlete I heard that an alert go off say IB is uh if we're below the IB then it might be the IBF I don't know which is the IB failure which is a mean trade is short so I'm not sure if we did that but I heard an alert go off so that's something you guys can think about anyway thanks so much for uh visiting the trader lab thumb up in YouTube there's a link in the bottom of YouTube if you want to visit the bookbap discord trade lab chat drop in say hi download the 60 PDFs of these structured trades so you can vet them and see how they fit there's a library of webinars in there that I've done some up to four hours long of real-time narration um and there's a primer webinar start with that one it gives you a high level overview of this process and an understanding of the business of trading how to anchor so you have a consistent process that you can measure if you can't measure it you're the gambler it's really a matter of which side of the table you want to sit on do you want to be sitting with the gamblers or do you want to be on the house and it's just a matter of choice and it doesn't matter how you get there but it does matter whether you want to be gambling or if you want to create a business the business of trading is a wonderful business becoming a long-term participant and becoming a trader takes a different mindset and understanding that what most retail traders do most retail traders are just passing through there the gamblers I suggest you consider another approach if you're not getting the results you want and again this might not be the right way to get there but you can learn a lot from the Trader Lab and kind of put it in there as a piece on your journey and I thanks again for visiting the Trader Lab today I'll be back on Monday and this stream is available to everyone in the Bookmap to Square Trader Lab chat to review over the weekend and of course the library and all the other tools and it's a great community of like-minded traders looking to leverage their collective experience remember we've all go down similar and divergent paths but we all are in the same place as far as our journey this might save you time up to you again which are all invited thanks see you again next week appreciate you visiting Trader Lab today and thumb up on the way out please and you please nice and subscribe to the channel if you want to get notifications of other education see you take care and always great stay