medium · Volume Profile Analysis profile-shapes
A volume profile trader is long EUR/USD at 1.0850 with a structural stop at 1.0820 based on the Value Area Low of the prior three-day composite profile. The prior three-day POC is at 1.0840.
Which stop placement principle is most consistent with volume profile methodology?
- The structural VAL stop at 1.0820 is the correct choice; invalidation of the accepted value area is the profile-based signal that the trade idea is wrong
- Any stop below the POC at 1.0840 is too tight; the correct stop is always 50 pips below entry regardless of profile structure
- The prior three-day POC at 1.0840 should be the stop; any trade below the highest-volume node means the trade is invalid
- Volume profile methodology does not use structural stops; all stops must be based on time, not price levels
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