medium · Volume Profile Analysis trading-strategies

In a balanced, rotational market a trader is fading the extremes of a well-defined value area. The session prints a poor high (a flat, abrupt top with no excess/tail). The trader's rule fades the value-area high.

Why is selling that poor high systematically inferior to selling a high that ended in a long buying tail, even though both sit at the same price?

  1. A poor high reflects buyers stopped abruptly without rejection, so it is unfinished business likely to be revisited and exceeded, whereas a tail marks rejection that confirms the auction explored and refused higher prices
  2. A poor high reflects stronger rejection because the flat top shows aggressive sellers absorbed all bids instantly, making it the higher-probability fade of the two
  3. A poor high and a tailed high are functionally identical for fading because both define the value-area boundary, so the distinction does not change the trade's edge
  4. A poor high signals a completed auction with balanced two-sided trade at the top, so it is the safer fade while a tail implies one-sided risk of a runaway move

Sign up free to see the explanation and track your rank →

More Volume Profile Analysis trading-strategies practice

KomFi: Test Prep Made Easy

KomFi: Test Prep Made Easy — free adaptive practice for GMAT, GRE, SAT, ACT, National Real Estate Exam, Investment Banking, and finance with full explanations.

KomFi Academy is free GMAT prep and personalized GMAT help built as a training platform: 77,980+ practice questions, 26,500+ flashcards, on-demand video lectures, podcasts, and 4K slide decks. Flagship tracks: Free GMAT Prep, Free GMAT Resources, National Real Estate Exam Prep, Investment Banking Prep, Finance Prep, GRE, SAT, ACT, LSAT, MCAT, Financial Accounting, Private Equity, Private Credit, and Quantitative Finance.

Free GMAT Prep & Personalized GMAT Help

What's inside

Topics

View pricing · Read testimonials