My research was based on the market profile concepts and I used volume distribution and stick to statistically valid concepts as far as possible. There are zones where large volumes are traded and these zones represent balance between buyers and sellers. These zones also forms edges where the balance breaks and price moves to find new value. Sometimes it gets pulled back into the previous value and continues to trade there.
Refer to the picture above. The pink shaded area is where 70% of the volume was traded and it is called value area. On the last day in picture, at open price went out from previous days value area and continued to trade upward. It reached the edge of a previously established value area and the day's high was formed there.
However trading based on volume distribution is not that simple. The picture shown is cherry picked to explain the concept. There are many variables affecting the price movement through the established value area and the establishment of new value area.
I compile a report every day before market open, with important levels and how to trade those levels. Usually I take one trade for a day and on some days two trades when the prices are expected to trade range bound. All the trades are planned before market open, and after open, just wait for execution. Most of the time trades are executed at open, after the first two minutes. I look where price is located after the first two minutes of market open and where is the nearest level and what to do at that level in my report and put orders. Some times I have to wait for price to reach a marked level. The stop loss is very small and minimum target is more than two times the stop loss after leaving room for slippage and brokerage. Stop loss is volatility linked and varies slightly depending on the present market conditions.
I am publishing the trade plan report here every day before market open and all the details to trade the levels is included in the report. This makes trading really easy as everything is well planned before market open. To use the report, you need not know the complexities of the analysis, just execute the trade as outlined in the report at the level.
The win rate is between 80-85% and minimum risk reward is 2 after slippage and brokerage. Actually most of the trades are executed near the day's high or low and there is more potential, but taking a small part consistently is all that is required to get huge returns from trading.
