What is the Playbook Trade?

The Playbook Trade is a trading strategy that uses a set of predefined rules to enter and exit trades.

It is a trade that has an answer to the four questions you should ask yourself and have an answer for before entering a trade.

The Four Questions

When price approaches a High Volume Node, look for bounces off this level. The high volume at this price suggests strong support or resistance.

When price approaches a Low Volume Node, prepare for potential breakouts. The lack of volume at this level means little resistance to price movement.

Use VWAP as a mean reversion tool. When price moves too far from VWAP, look for opportunities to trade back toward this level.

When markets are in a range, use the Value Area High and Value Area Low as boundaries for range trading strategies.

Ignoring Market Context - Always consider the overall market trend and conditions
Overcomplicating Analysis - Start with simple HVN and LVN identification
Ignoring Timeframes - Use appropriate timeframes for your trading style
Chasing Breakouts - Wait for confirmation before entering breakout trades

Different volume profile shapes can indicate different market conditions:

Gaps in volume profile can indicate areas of low participation and potential breakout zones.

Significant imbalances in volume distribution can indicate potential trend changes or continuation.

To begin using Playbook Trades in your trading:

Identify a driving input - This is the market behavior that is easily identified and understood by the trader. It's also a behavior that the trader can use to anticipate what is likely to happen next.