Scalper’s Paradise – Insights on Evolving Technical LevelsThis is my first post, and I’ll do my best. However, I might not know how to update the post or even view the comments. So, in advance, I apologize for any issues that may arise. :)
Now, let’s dive in with a snapshot of a 1-minute chart. Here, you can see the developing VPOC line along with the VWAP line. These aren’t just random indicators—they are volume-based indicators, meaning the data comes directly from the exchange system. This makes them highly relevant for traders, as they provide crucial insights into market activity.
But what exactly does this mean?
The developing VPOC line (Volume Point of Control) represents the price level with the highest traded volume of the day. It is often displayed when using a Volume Profile.
On the other hand, the VWAP (Volume Weighted Average Price) is a standalone indicator that calculates the average price based on volume. Essentially, the VWAP line divides the chart into two key areas:
Above VWAP → Favorable for short positions (or considered expensive for long positions).
Below VWAP → Favorable for long positions (or considered expensive for sellers).
These levels help traders gauge price efficiency and market sentiment throughout the day.
Insights from My Time as an Institutional Junior Trader
As a junior trader in the institution, my job was simple: follow orders. This meant I was told what to trade and in which direction—I was responsible for executing the trades at the best possible price.
Now, as an institutional trader, I execute thousands of trades a day, which naturally results in an average price due to the sheer number of trades executed at different price levels.
So, how is my execution evaluated throughout the day? Exactly—against the Volume Profile and VWAP.
For example, if I need to buy a large quantity and my executions are concentrated in the lower area of the VWAP-divided chart, it means I’ve done a good job—I’ve secured a better-than-average price. On the other hand, if my trades are mostly in the upper area, it means I haven't performed well, as I couldn’t even beat the average price.
Let’s put on our thinking cap and bring everything together.
Imagine you need to accumulate a long position, and you’ve been buying thousands of times, resulting in an average price.
Now, let’s assume you are an institutional junior trader, and your boss instructs you to buy. You’ve already accumulated 85% of the position, and your average price is in the lower area of the VWAP-divided chart. Suddenly, the price has risen, and you have the opportunity to buy the remaining 15% at the VWAP.
Would you take the trade? Of course, you would.
Why? Because 15% won’t significantly move your average price, and you’re still buying at a reasonable level.
And that’s exactly how institutional traders operate all the time. They are constantly evaluated against these key indicators (VWAP & Volume Profile)—just like I was.
How You Can Apply This as a Retail Trader
So far, we’ve discussed just a small aspect of trading, but now you understand that levels matter and that institutional traders think differently when it comes to buying.
While retail traders often focus on getting the best price, institutional traders prioritize average price. This fundamental difference leads to completely different trading styles.
Now that you know how institutions operate, you can start watching the key levels provided by indicators like VWAP and Volume Profile. These aren’t just static levels—they are developing levels, meaning you can use them multiple times throughout the day.
Monitor these key levels throughout the session.
Pay close attention to order flow when price approaches these levels.
Identify who is in control—buyers or sellers—so you can take action accordingly.
By combining these insights with the order flow, you can make more informed and precise trading decisions—just like the institutions do. 🚀
Sincerely,
Marco
