All language subtitles for 8. Calibrate Position Management Stop Loss

Let us now discuss how we can use the
information provided by the volume

to locate the stop loss.

To set the stop loss, we want to
identify areas where there has been a

rejection, and these are the low volume
nodes.

The price generated a reversal on them,
and we expect them to behave in the same

way in the future.

Therefore, it is an excellent area to
place our stop protection.

The exact location of the stop should be
at a level that coincides with the end

of the low volume node and the beginning
of the high volume node.

Since the low volume node is a zone, the
price can generate the final inflection

point at any of the levels that make up
the zone.

That is why the most precise location of
the stop loss should be at the end of

the low volume node.

This will give us some room for the
price to turn around before reaching our

stop.

This chart example shows this very well.

If we had entered this rejection on the
LVN, the stop loss would have been

placed approximately at the marked
position, at the end of the low volume

and at the beginning of the high volume
node.

We will now work with the examples we
saw earlier.

In this case, we identify the low volume
node and the stop loss would be placed

at the point where it is marked, just at
the end of it and at the beginning of

the high volume node, as we have seen.

We have always been told that the stop
loss is on the other side of the

inflection points that mark potential
supports and resistances.

But we have never been told exactly
where and why.

And the reason is this. The exact level
where it should be placed is at the

point where the end of a low -volume
node and the beginning of a high -volume

node zone coincide, so that the price
has enough margin to generate a

at any of the levels that make up the
low -volume node before moving in our

direction.

Here, we have another example.

The price generates the rejection at the
low volume node and offers us the entry

trigger. If we had taken the opportunity
to buy, the stop loss would have been

placed below the price and exactly at
the level where the beginning and the

of the high and low volume nodes
coincide.

And finally, in this other example, the
situation is the same.

Short entry on a low trading zone and
set the stop loss at the end of this

As in this case, if the low volume knot
is relatively narrow, the stop loss will

be closer to the end of the price.
However, the concept will always be the

regardless of the size of the knot.

It should also be noted that in addition
to the low volume nodes, the more

trading levels we have in favor, the
better.

There will be times when there is no
clear low volume node on which to place

stop loss.

For these special cases, it is
especially useful to use the rest of the

levels. One point to note is that in
order to place the stop loss, we should

take into account the BPOC due to its
own nature and implications, which we

discuss again.

In this example of trading on the value
area high of the profile, if we look

closely, all this area is part of a
large node of low volume, so a correct

location of the stop loss would have
been at the point where the nodes

which would also be below the value area
high, as it is logical.

I mentioned earlier that the VPOC should
not be used for setting stop losses.

The reason is that this level suggests
balance and is part of a high -volume

node, and this means that the price is
likely to visit this area.

The concept is clear. The stop loss
should be placed in areas where the

has previously generated a rejection,
not in areas where it has generated an

acceptance.

Therefore, in this example, if we also
wanted to place the stop loss below the

VPOC, the ideal location would be the
one shown below, which would be anchored

at the end of this low volume node.

And as we can see, this would be a
location too far away from the entry, so

should be discarded.

This will not always be the case. At
other times, the best location, due to

proximity of the price to the trading
levels, will be at some low volume node

below the VPOC.

The key is that we select the most
favorable location while maintaining the

logic of these principles.

In this other example, we have an entry
where the price is trading above the

VPOC and generates a rejection at the
low volume node.

We would identify the end of this low
volume node and place the stop loss

This should be the most conservative
position.

As we can see, this node is quite wide,
so the stop loss would be relatively far

away. We should evaluate whether this
distance is sufficient for our position

management. We could decide to shorten
it and place the stop closer.

but this would increase the risk of
being hit.

Finally, here is another example of
where the entry occurs in a confluence

of the VPOC and the weekly VWAP.

We identify the nodes at the bottom and
place the stop loss at their limits.

As mentioned before, this type of entry
has a high probability due to the

confluence of levels.