Full transcript
0:01All right, guys, and welcome back to
0:03another video. And today we are talking
0:05about your mistakes with absorption,
0:07right? Like the actual mistakes you are
0:09making that you can probably get rid of.
0:11You're probably entering on trades.
0:12You're probably re-entering a lot of
0:13times with absorption just because
0:15you're making these four mistakes,
0:16right? And let's go over the first one,
0:18right? A lot of you guys are not waiting
0:20for a reward system. I've explained this
0:21in my Dom with Advance video. You can
0:23check out on my YouTube channel, but it
0:25is basically just a confirmation that
0:26the absorption will actually work. I
0:28would rather for you guys to enter on
0:30confirmations after the absorption has
0:32occurred rather than just entering
0:33straight after the the absorption,
0:35right? Just because you can easily be
0:37faked out. It's about like a 27% chance
0:40all absorptions fail without a
0:43three-tick replenishment of a reward
0:45system. So, meaning that it needs to go
0:47in your direction within three ticks
0:49after the absorption for it to actually
0:51work out, right? To get rid of that 27%
0:54failure rate. So, I mean, you can see
0:56here there's many ways of knowing, like
0:59simply, a reward system. One way, for
1:01example, here. You can see here buyers
1:03are coming in, right? Buyers are coming
1:05in at this top wick. Price comes down.
1:07Then we have sellers confirming the
1:09move, right? To the downside. However,
1:12these sellers, they're not being
1:13replenished strongly. They're not being
1:15refreshed strongly. You can, for
1:16example, use the time and sales tool or
1:19the speed of tape tool, right? And you
1:21can see, for example, sellers are
1:22replenishing, sellers are replenishing,
1:24and then buyers just step in instantly
1:26when these sellers came in, right? So,
1:28now you know buyers are trying to defend
1:29where would you enter where buyers are
1:31trying to defend? You would want more
1:32sellers to come in and, you know, be
1:34aggressive. Even here you can see, in
1:36terms of CVD, we have the median line
1:38and price is obviously above this median
1:40line, showing you that overall
1:42directional aggression in terms of
1:44delta, buyers are strong. And you can
1:46even see that we're in an uptrend,
1:48right? Remember, absorption you only use
1:50it logically in reversal type of
1:52scenarios. You're not using it with
1:54trying to catch a continuation of a
1:55move. So, you would try to take shorts
1:57here, right? To catch that fade of the
1:59trend that we are going up in. So, you
2:02can see here in directional terms of
2:04CVD, in terms of delta, price is bullish
2:06and we are going up. We're above the
2:08median line. When we start to fall off,
2:10what's price doing? We fall off, but we
2:12just test this obviously this median
2:15line of CVD, showing you that we're
2:17still bullish. So, that is one really
2:19simple way of just waiting for, you
2:22know, a reward system. Now, we can go to
2:23the second one. Not following the
2:25auction. I have to like always preface
2:28this a lot of times. A lot of beginners
2:29do this, right? They think that
2:31understanding all the order flow tools,
2:33such as the footprint, deep trades, the
2:35DOM, the footprint, like all of these
2:37things, right? That can show you orders
2:39and they're all virtually showing you
2:40all the same information, even the heat
2:42map, things like that, right? They are
2:44all order flow tools. However, you're
2:45not going to be successful with them if
2:47you don't understand the auction, if you
2:49don't understand where price is. If
2:51you're just randomly entering where
2:52absorption occurs in a random auction
2:54that don't even know who should be in
2:56control, who should like, you know, you
2:57should give leniency towards, you don't
2:59know who should be like, you know,
3:00having strength and things like that,
3:02then you will fail, right? You need to
3:04understand this. This is probably like
3:05the number one mistake I always see
3:07people doing, but
3:09you've probably been watching my channel
3:10a lot. You've probably, you know,
3:11understood absorption a lot now from my
3:12recent videos and like, you know, me
3:14live trading videos and things like that
3:16and you've seen like, you know, all the
3:18mistakes and that's why I'm putting it
3:19as a number two priority, not number one
3:22anymore, just because a lot of people
3:23are finally understanding the auction
3:25and understanding that it really
3:27depends. So, I can show you an example,
3:28right? We have a daily VP. This is
3:30showing you the, you know, current day's
3:33volume and here we have a delta profile
3:36next to it.
3:37And you can see here, it automatically
3:38draws out the predefined areas, such as
3:41value area high, value area low and POC,
3:43right? And you can see here, this is not
3:45absorption. People would think this is
3:47absorption. If you were not to see this
3:48volume profile and you just saw that
3:50we're going up with an uptrend, buyers
3:52come in, they get hit to the wall, then
3:54we have a bunch of sellers coming in,
3:56showing you that the opposition is
3:57failing, you know, buyers are failing
3:59cuz that's the opposite side, and your
4:00side is winning. Obviously, the sellers,
4:02right? Because you're trying to fade
4:03this trend, you're trying to enter on a
4:04absorption reversal signature. However,
4:07did we go down? No, we didn't. We just
4:09came back up, most likely hit your stop
4:11loss unless you're talking to like a
4:12one-to-one, right? And where is this in
4:14terms of the auction? Well, we are close
4:16to, you know, balance. We're close to
4:18POC, and price loves to obviously stay
4:21within this area and just basically chop
4:22within this area. So, do you really
4:25think this is a good area to have an
4:26absorption signature? Most likely not.
4:29You would rather have it at extremes
4:31such as ledges and shelves. If you don't
4:32know what that is, you can obviously
4:34find it on my YouTube channel, but yeah.
4:36And I always say that value area high,
4:38value area low,
4:39these are areas that are obviously
4:42extremes, right? But they are arbitrary
4:43values, meaning that they shift while
4:45price shifts. It's sort of like a
4:46lagging indicator. I wouldn't
4:48necessarily enter on a on current
4:51necessarily an extreme on current day
4:54VP, value area high and value area low.
4:56Maybe previous days ones, right? But
4:58this one is a predefined area that
5:00always moves as price moves on. So, you
5:02wouldn't necessarily use these extremes.
5:04You would want to use real extremes such
5:06as shelves and ledges and low volume
5:08nodes and my high volume nodes, right?
5:09So, again, that is another mistake that
5:12a lot of you guys are making, just not
5:13following the auction. And number three
5:16is not understanding the logical
5:18barriers. You first have to understand
5:19the definition of what is actually. So,
5:22the normal simple Google definition,
5:24right, is that absorption means the
5:25process of one thing taking in, soaking
5:28it up, or receiving another substance,
5:30right? So, if you just think of it like
5:32a sponge, right? Um like we're going up,
5:35we're going aggressively with a ton of
5:36effort from buyers, right? We're just um
5:38pumping, right? So, if I were to
5:40actually show you, we're just pumping,
5:42pumping, pumping with a bunch of
5:43aggressive buyers coming in, right? In
5:45terms of orders, they're aggressive,
5:46they have effort, things like that. Then
5:49we go up and we instantly hit a wall,
5:52right? And what is that wall? This is
5:54passive sellers coming passively,
5:56they're coming in. Then you see a
5:58bubble, right, of aggressive buyers
6:00coming in on the deep trades. And then
6:02we go lower. You're thinking, well, we
6:04should go technically higher then,
6:05right? Because we have a ton of effort
6:07from buyers. However, they're not being
6:08rewarded. So, you can assume that these
6:11um sellers are coming in passively to
6:13stop these aggressive um effort buyers,
6:16right? Now we're going down having no
6:17effort no reward and we just fall these
6:19buyers and we're going lower. Then a
6:21seller aggression comes in showing you
6:22there's a reward system now, you know,
6:24from down taking for, you know, your
6:27aggression. So, now it's actually
6:28receiving it from another like energy
6:31source you can say but, you know, um you
6:32wouldn't say that though. It's just
6:33aggressiveness of your side coming in.
6:36And what does price do? Price just just
6:38goes and dumps, right? And I would
6:40always like you guys anyways to enter on
6:42the test of the um reward system just
6:45because that is showing you even extra
6:46confirmation. So, we got, you know,
6:48buyers hitting to the wall having no
6:50result. And you know, there's a bunch of
6:52effort from buyers and they're all being
6:53stopped out by these passive sellers
6:55that are coming in to soak it up, right?
6:57Now we are going lower with
6:59aggressiveness on our side, the
7:00opposition's failing, our side is
7:02winning. Now, just in order to know this
7:04is actually our side winning and not for
7:06us to just go all the way up, we have a
7:08test with a decent amount of refresh
7:10orders in the time and sales. You could
7:11even see it on the DOM, you could see it
7:13um on the footprint, you know, selling
7:14balance says whatever. We go lower and
7:17yeah, that is absorption and that's how
7:18you enter on confirmation of an
7:20absorption, right?
7:22And the um last thing is
7:25waiting for your side to win and the
7:26other side to lose control. I basically
7:28just explained it but I can show you a
7:30better way. The easiest way to actually
7:32see this is delta, right? And you can
7:34see here obviously, like we explained
7:35before, this is not absorption. A buyer
7:38comes in, sellers come in. You enter,
7:39that's great, but where are we in the
7:41auction? We are at POC. This is where
7:43price is most likely to chop. You know,
7:45there's on like decisive area of what
7:47who should be in control, who should
7:49have leniency. So, you wouldn't you
7:51would disregard this, you would just
7:52filter out, you wouldn't want to enter
7:53that. However, we come to the value area
7:55high, buyers come in, they get hit to
7:57the wall, and then sellers come in for
8:00reward system. But, where does this hit
8:01to the wall come from? Roughly around
8:03where a high delta spike area is. So, of
8:06buyers, the opposition is obviously
8:08losing control, you know, bunch of
8:10buyers are coming in, but obviously
8:12sellers are coming in passively to stop
8:14this aggression of buyers, of this
8:15effort of buyers. So, they are being
8:17absorbed, they're basically being soaked
8:19up passively by sellers. Same thing down
8:22here where we go below value area low,
8:24we have a failed auction. So, right
8:26here, if I were to draw it in red,
8:29um right here, this is known as a failed
8:31auction because we just come out of
8:33balance, and now there's obviously a 70
8:35to roughly 80% chance we'll come back
8:37into balance as price likes to stay
8:39within balance 70 to 80% of the time.
8:42And again, we have a high delta spike.
8:44By the way, what I wrote there before
8:46was wrong, I just deleted it, but yeah,
8:47we had a high delta spike of buyers,
8:50right? Regaining control, these sellers
8:51are being absorbed at the bottom
8:52passively, and now we go back up, right?
8:55Back into balance. So, these are the
8:57four main ways that I think a lot of you
8:59guys are making mistakes on. And yeah,
9:01you guys can comment down any other
9:03things that you guys are entering on
9:04like, for example, failed auction
9:05setups, like scenarios with AMT, or
9:07maybe like, you know, some confirmation
9:09entries that you guys take, and maybe um
9:11you know, you know, you know, you want a
9:13video like this where I can talk about
9:15mistakes that you might be making, and
9:16you can implement this, you know, to
9:18have extra layer of confirmation, just
9:20so you can be profitable with
9:21absorption, right? I do have a free PDF
9:23resource of what I just explained with
9:25all of these scenarios and everything
9:27there with a checklist and things like
9:28that in the description, right? So, you
9:31guys can check that out, and it'll be a
9:32bit more in-depth as well. These videos
9:34are like a bonus. The PDF resource is
9:36like the main thing to take from this
9:38just because you can see it on the side
9:40of your screen, for example, while
9:41you're taking the trades, you can tick
9:42it off as you go on and do if you were
9:44to use the checklist, of course. And
9:46make sure you guys like and subscribe if
9:48you want more content like this. And
9:50yeah, that is pretty much it. I'll see
9:51you guys soon.