I love the VPVR - volume profile study. It tells us so much about inefficiencies in liquidity and where price is most likely to go. As per a general understanding of price action, price tends to follow the path of least resistance towards areas of greatest supply or demand. We've popularised terms such as stop runs, liquidity hunts to discuss this basic idea.
This is where the VPVR is a useful tool for any trader.
Taking a HTF view of BTC, it's extremely hard to ignore the price void below. Sure, price can move up and turn bullish again. There's a non zero chance of anything happening. BUT - what is the path of least resistance? From looking at the chart I've shared, it's unquestionably down.
From how I see it, by hedging here (1x short, going to cash, whatever), you risk 10% to the upside in the case of a bullish flip. However, by not hedging you're risking up to 35% to the downside.
At the end of the day, managing risk first and foremost is key for me. Follow the liquidity.
This is where the VPVR is a useful tool for any trader.
Taking a HTF view of BTC, it's extremely hard to ignore the price void below. Sure, price can move up and turn bullish again. There's a non zero chance of anything happening. BUT - what is the path of least resistance? From looking at the chart I've shared, it's unquestionably down.
From how I see it, by hedging here (1x short, going to cash, whatever), you risk 10% to the upside in the case of a bullish flip. However, by not hedging you're risking up to 35% to the downside.
At the end of the day, managing risk first and foremost is key for me. Follow the liquidity.