TradersLibrary2 - anatomy of a volume profile trader

8.2 “P” profile showing upward volume development.
A profile developing to the upside (P Profile) is leaving a trail of short traders
holding onto losing positions. As price returns to test the lows of development
those traders will offset positions (buyback) thereby causing price to continue
upwards in the case of a “P” profile. The P profile consists of higher lows. Once
price has moved significantly enough and an upward trend has been identified,
price may look to shake out long traders by dumping to test the swing lows and
take out stop losses. This is usually a bullish play. This is a common strategy of
floor traders who see that price is overall moving higher and want to run stops to
accumulate and quickly bring price up to new high. Please know that they don't
want to bring you along for the ride. If you exit your long position, it allows
them to accumulate more longs before price launches and continues higher. This
is smart money (real smart), knowing price is going higher overall and buying
the big dip. In the FTR we call this the stop flush, or stop sweep. This is a great
buying strategy to get the best fills.
Quiz
Where should you be buying in a P profile?
A. Any short-term dips below major lows (stop sweeps).