Volume profile on Nasdaq, Gold and Euro: Which side is the market maker on? [Video]

Trading is a zero-sum game. The gains of one part of the market are the losses of the other — that's how this business works. That's why the most important question in any analysis isn't "where is price going?" but "which side is the Market Maker on?". In this breakdown we apply the same method across three different markets — the Nasdaq, gold, and the euro — to show how Volume Profile answers that question.

The principle: think like the Market Maker

Before the tools, the concept. When Volume Profile shows the heaviest concentration of transactions occurred in a specific band, that means an enormous exchange took place there between two parties: the Market Maker on one side, and the rest of the participants on the other.

If the Market Maker was selling while everyone else was buying, then he's short and retail is long. What happens if price rises from there? Retail makes money and the Market Maker loses. And here's the statistic that changes everything: roughly 90% of retail traders lose. That means about 90% of the time, the Market Maker is the one who's right.

So if we identify that the Market Maker is short in a zone, the probable path is that price needs to fall — to take out the stops of those who are long and turn that position into profit. That's the institutional contribution to analysis: thinking like the one who runs the business, not from our ego or our preference.

Nasdaq: the Wave 2 and where the stops sit

The Nasdaq completed a five-wave sequence and is now building the corrective Wave 2. The question is how far that retracement can go.

Applying Volume Profile from the previous low to the high, we measure the complete impulse and get the value area — the range where roughly 70% of the cycle's transactions occurred, corresponding to one standard deviation. The point of control marks the node of heaviest trading.

Notice that when volume decreases at the top, the Nasdaq quickly reverses — there isn't enough volume to sustain the move. After building Wave A back into the point of control, we look toward the B wave and then the C wave down.

If most of the trading concentrates in that band, the logical question is: where are the stops of those who bought there? Right below. And that stop zone is exactly where price needs to go — through margin calls, options expirations, and stop losses — for the Market Maker to book his profits.

We add the VWAP anchored from the low. The VWAP marks the fair average price. Price already reached it once; the next step is to break lower and move into the liquidity area, where we'd resolve whether buying is a good idea.

Gold: two volume readings and the institutional side

Gold shows an impulse, and applying Volume Profile gives us the point of control — the strongest volume of the previous cycle. Price already hit that level, but it's likely to push slightly lower to clean out the stops from the buyers, into the 4,320 area.

Here we apply a second profile, this one over the corrective wave, and that double reading is where the value lies. It shows most of the volume concentrating in a specific band — and there we ask the same question: which side is the Market Maker on?

In gold, the reading is that the Market Maker is long and retail is short. If price fell significantly from there, retail would win and the Market Maker would lose. Given that the Market Maker is right close to 90% of the time, the probable scenario is the opposite: a fresh low, signs of weakness in supply, a rejection, and from there the move up.

The target comes from a third profile drawn from the high to the low, pointing to the 4,600 area, with an additional VWAP marking the center of value along the way.

The question almost nobody can answer

Here's the most important point of the video, and it's a direct question for you.

When price reaches a level — a support, a resistance, a Fibonacci level, a moving average, a pivot point, whatever you like to use — do you have an objective tool to validate whether there's strength or weakness at that moment?

Because it's not just about price hitting the level. It's about how price gets to the level. Price arriving with acceleration and force tells a completely different story than price arriving decelerating, with wicks, showing exhaustion. The first will probably break the level; the second will probably respect it.

Without that validation tool, you're left with an unresolved question every time price reaches your level: is this a good idea to buy or not? That's the next step, and it's what we cover in our trading room every day.

Euro: finding the end of the corrective wave

On the euro we're looking for the end of a corrective wave to sell it. The main bias is bearish, and ideally price would move slightly higher before the rejection — because that would give us a better selling price.

Volume Profile shows the point of control, and the VWAP is proving hard for price to cross, which confirms the bearish read. By the end of the week we're highly likely to be below the 1.5600 area or even lower.

The ideal setup: price moves slightly higher, rejects, retraces, and then the move down. It's a matter of patience. We know the bias; we're just waiting for a good entry point.