ZoneTraderPro Volume POC Absorption and Extension Trade

POC Trade Example
POC Trade Example

The POC trading signal is the most powerful signal in the ZoneTraderPro order flow indicator suite. This pattern is normally seen several times a day resulting in the opportunity for multi-point trades, usually at least 5 points or more because of the reversal potential.

The pattern occurs when the Blue POC box and the red or green absorption box in the top or bottom 3 price levels.

There are two types of POC Signals. The POC Absorption and POC Extension Signal. Both can occur on the same bar and they represent a different algorithm making this a tremendously powerful signal.

The POC Signal Gallery

Order Flow POC Absorption Buy
Order Flow POC Absorption Buy

What is important about this trade is how it works with the other tools in the ZoneTraderPro toolbox.

In the picture on the left we have several different reasons to buy the market based upon order flow and price patterns. First ZoneTraderPro identified a Tick Divergence pattern which is a reversal pattern. When the market made a low, it was trading into a previous known support zone, which is the green extension zone painting on the chart. Next two thing happens in the order flow. A large buyer came in and created an POC extension zone buy. Additionally a passive buyer was buying with a limit order at 2717.00 which formed the absorption POC trade.

On the smaller time frame chart, ZoneTraderPro gave a stopping ratio (the .70 number) and a ZTP Order flow buy signal. In 30 minutes the market was trading 10 points higher.

The reasons are simple and not complex when you understand order flow. The market was reversing from a low to a high, but the retail traders are sending market orders thinking the market would trade lower. The large institutional traders are buying that supply and without the ZoneTraderPro order flow tools and training you have to ask yourself, would you be a seller or a buyer?

So what happens at that high? Which was also the high of the day.

POC Buy Signal on Smaller Time Frame
Order Flow POC Sell
Order Flow POC Sell

Pretty much the opposite in reverse. Again we have a ZoneTraderPro price pattern. This time the pattern is an Exhaustion trader which is also a reversal pattern. Again the extension zones indicate previous resistance and as price traded at the high, a large seller came in with a market order.. Along with the absorption we have trapped buyers.

On the smaller time frame chart we have multiple stopping ratios and multiple ZTP Oder Flow Sell signals

On the smaller time frame chart we have multiple ratios and the ZTP Oder Flow Sell signals.

The point to be made here is that when the market makes a reversal, it will usually leave signals in the order flow that ZoneTraderPro identifies. The job of the trader becomes easier when he has confidence in the signals.

Here you can enter based on the ZTP Order Flow signal with a 3-4tick stop and a 4-5 point target. That is a tremendous risk reward ratio.

ZTP Order Flow and POC Sell Signal
ZTP Order Flow and POC Sell Signal
POC Buy and Sell Signals
POC Buy and Sell Signals

What would happen if there was an opposite signal before a target was reached?

In this example a ZoneTraderPro trend trade buy signal was given along with a POC and Trapped Seller order flow buy signal. Then it is immediately followed by a POC sell signal. As you can see from the chart, exiting and/or reversing is the correct trade. This opinion is based on experience with the patterns that you will learn.

The POC Buy/Sell is a signal that generates between 5-10 times a day and represents the best tool in the order flow tool kit.

POC Extension Signal

The POC Extension is a different algorithm from the POC Absorption signal. It represents a different type of order flow pattern. So when both patterns occur on the same bar, you will likely have an excellent trading signal.

Order Flow POC Sell
Combination of POC Signals
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