How to Read Levels

The Volatility Box (VB) models are at the core of the platform, designed to simplify trading by providing clear, actionable levels for identifying potential trade setups. These models highlight areas where price is statistically more likely to reverse or consolidate, offering structured entry, stop, and target levels. By understanding how to interpret these levels and when to apply them, you gain a significant edge in your trading.

What sets the VB models apart is their reliability. The levels do not repaint, meaning once they are established, they remain fixed for the trading session. If the market moves in an unexpected direction, the models self-adjust dynamically, keeping the levels relevant and actionable without requiring manual intervention. Mastering how to read and use these models equips you with a consistent framework for navigating volatile markets with precision and confidence.

Understanding the VB Model Levels

The VB models are visually represented as zones on your chart, with each component serving a specific purpose:

1. Clouds (Green and Red Zones):
   • Green Clouds: Indicate buy zones for potential long setups. A breach into this zone suggests price is oversold and poised for a reversal.
   • Red Clouds: Indicate sell zones for potential short setups. A breach here suggests price is overbought and likely to reverse downward.
2. Dashed Lines:
   • Cyan Dashed Line (Hourly Models): Marks the entry threshold for hourly trades. When price crosses this line, the Live Scanner identifies it as a setup.
   • Gray Dashed Line (Daily Models): Acts as the target level for daily trades, helping traders determine when to exit positions.
3. Why the Models Don’t Repaint:
   • VB levels are calculated using statistical ranges and the day’s high and low. They remain consistent throughout the trading session, providing reliable and actionable data.
   • If price starts moving in the opposite direction, the models automatically self-adjust, ensuring they stay aligned with the evolving market conditions.

How to Read Hourly Models

The hourly models are recalculated at the start of each trading hour, making them adaptable to short-term market fluctuations. These models are ideal for intraday traders seeking frequent opportunities:

1. Key Components:
   • Cyan Dashed Line: The first signal for potential entry. Once breached, price enters the volatility zone.
   • Clouds: Represent deeper levels within the volatility zone. Deeper entries into the clouds offer better risk-to-reward ratios.
2. What the Live Scanner Tracks:
   • The Live Scanner detects breaches of the cyan dashed line in real time. This ensures you can spot setups the moment they occur.
3. Example in Action:
   • When QQQ breaches its hourly cyan dashed line and enters the green cloud, it signals a potential long setup.
   • The deeper the entry into the cloud, the better the reward relative to risk. A confirmation signal, such as the Edge Signal or Momentum Cross, strengthens the trade idea.
4. When to Use Hourly Models:
   • Hourly models are best suited for scalping or quick intraday reversals. Their frequent breaches provide more opportunities, especially in liquid instruments like SPY, AAPL, and QQQ.

How to Read Daily Models

The daily models provide static levels that remain constant throughout the trading session. These levels are particularly effective for capturing larger intraday moves or swing trades:

1. Key Components:
   • Clouds: These are the primary entry zones for daily trades. A breach into the green cloud suggests a potential long setup, while a breach into the red cloud signals a short setup.
   • Gray Dashed Line: Acts as the target level for daily setups, offering a predefined profit-taking zone.
2. How the Models Are Calculated:
   • While the exact methodology is proprietary, the levels are based on the day’s high and low, adjusted for expected volatility. This ensures the levels are always relevant and reliable.
3. Example in Action:
   • When Microsoft breaches the green daily cloud, it signals a potential long setup.
   • The target for this trade would be the gray dashed line, offering a predefined exit level.
4. When to Use Daily Models:
   • Daily models are best for traders looking to capture larger moves or multi-day trends. Their strength lies in their consistency, with fewer breaches that signal higher-conviction setups.

Hourly vs. Daily Models

Feature	Hourly Models	Daily Models
Reset Frequency	Resets every hour	Calculated once daily
Trade Frequency	More frequent breaches, smaller moves	Fewer breaches, larger moves
Ideal Use Case	Quick scalps or intraday reversals	Swing trades or major intraday reversals
Entry Threshold	Cyan dashed line	Clouds
Profit Target	Cloud boundaries	Gray dashed line