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cool stuff, i've been trying to plug away at Dalton a little bit at a time and its finally starting to make sense(or at least less like trying to read egyptian). ant, what do you mean by "one timeframing" though? The next TPO isn't crossing over the previous much?
Do you guys find the whole lettering view to be useless? Just focus on the way the profile is developing overall? |
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"One timeframing" is when there is only a single longer timeframe trader in the market (buyers or sellers). When buyers are in control, the current bar does not violate the previous bar's low by more than a tick (vice versa for sellers). The lettering is useful for understanding what happened in a specific 30 min time period. Without the lettering, you wouldn't know what happened earlier or later in the day by looking at the profile. That's all.
Use the Market Profile graphic as a tool to understand market behavior. Forget about trying to identify setups using Market Profile, first try to learn to read the market through the Market Profile. For example, look at the shape (e.g., symmetric or squat means balancing, elongated means trending, p-shape means short covering, b-shape means long liquidation, etc). Pay attention to tails, single prints, range extension, gaps (invisible tail),
value areas, high/low volume areas, spikes, etc. and learn to interpret what each of these components is telling you about the market auction. Learn to identify the attempted direction and then gauge it's performance in moving in that direction. You can use volume analysis when the attempted direction is clear and use the profile shape when the attempted direction is not so clear. Also, look at
value area placement. Again, the goal is to try to understand what is happening in the market so that you can position yourself with order flow. Once you have market understanding, then you can look for asymmetric trade opportunities (i.e., trades that have a chance of 50% or more of winning and have a win/loss ratio of 2 to 1 or more). One of the basic trades in Market Profile is to identify brackets and balance areas and then fade the extremes or play the breakout. But first, you need to understand context. Finally, learn about the four stages of market development as described by
Steidlmayer (i.e., balance, transition to trend, trend, trend end - back to balance). Market Profile really is a great tool for understand market behavior. Hope this helps.