Market Profile Trading Concepts

[OAC]

Originally Posted by rigel perhaps you can put this question on wyckoff forum where MP concepts are incorporated into boxes.

MP Value Areas can be represented better by circles or ellipses than boxes.

[omni2006]

Originally Posted by Tasuki "The initiative range extension and the responsive tail were one and the same activity."

correct. so if we have established a balance area, a push outside that balance is initiative and we get range extension. the responsive tail means that the initiative effort was shut down. there wasn't enough power behind the move to sustain it, a more powerful responsive movement came in, and created the tail. back into the balance we go. we had a nice example of this today in the ES. at point #1, higher prices would be expected to shut down selling, but it didn't so someone was trying to initiate an upward move. after we got range extension up, sellers responded at point #2 and the upward movement failed. the area that sparked responsive selling lined up with yesterday's VAH (point #3).

How's he to know if he's looking at buyers initiating a new leg up in the market or sellers responding to higher prices and selling above yesterday's Value Area?

though i realize there is more complexity to the market and its behaviors, i use a very basic lens for this scenario: did the expected happen? if we reach the upper portion of a visibly recognizable balance area, did higher prices shut off the buying? if not, that is unexpected and therefore not responsive. it is initiative. that's only for the direction.

keep in mind how many different agendas are at play in the market at any given time. if, like we described above, the initiative move is weak and overtaken by responsive sellers then that initiative attempt failed. not only has this upward move failed sending us back down into balance, this can easily generate downward momentum and spark an initiative downward move at the bottom of our balance area.

i think understanding the market through Market Profile simply takes a lot of time and practice. remember that MP is not a strategy, nor is it a trading system. of course, that's not to say people can't create trading systems based off of MP.

i sincerely hope that helps.

thanks and take care -

omni

[Tasuki]

Originally Posted by omni2006 i use a very basic lens for this scenario: did the expected happen? omni

Sheer brilliance, omni. You obviously have an excellent grasp of Market Profile principles. Thanks very much.
Tasuki

[omni2006]

Originally Posted by Tasuki You obviously have an excellent grasp of Market Profile principles.

thank you, but I too am a perpetual learner

Originally Posted by Tasuki Thanks very much. Tasuki

you're very welcome, i hope it was helpful.

take care and have a great weekend -

omni

[enochbenjamin]

Originally Posted by Soultrader 2. Opening Price in relation to the value area: Here is a rank of market balance vs market imbalance. If price opens above/below value and the previous days range, this creates a complete market imbalance. This offers a high risk but high reward trading opportunity. If price opens above/below value but within the previous days range this indicates a market imbalance but not as significant as the earlier example. This creates a medium risk and medium reward trading opportunity. If price opens within value and within the previous days range, this indicates a complete market balance. Unless price extends above/below value, this creates a low risk but low reward trading opportunity.

Please let me know if the attached chart visually represents what is being said above.

This is a chart of todays action on ZNM9.

Thx in advance.