[Soultrader]

Hi Noal,

At first I had trouble understanding it. Partly because I had always pictured insititutional traders or funds to be super traders and were never wrong. Well they may be right, but intraday traders who focus on small price movements certainly focus alot more on getting a better fill. While I may use a 10 pt stop on the dow minis these insitution can use a larger stop because of their holding period.

I'm pretty sure I have comprehended the page correctly but not 100% sure of this. Let me begin with a market profile chart below:



The chart above illustrates the value area, poc, and TPO count for the emini Russell contract. We have a TPO count of 183/193 slightly favoring the buyers. Now for an intraday or short term trader the value area is what we perceive to be fair. However, for an longer term buyer if he decides to buy in this value area he is buying because he thinks the market is going up. In other words from his perspective he is buying low because he is focused on the longer term holding period. If he decides to sell in this value area he is selling because he thinks the market is going down. In his perspective he is selling high in relation to his longer term market perspective. Hence the statement:

	Quote:
	The behavior pattern: the longer-term trader gives up an edge in order to make the trade. He's willing to do this because something that is fair in the day can be a bargain in a longer-term time frame. In other words, when the longer-term trader makes a trade in the value area, he is buying low or selling high in relation to longer term value-not in relation to today's value.

Now, the author also states that the side with the most activity has to be short-term activity.... in other words no one is giving up and edge there.

Basically short term traders perceive price to be fair inside the value area. Day traders, swing traders, pit traders, etc... view this area as fair and balanced. So the most activity is found amongst this crowd who perceive price to be fair at value.

On the other hand, the longer term market participant views the value area differently. He does not view it as fair or balanced, a longer term buyer would view the same value area as a bargain. A longer term seller would view the same value area as too high. Therefore the area with the smaller activity indicates the longer term market participant.

This concept is a little ackward for me to grasp... since I believe the author is referring to the chart on the .pdf file.



Now there is still one line which I can not fully understand.

	Quote:
	If the longer-term buyer is most active, the value area is slightly too high because he is willing to buy at a slightly higher price. If the longer-term seller is most active, the value area is slightly too low because he is willing to sell at a slightly lower price.

Is this indicating that the longer term buyer is buying enough contracts to expand the value area?