[Soultrader]

Originally Posted by Maverick0325 »

Soul,

I too found pivots to be a very complimentary strategy to WHO i am a trader, but ive developed a small 'crush' (lol) on Mkt Profile ovber the past 6 months.

Had some questions for you:

1. What is the single biggest way to use it in your opinion? Signifying levels of S/R? Mkt direction/sentiment?

2. I use the value areas to mark levels of S/R and play those intraday in the YM. Question is the best values to use, and when to gather that data to make for an accurate S/R line. The self-fullfilling prophecy that is S/R in the YM means that i dont necessarily want the accurate data, but rather the data than is most widely used in my opinion. Pioneers dont last too long with that b/c they dont have anyone else to support that price point on the chart, thus not getting any S/R out of what you THINK is the correct value.
Do you....
A. Take VAH/POC/VAL (VA#'s) at the close of say Wednesday for Thursday's trading day and play those levels of S/R?
B. Take the VA#'s the morning OFF the day you wish to trade, ie, 9am in the morning on Thursday, when you are ultimately getting data that includes the overnight of that current day, 12am - 9am or so...
C. Use the 'developing value area' as it deveops throughout the day? Can this 'dev. VA#'s' be used as S/R on the chart as well, almost like 'buying the pullbacks to the 34EMA' in an up-trending market? Could you buy the pullbacks to the developing (key word) Value areas liek EMAs work? Do other trades do this enough for it to work?
D. What resources are available to me to do more research on the S/R levels that work best using MktProfile. I am relatively new to Mkt Profile so I would like to find a Blog, Post, etc that perhaps has some historical data as it pertains to this strategy.

Im anxious to learn more, thank you in advance!

Hi Maverick,

The threads and vidoes using pivots and value areas is a methodology and style I used to use for the YM. I have not kept track of this ever since I switched over to trading the Nikkei so do not know how effective they are now.

When I used to trade like this, pivot point and market profile clusters was my bread and butter. I had also combined volume and tape at these levels to determine whether price was going to hold or break. Combine that will market internals like the TRIN and TICK and you have a much better picture of price action.

I dont recommend using the value high and low pivots as S&R religiously. Yes, you take the previous day value area for todays trading. They should be used more as a reference point because price can easily hover back and forth within and out of value.

I never really used a developing profile besides knowing whether the POC was moving up or down. And yes, playing retracements back to value high/low pivots is a good strategy. (one of my own still for the Nikkei and I find it highly effective)

For resources, you should obtain market profile charting package and then study them until you are tired of seeing charts Its best to pour over them and understand how to read market profile charts fluently before applying them in your methodology. The last thing you want to do is to use a methodology with real money without completely understanding it. Are you able to determine what type of day we may have just by looking at the initial balance? Can you spot good trade locations based on market profile? etc... Grab a hold of Mind over Markets for starters. Then grab his second book and perhaps Steidlmayer's as well.

The only way for me to understand market profile was to pour over charts and recognize patterns. I no longer use certain techniques like I did for the YM with the Nikkei because of its characteristics. However, I apply the same concepts but work with different strategies around it.

The Value Area Rule for example is a classic strategy that should be studied. Also value area is 70% of price action. Which means the extremes on both the up/down side of the value area is only roughly 13-15%. Therefore buying breaks put the odds against you. Which is why I like to play rejection patterns using market profile as well.