Crash course into MP

[januson]

Hi...

For the last couple of weeks I've been very interested in MarketProfile. Finally I took a small step, to download MarketDelta and play around with it just to get a feeling.

I'll will certainly have to read a lot, but I couldn't wait to start this up so....

But then it suddenly hits me... Is this doable in our stockmarket, Copenhagen OMX, Nordic Exchange.


I've attached a screenshot of Novozymes, could somebody be so kind to explain something of what I'm looking at and what I should be looking at

This is only intended as a small teaser for my self You know.. something I can work my way out from, I learn best from examples that I can relate to!

Kind regards
Janus

[AgeKay]

Forget MP. Instead, look at JPearl's thread series "Trading with Market Statistics" in this forum. You'll get a lot more out of it.

[januson]

I'll do that.. thank you

I think I maybe will put MP at standby for the moment, Market Statistics looks interesting.

[lote_tree]

I'd never trade without an MP chart. It's too valuable to leave out of your arsenal IMHO. But everyone has their own style I suppose.

Peace

[thrunner]

Januson, there is nothing wrong with looking at the MP levels because there are so many traders looking at them. Just as there are so many looking at the VWAP, SD1,2,3. I am not sure what data feed you are getting for the Nordic OMX (Esignal ?), but you can probably try some of the free/low cost MP indicators for Tradestation/Multicharts or Ninjatrader; and try the free VWAP indicators as well.

[AgeKay]

	Quote:	lote_tree
	I'd never trade without an MP chart. It's too valuable to leave out of your arsenal IMHO. But everyone has their own style I suppose. Peace

What is so valuable about MP and what are you using it for? Please be specific. For me, MP doesn't even make any sense from a logical point of view. Why does it matter at what time interval volume was formed? Isn't it completely arbitrary?

[Soultrader]

	Quote:	AgeKay
	What is so valuable about MP and what are you using it for? Please be specific. For me, MP doesn't even make any sense from a logical point of view. Why does it matter at what time interval volume was formed? Isn't it completely arbitrary?

This is because you have not studied mp well enough to be able to use what mp is providing. More than the strategies revolving around mp... you need to first grasp the mp concepts. As traders use candle patterns to trade... mp can be used in the exact way. Familiarize yourself with it and you can see what type of profile we are likely to develop. If you can see the type of day we are likely to have wouldnt this be a tremendous edge? You can easily build strategies around it.

MP also helps show participation by the longer timeframe. This is critical information as the longer timeframe traders are the ones that create trends. Compare Trader A who is familiar with mp and Trader B who is not aware of it.

Trader A sees a narrow initial balance and plans a trade based on range extension. So basically he is trying to play a momentum of the IB breakout. Trader B is not aware that a narrow IB is easily upset. Hence he tries to fade the test of the low/high only to see price blow right past his entry point to breakout of the range.

Another example.... lets say the markets rallied strongly into the close. However Trader A spots that value placement is still lower compared to the previous day. This offers him warning signals that the late afternoon rally may have just been short covering. Hence, the following day he focuses on the short side as he thinks price is weak. On the other hand, Trader B assumes that the late afternoon rally is bullish can continues to trade from the long side the following day just to see price make small bounces and right back down.

These are just simple examples of what market profile can show a trader. However, knowing mp will not make you profitable. It is how you develop strategies around mp which will put the odds in your favor. A trader without a plan and strategy is destined to fail. MP simply allows me to create a roadmap for the trading day.... its like having a map in a new location. You can guide yourself alot easier than the person without one.

None of this will make any sense if you do not understand mp to begin with.

[momentom]

Great examples James.

Here's one more:

You are, say, short, and looking for a target:

previous days value area highs and lows and points of control are obvious points to look for the market to stop at, at least for a bounce.

[AgeKay]

	Quote:	Soultrader
	This is because you have not studied mp well enough to be able to use what mp is providing. [...] None of this will make any sense if you do not understand mp to begin with.

I have studied MP well enough to understand that it gives you as much of an advantages as most technical indicators out there (i.e. none). The examples you gave could come right from a trading author - vague, non-verifiable, but a plausible narrative - after the fact. What often does the price come back to the Value Area (and why is the VA 70% and not 72% or 80%) and if fit goes away from it, how far does it go away from it? What is the reward-to-risk ratio? The big problem with MP is that it's so subjective and the things that are objective (like time period & value area percentage) are completely arbitrary.

[darthtrader]

	Quote:	AgeKay
	The big problem with MP is that it's so subjective and the things that are objective (like time period & value area percentage) are completely arbitrary.

As opposed to what? Purely mechanical trading? The power of MP is that it is not an "objective" setup that will fail by the time the book has been published. Its nothing more than a way to frame price action, how you trade it is up to you.

From that profile posted, to me you have a balance area, then an auction down to a lower balance area. I would be looking to fade a failure of price to move back into the previous balance area or looking for a breakout at the bottom of the current balance area. You obviously need something more for the actual trade location than that but its a good way to frame the overal action.