[tomdz]

Assume we've got 20 TPOs above the POC and 80 TPOs below (to make the situation clearer). Obviously, the majority of value is rested below the POC, hence we assume the short-time traders are trading on that side. The trades made on the other (top) side come as a result of the competition between the long- and short-term traders within the value area. The short-term participants don't trade on that side (the price gets too high for them so they withdraw from the competition and go back to their region), but the latter is concidered a bargain by the long-term traders. And because the prices auctioned higher due to the competition, it must have been the long term-buyer who was responsible for that move.

Do you think this is what the author could have in mind?

[Soultrader]

Noal,

That is initially what I had in mind also. But the thing I dont understand is how can one claim that the longer term buyer bought above the POC. How can one prove this? I guess if you stared at tape all day long you might be able to spot big lot buyers above the POC but this is not 100% guaranteed. There are plenty of big short term traders as well. This whole section in the .pdf file is very unclear to me.

[ant]

I didn't read through this entire thread, but think I got the jist of the discussion. I just wanted to add my understanding of the TPO count.

Floor traders seeks balance (or fair price) in a market to facilitate trade between buyers and sellers. Floor traders control the value area, because that's the price region that indicates fair price. When the TPO count below the POC is higher than the TPO count above the POC, that indicates that an imbalance exists with buyers being more dominant. When the TPO count above the POC is higher than the TPO count below the POC, that indicates that an imbalance exists with sellers being more dominant. When an imbalance exists according to the TPO count in a rotational day, I immediately start thinking about the inventory of floor traders, i.e. their short and long inventory. The imbalance in the TPO count tells me that floor traders are either too long (have too many long positions) or too short (have too many short positions). So the behavior I would expect from floor traders is to either start selling/buying in order to balance their inventory. Floor traders are expected to buy if they are too short and sell if they are too long. This is similar to a daytrader having a short position and needing to cover at some point during the day. Since the longer timeframe does not usually trade in the value area (it is not their expected behavior), their action in the value area is negligible. The TPO count is just one component of Market Profile and it needs to be considered within the context of the market.

[Reaver]

Originally Posted by ant »

I didn't read through this entire thread, but think I got the jist of the discussion. I just wanted to add my understanding of the TPO count.

Floor traders seeks balance (or fair price) in a market to facilitate trade between buyers and sellers. Floor traders control the value area, because that's the price region that indicates fair price. When the TPO count below the POC is higher than the TPO count above the POC, that indicates that an imbalance exists with buyers being more dominant. When the TPO count above the POC is higher than the TPO count below the POC, that indicates that an imbalance exists with sellers being more dominant. When an imbalance exists according to the TPO count in a rotational day, I immediately start thinking about the inventory of floor traders, i.e. their short and long inventory. The imbalance in the TPO count tells me that floor traders are either too long (have too many long positions) or too short (have too many short positions). So the behavior I would expect from floor traders is to either start selling/buying in order to balance their inventory. Floor traders are expected to buy if they are too short and sell if they are too long. This is similar to a daytrader having a short position and needing to cover at some point during the day. Since the longer timeframe does not usually trade in the value area (it is not their expected behavior), their action in the value area is negligible. The TPO count is just one component of Market Profile and it needs to be considered within the context of the market.

Well put, Ant.


I can't bring myself to read the CBOT manual, because, as the saying goes....don't ask a barber if you need a haircut.

I may be wrong- but I don't like reading "official" material put out by a trade board (or brokerage for that matter) on how to trade. Conflict of interest.

They truly do not want the masses to succeed, because then the consistent winners who pay an arm and leg for their seats and memberships....would no longer be the winners...and wouldn't be members anymore....so that would cause a huge drop in revenue for the board of trade....

The individual, non-member trader is on their own...and we are expected by them to lose. We are expected to be marks in their shell game.

My opinion if course. Be advised-I am slightly cynical.

[Sparrow]

Slightly off topic:

Quite honestly i have no idea where most of CBOT's revenue comes from.
I guess though commissions are a big part of it. Probably also a bit from selling data and fees for brokers.

The longer a trader sticks around the more commissions he generates for the BOT.

How much the members contribute? I haven't got a clue, maybe so much that your argument is valid.