[FXSurfer]

Nice thread Soultrader!

Hope it gets going again in this new year.

Thanks!
Brent

[deb99891]

soultrader

plz do post some charts
on opening relationships
nice thread so far

[Tasuki]

Sometimes I wonder about some of the terms that MP folks make up. For example, the concepts of "initiative buying" "initiative selling" "responsive buying" and "responsive selling". See p.46 Dalton's Mind over Markets.

For those of you who don't have the book, what you do, if I've got this right, is compare the current day's market activity with the previous day's value area (VA). If the market is currently trading above VA, then you say that this activity is either initiative buying or responsive selling. To quote Dalton, "The initiative range extension and the responsive tail were one and the same activity."

So, bottom line, does this help the trader? Or not? 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?

[rigel]

I view it in the following manner:

1. If price breaks out of a value area or congestion and you fade i.e go short or long depending on the dir. of breakout, then you are responsive

2. However if you enter on a breakout or just before, then you are initiating.

[Tasuki]

Thanks, rigel. My initial thought was that this information would be useful for trading, but it doesn't seem to be. The idea, in my mind, would be to discover some way to tell whether the inititators were going to have any follow-through or whether the faders were going to push price right back down.

Mixing styles here for a minute, there's a term in Wyckoff analysis called "joc" which stands for "jump over creek." This same idea (minus the cute term) appears also in VSA analysis--sometimes we see price "jump" over a resistance barrier in one big candle. The idea, apparently, is to keep the longs from selling ("hey, I'm in the money, no need to sell now") and to force the shorts to cover ("what the hell, oh my god I'd better get out").

Traders who use candles or bars can see this activity and they recognize it for what it is---fresh buying power, in other words, inititative buying. Traders who use Market Profile, however....how do they know from their profile that this is intitiative? I guess what I'm asking is whether there is something within the market profile, some detailed structure of the profile, that distinguishes between intitative and responsive?

[rigel]

Tasuki,
yes it can get quite complicated if we try to figure out all that you mention in realtime intraday trading, by that time the trade would have gone and we would end up with a nasty headache. perhaps you can put this question on wyckoff forum where MP concepts are incorporated into boxes.

[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