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Old 08-12-2009, 08:58 PM   #17
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Re: The Evolution of Market Profile Theory

For me, anything that is market-generated information (Open, High, Low, Close, and volume) is not an indicator.

I also find VolumeJedi's view of price being an indicator interesting, because someone who trades using Market Profile principles trades value, not price. Price is simply an advertising mechanism, i.e. price advertises "price away from value" in balancing markets or "price leading value" in trending markets. But in the end, I don't consider price an indicator. Price and volume are all the markets generate.
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Old 08-12-2009, 10:24 PM   #18

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Re: The Evolution of Market Profile Theory

Hello all. Very interesting thread and exchanges of ideas here.

1st post has still attracted alot of great posts on this thread about the relevance of the application of market profile as framework to see the auction market theory in a lively and well organized manner.

I do agree with volumeJedi, Frank and some others that MP is not an indicator per se or a trading methodology by itself but rather a conceptual framework of the current state of the law of supply and demand laws in motion and where is the current auction in relation to fair or non-fair value.

So great posts guys and much appreciated

Shreem
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Old 08-12-2009, 11:15 PM   #19

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Re: The Evolution of Market Profile Theory

Kiwi... the descriptions above are perfect...put this in context with a price chart.
A raw chart has prices shown by bars, candles, lines, etc. If you wish to measure what it is doing, you add an indicator. A moving average, an oscillation, etc.(#2 above) A MP chart shows price volume and time that has no indicators. Price alone makes not an indicator.
Using the same data, it creates another graphic view of an auction. It can and usually is used in conjunction with other charts that do have indicators.
If you find the right person to teach you the profile, it will also become clear that it is a powerful tool, and a tremendous tool to use with your other charts and indicators. And anyone that trades the EDGES of value should consider taking some more study, because
a little information about the Profile can hurt you. Would you like to know where the next swing will be before it happens... that's where the Profile can be of assistance.
BTW, my toy is not better than anyone's toy ... not sure why that popped up.
Any way good trading wishes to you...

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Old 08-12-2009, 11:17 PM   #20

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Re: The Evolution of Market Profile Theory

Wow…The indicator discussion. Until a standard definition is adopted there will be no closure on this subject, yet I will bite.


Some folks don’t think that a price chart (OHLC bar or candle etc…) is an indicator
Some folks don’t think that NYSE tick is an indicator.
By my definition…The above are indicators, so too is a market profile;

Time based price charts are indicators of Price and Time.
Tick, NYSE is an indicator showing the difference of Issues on a up/down tick within a user determined period of time.

Therefore, anyone that uses a price chart to trade is using an indicator in my book.

I suppose you can have sub-categories for indicators.
For example there are a host of indicators that are based on another indicator. For example a Moving average placed on a time based chart is an indicator of another indicator--"the price chart".

So when I say I’m a price action trader and use no indicators, what I really mean is that I don’t use any secondary indicators based on my main indicator, e.g. MA’s , oscillators etc., which is a Time based price chart displayed in Japanese Candle Stick.

As for the opening post and its author, although detailed information is not given and I cant fault him for such. Everyone that posts on these boards is in one way or another fulfilling some kind of need, and I dont expect him to be an exception. UB offers a unique view and to me that by itself is a contribution and at the very least gets me to think outside my normal Frame of thinking.
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Old 08-13-2009, 02:37 AM   #21

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Re: The Evolution of Market Profile Theory

Quote:
Originally Posted by sevensa »
What about the big players that need to hedge? The airlines who want to hedge their fuel costs, the industrial companies that want to hedge for raw materials? They are not in it for purely speculation profits and to take money from the masses.
Sure there is something like what might be called big unflexible money.
But: They are certainly not the people who are interested in the game of comfort and panic.
That can be shown indirectly: Big swings are clearly not in the interest of these people. They are negatively effected by it just as the small traders. Just watch the airline comments (and the reaction of their share prices) on big crude moves.
True you can take advantage of their existence because they leave big traces.


Quote:
Originally Posted by sevensa »
What are you basing your statement on that one side always will be the same ones making money?
The infrastructure (people, software, leasing rates, hardware) that the price moving players use is so expensive that they would be taken out of business soon by their supervisory boards if they wouldn't be very profitable constantly.

What Urmablume is showing are the traces of this sophisticated infrastructure. For the volume spikes seen in the postings some specialized stuff is needed: Servers right next to the exchange, many clever software engineers and many man-years of programming, some good traders, big pockets.
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Old 08-13-2009, 02:59 AM   #22

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Re: The Evolution of Market Profile Theory

Quote:
Originally Posted by uexkuell »
Certainly there are many ways to look at the market.

To me this sounds a little idealistic.


Allow me to formulate another view not for theoretical reasons but because I learned that it can make trading efficient:

Why are there people that keep markets alive?
Because some people make profits through them. And markets will be kept alive only as long as some people (has to be always the same) make really big profits. (If it were only small profits they would start looking for other fields).

Therefore the main purpose is to give the few a chance to make big money.
On the other hand this implies that they have to take it from the masses.

So in this view it is not about finding agreements or disagreements more on finding areas of comfort (for the masses) which quickly turn into traps.

It is more like:
Where do the masses go?
How can we make them feel comfortable (in order to build bigger positions)?
After that, how can we shake them out / make them panic?
This has already been answered by Sevensa.

There are farmers who want to hedge their crops. Companies issue stocks to finance business expansion. Individuals own stocks to become board members. Airlines want to make plans now based on the perceived value of oil some time in the future. Markets exist for this.

Yes there are a few that can make money on inefficiencies and manipulation but markets exist in spite of them not because of them.
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Old 08-13-2009, 03:03 AM   #23

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Re: The Evolution of Market Profile Theory

Quote:
Originally Posted by VolumeJedi »
Yes there are a few that can make money on inefficiencies and manipulation but markets exist in spite of them not because of them.

I really like that too. So I should thank Urma for creating an interesting thread rather than worrying about whether he's trying to sell something or not.

Last edited by Kiwi; 08-13-2009 at 03:11 AM.
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Old 08-13-2009, 03:19 AM   #24

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Re: The Evolution of Market Profile Theory

Quote:
Originally Posted by ant »
For me, anything that is market-generated information (Open, High, Low, Close, and volume) is not an indicator.
Quote:
Price and volume are all the markets generate.
It seems I have not been clear.

Quote:
Originally Posted by VolumeJedi
I put Market Profile in quotes because if you use a strick definiton Price ITSELF IS AN INDICATOR....
The Wyckoffians would say, much more articulately than me, the price is contiguous. It flows independent of time. Thus any attempt to parse this flow into compartmentalized data points is to create false snippets of prices true nature. In other words, a 30 minute chart only indicates as false picture on prices natural flow. Since price is contiguous, there is no open, there is no close, there is no high and there is no close. These notions are merely constructs or indications of what prices actually has done over an artificial timeframe. If something gives an indication, then by definition it is an indicator. Therefore price itself (as seen on a bar chart) must be an indicator.

I do not see price as an indicator. I do not see Market Profile as an indicator. I do not see volume as an indicator.

Market Profile is the visual representation of the price/value discovery process. The aution.
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