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Soultrader

[MP] Trading with Market Profile

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Thanks for both your reply's, truly insightful. One more question I had though, if IB isn't completed and previous days value area is not in the picture as in Monday 12-8, is this highlighted blue box using just the opening as valid support a long setup either of you may take?

5aa70ea0c0386_longentryonES.thumb.png.3de7ec6e0503fa8272e35e642ebebeda.png

Edited by jebidaya

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It looks like price is testing/probing these areas, to see if it can distribute and move to the next one or create a new one.

 

I am very interested in learning more about how you use the previous day's value areas and significant highs/lows.

 

I use a vp looking back 5 and 10 days yet volume/price is compiled into one big profile. That way I take the levels that jump out at me and use them. Your levels from exact days portrays a more accurate picture of the distinct value areas and hod/lod's.

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I would say its hard to tell without being able to see from the chart how much was distributed on those 11.17 and 11/27 days
You are exactly right...sorry for leaving that out. That would give a better clue about the potential downside.

 

attachment.php?attachmentid=8821&stc=1&d=1229207731

 

attachment.php?attachmentid=8822&stc=1&d=1229207731

Dist1.jpg.048c7f21c4afd3eedcbedab63a5b2121.jpg

Dist2.jpg.a8d69c120a1d85744a52a56a127e30ab.jpg

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Actually the first trade i took was short from 960 there were a few rotations there, from the way down the day before that should have and did give a nice kick just incase that was going to be the high of the IB. I really didnt expect the up move to go all the way back to the 84 level, that just goes to show you follow the structure as it developes and try not to add your personal bias into it (easier said than done).

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Alleyb,

For CL and ZN if using 24 hours charts, would 240 min TPO be the ones to use?

Thank you.

Also when doing profile evolution (counting TPOs, identifying tails and looking at VAs), how far back do you go? (from MP 102).

 

meyer

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meyer99 the world has effectively moved to 24 hours on most things so the short answer to your question is yes, BUT there's always a but isn't there.. but its also about flexibility of finding the auction time period or timeframe (that I shall refer to as ATP) of the moment. so for example global volume generally is light in Asia, heavy in London or EU and heaviest in US product in the US sessions. Please do not confuse what I have stated. Light in Asia etc I am talking all product not just US.

Re ATP then when a Government report comes out a 240 minute chart is not really going to be much use but a 1 or a 5 or a 10 minute maybe. Then again for example there are other times where a reduced ATP is appropriate for example as London opens at 7am local (2am ET) with the official Stock Market opens 1 hour later then again a 240 minute chart is useful for the backgorund but does not help with the minute to minute foreground

 

With regard to counting - what you referred to as Profile Evolution - this is a very viable alternative to the LDB (Which btw the CME will reenact as from Feb 9th BUT only for CBOT product and at a mega cost of 500 bucks per month). I have found that my methodology A. is cheaper, B quicker C just as accurate (for I used to check back to the CBOT raw data that I used to have access to) D. easier to understand

How far back you ask? I look at distributions in all ATP so for example in CL right now I would look at the ATP from Jan 6th to present from Jan 26th to present Feb 6th by itself

ZN I assume is the Notes in which case I would currently be looking at Nov-Jan, and Feb 2nd to present

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What software are you using for your examples?

I am slowly working my way up the learning curve with Dalton and Steidlmayer's books and I am evaluating FinAlg's TPOChart. Do you have any other software recommendations?

THanks for sharing your knowledge and experience.

Peter

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Chart from January 4, 2008:

 

attachment.php?attachmentid=4669&stc=1&d=1199669702

 

Profile resembles that of a Normal Variation Day in which the range extension is double the initial balance. Notice how range extension from C period down to K period is almost the same as the range of A-B period.

 

Normal Variation Day indicates 30-40% market activity controlled by loger time frame market participants. "b" shaped profile hints of long liquidation. Key question will be "Is the short term selling temporarily over?"

 

IB Rejection vs Acceptance

 

Knowing the type of market you trade whether it be reponsive or initiative is important in developing strategies under the IB breakouts. The chart above shows multiple attempts by D-J period to trade back up into the initial balance. However, price is rejected creating lower value placement. Price acceptance below the initial balance is showing further weakness.

 

My bias will remain for price to trade in this newly developed value area so will look for short opportunities above value. Will post a few charts later as the markets open to show possible short setups.

 

@soultrader.

 

Thanks. Gr8 thread for Market profile indeed.

 

How to say its a responsive or initiative market? Hope responsive selling also mean Initiative buying and vice versa ..

 

 

Regards

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@soultrader.

 

Thanks. Gr8 thread for Market profile indeed.

 

How to say its a responsive or initiative market? Hope responsive selling also mean Initiative buying and vice versa ..

 

 

Regards

 

A caveat: remember that nothing is ever 100% clear except in hindsight. That being said, look at your value areas for yesterday, the last few days, etc. If you're within those values and the market attempts to auction above or below them, it's initiative. If you are outside and the market begins to move back into value, it's responsive. I believe Barton calls them inside-out and outside-in trades for obvious reasons. If a group of traders perceives that the current definition of "value" is incorrect, for example, and sells the market, pushing the price down, they are attempting to initiate a change in value. If another, larger group of traders perceives that market as now being cheap and buys size, pushing it back up into value, that is responsive since they are responding to a change in price. A responsive trader is like my mother - they love a sale.

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Hi, guys: Volume Profile, as has been said, it just one tool that one can use. Quite often, POC's are ignored, blown right through, or simply do not apply. I follow Enthios.com and that guy is an expert at MP and uses a method for trading reversals. Today's action saw a short at 1286.50 on the ES that held nicely but was breached up to 1288, thus blowing out ES Retail traders with 2 point hard stops. Thus, one should trade ranges, major res & support levels along with that interplay with the POC and work trades that are triggered from a confluence of different indications for an entry.

 

I have been trading the ES full time now for over 5 years and have never blown out my account but got close in the early years. I think that the key to success is to work very high probability res and supp areas...understand when the daily mid-levels from the previous session work in your favor once a top or bottom is put in for today's session. Look at VWAP, and Gann levels....mark up your chart with everything you have in your arsenal in the hour prior to the open and starting with some homework the night before.

 

Analyze every trade to determine what you missed REAL TIME.....there are always misses in analysis looking back but everyone has the ability to hide the right side of our charts and using the bottom progress scroll tool to watch YOUR past trades to determine what you missed. If you did not but entered in your direction based on everything you had, then the market just took it away from you despite your best efforts and thus that is a good trade after all. The key to your broken trades is to them immediately exit when your arsenal failed you and minimize your losses. What I mean is that you know when you blew it and most of the time you can protect yourself say to a $200 loss in the ES and draw that line.

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Hi, guys: Volume Profile, as has been said, it just one tool that one can use. Quite often, POC's are ignored, blown right through, or simply do not apply.

 

I find POC's to be most useful as targets for reversion trades. In other words, if prices move out to the edge of the trading range or a major support level and I fade it, I will often look to POC's for targets. It makes sense - if there is a disagreement on value and those who wish to change value lose the battle, then prices will revert to established value.

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Hi, this is my first post here because i can not help with understanding POC. I know that this level is key S/R, i see it many times. Problem is that i do not understand why it could turn right there. Biggest amount of transaction was there so i could mean that that level is balanced (people agree about that price). So imagine that yesterday was P shape day a.k.a. Trend day long. Todays open is near VAH and i want to speculeta about rejection from POC.

 

If anyone can give me some support ideas, i really want to make that trade but my brain says something different so i need some logic ideas why it should turn. :confused:

 

Thanks

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Hi, this is my first post here because i can not help with understanding POC. I know that this level is key S/R, i see it many times. Problem is that i do not understand why it could turn right there. Biggest amount of transaction was there so i could mean that that level is balanced (people agree about that price). So imagine that yesterday was P shape day a.k.a. Trend day long. Todays open is near VAH and i want to speculeta about rejection from POC.

 

If anyone can give me some support ideas, i really want to make that trade but my brain says something different so i need some logic ideas why it should turn. :confused:

 

Thanks

 

Do you think the trend will continue up? How is price reacting to the POC? How has the market traded the few days or weeks leading to the current day? Where are you in the trading channel? Is the POC at a good trade location?

 

The first level of trading is mechanical. The second level is placing all the relevant market activity in context. Only then will you be consistently profitable. Most people never get to the next level.

 

Good luck,

dVL

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daVinciLite:

 

Thanks for answer.

 

Yop context in trading is the most important part. I started reading tape, DOM, 2-3 months ago because i can not trading the mechanical system with confidence. MP is what for me make context of the game.

 

The answer is quite different from what i mean. Thanks for that, but i want some reasons why it should turn. For example VAL is price which is unfair so i culd buy with confidence there. I want to know psychology behind that point.

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Hi IIgis, after reading DOM do u think is worth it trading from it ? would u mind explaining a bit about things that you notice?

 

Davinci...Would you please tell me a very good source to learn and get to that level, I have read all Market profile books, screen time, etc and yet not there....consistency with some certainty is what i am for...How did u get to thtat level?

 

Thnaks guys

 

Daniel:)

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Hi IIgis, after reading DOM do u think is worth it trading from it ? would u mind explaining a bit about things that you notice?

 

We have many threads on reading the DOM. Use the search function and go post in those.

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