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Dr Who

Mentally using Mp

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I still use a MP chart but I do mentally use MP on my 233 candlestick tick charts. Takes some practice but very useful for me.

 

Soultrader,

 

As soon as I red about MP I thought I could feel it in price by using simple bar charts.

 

Regards

The Doctor.

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Soultrader,

 

As soon as I red about MP I thought I could feel it in price by using simple bar charts.

 

Regards

The Doctor.

 

You can feel it for sure but to fully understand it you need a MP chart. You cant possibly visualize a MP chart for lets say the past 10 days.

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You can feel it for sure but to fully understand it you need a MP chart. You cant possibly visualize a MP chart for lets say the past 10 days.

 

 

Too true. Though I am only interested in the concept and how I can evolve it into my trading without the actual MP charts - more like just understanding it.

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The concept is simple. Balance vs imbalance. If you prefer not to incorporate a MP chart, you should be aware of the value high, value low, POC, and any naked POC's.

 

I agree, but how can that be done without using a MP chart?

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Wow. I feel like I have just come home out of the cold. This site is great. Thank you Soul-trader.

 

When I first hear Mark Fisher speak, he mentioned his Pivot Range as being a close approximation of Market Profile. This set me on a course I am on today. I already knew the "power" of Market Profile but did not have access to the necessary data. Would it be possible to get some of the same information just using High, Low, Close? Mark says his Pivot Range is about 90-95% the same as what Market Profile interprets as the Value Area.

 

Enter the PivotProfile. This is my tweaked version of Mark's Pivot range. I use this to get Market Profile-esque information:

 

attachment.php?attachmentid=503&stc=1&d=1168808499

 

**Yellow line: Point Of Control.

 

**Value Area True (Value Area (t)): upper purple (Reaction Range High) to lower purple line (Reaction Range Low). This is where 70% of price action took place.

 

**Value Area Absolute (Value Area (a)): upper pink line (Deviation Range High) to lower pink line (Deviation Range Low). Approximately 60% of price action takes place within this range. This range is also closest to Mark's Pivot Range.

 

** Upper thin blue line (Extended Range High) to lower thin blue line (Extended Range Low) is the FairValue Range. Here we have roughly 85% of the price action. This is not all that important. Those that use the initial balance formula to create opening range extensions, however, know the .85 number.

 

** The upper thicker blue line (Yesterday's High) to upper thin blue line (Extended Range High) create the upper UnFair Value Range. This is basically the tail of the distribution curve. As you may well know, this area, especially the high, then to be rejected prices. The lower thicker blue line (Yesterday's Low) to the lower thin blue line (Extended Range Low) is the lower UnFair Value Range.

 

To be clear, this is a chart of Friday's trading in the Euro. The Profile here was done at the close using only Open, High, Low. Red vertical line on the 30 denotes the end of Thursday/start of Friday per CMS @ 1700 hrs. These levels would then be used for Monday's trading. Friday gave us a nice full and Perfect Profile. They all do not come out like this, as we are using a static equation. That is, sometimes there is only on purple line. If this happens, then the Value Area (t) would extend from the purple line (assume upper) to the Lower pink line. One reason for this is the underlying hypothesis. These ranges/lines represent areas where price did trade and find support/resistance or some sort of reaction. In other words, unlike Floor pivots that are based on the concept of regression to the mean, these lines are support and resistance BECAUSE THEY WERE SUPPORT/RESISTANCE during the previous day. Thus, if the equation would cause a line to be outside of the actaul trading range, it is not plotted. This is at the heart of Market Profile. And why Market Profile support/resistance levels tend to work better than typical pivot levels.

 

Time and Time again price touches the previous day's POC (yellow Line). If it does not, when we have a Virgin (naked) POC. The 80% rule trade works well also. That is, according to Market Profile, if price exits the Value Area (t), and then re-enters, 80% of the time price will trade to the opposite end of the Value Area (t). Some may note that the color scheme looks like the Price Histogram used by Enthios.com at Price Histogram . Basically, there is a way to "visualize" Market Profile without actual Market Profile charts.

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Hi Pivot, interesting post, I trade forex myself but haven't really used MP on these. Wanted to get your feedback. How long have you been using MP on forex? Are these levels reliable?

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Hello Soultrader, very happy to be joining this great community of trader her.

 

I have a little question for you. On the link that that you have put on your post below, do you think that the daily values of the British Pound, Euro FX or Japanese Yen future contracts can be applied for the same currencies on the spot forex which is what I trade at the moment?

 

Thank you in advance for your answer

 

Wishing you a very good day and thank for your excellent videos

 

Shreem:)

 

 

 

 

I draw horizontal lines on my candlestick charts for visual purposes as well. You can simply obtain the MP data at: Daily Notes for Day Traders | Pivot Points for Index Futures and more

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here is how you can eyeball a simple market profile concept.

 

pull up a 30-min chart for pit session only. draw a horizontal line on the chart that spans that day.

 

place the line at the price level that touches the most bars. this is the POC and can be considered that days 'accepted price'... if multiple prices are touched an equal number of times then take the midpoint of those prices.

 

if 2 different points are far away from each other but have similar number of touches, I exclude the opening 30-min bar and re-calculate. The opening 30-min bar is generally a period of price discovery.

 

if you cannot draw a line through at least 6 bars (excluding the opening 30-min bar), then no price was accepted and you consider this a 'trend day'.

 

I consider the market to be 'in balance' if a horizontal line can touch 6 bars.

 

Watch how often the market moves just prior to enable that 6th bar touch --- the market will often make a move before 6 bars are touched.

 

Don't fade an initial push away from value (the POC)... go with it. But don't chase it either (if you miss it, you miss it). The 1-2pm EST is common time to break away from a balance. you can try to catch a trending move here.

 

Personally, I like to fade a morning move away from previous day POC if you have already had a 2-3 day directional move --- odds are now on 'responsive players' to come in and knock it back the other way -- for a flush -- not necessarily a reversal. If the market balances during the day and then breaks away from this balance, this is considered 'initiative activity' and you try to go with it -- this is tricky though.

 

The biggest trap is when the market balances at a given price and then very late in the day spikes away from this balance. This is generally a trap that will see a reversal overnight or the next day back to the Point of Control.

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I didn't know where to post this so this seems like as good a place as any. It is in the Market Profile section yet broad enough for me to go on a slight tangent.

 

What I have posted here is a Pivot Profile of the Euro for Friday the 25. What That means is this Profile is calculated at the close on Friday and will be used for trading on Monday Jan 27,2008.

 

With my tweaked version of Mark Fisher's Pivot Range, I have tried to create a tool that will closely follow Market Profile. In other words, without actual volume at price data or TPO data, create a similar profile of where price traded on the day.

 

Check out the chart.

 

In a complete profile:

 

1. Deviation Range High to Deviation Range Low (pink) is the value area. Like Market Profile, it is believed that one standard deviation of price action is contained with this range. Technically one standard deviation is 68. something but most people just round up to 70%.

 

2. The next range is the Reaction Range. Which goes from the Reaction Range High to the Reaction Range low (light purple). This range contains a bit more of the days action: 80%

 

3. The Extended Range which is from Extended Range High to Extended Range Low (dark Purple) captures 95% of the days price action.

 

4. Of course, from high to low (black lines) we have the day's entire range.

 

Now this is a static formula so there are times when certain lines must not be used as they fall outside of the range. This is what we see here. In this case we still have the same ranges but we must adjust them. In this case the Deviation Range Low is the low for ALL the ranges. So we still have an Extended Range, it simply goes from Extended Range High to Deviation Range Low. The Reaction Range goes from Reaction Range High to Deviation Range Low. And of course the Deviation Range remains from Deviation Range High to Deviation Range Low.

 

By simply "eyeballing" it you can see what a good job the Profile does in defining the areas of the trading day. Also not the amount of touches and hit off of the various lines. One of our main contentions is that if an area was important in today's trading, it will be important in tomorrow's trading (all things being equal). Therefore, we can use these lines as likely support/resistance areas for the next day. Like a Market Profile, we expect price to retouch the previous day's POC (yellow line).

 

 

attachment.php?attachmentid=4918&stc=1&d=1201343460

 

The original idea was to create a tool to simulate the information found with Market profile. According to Mark, his piovt range is a close approximation of said information. But I now find myself thinking it really doesn't matter how close to a Market Profile value area my numbers are. Why? Because the Pivot Profile can stand on its own. It provides a concise prism through which to view the market.

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I draw horizontal lines on my candlestick charts for visual purposes as well. You can simply obtain the MP data at: Daily Notes for Day Traders | Pivot Points for Index Futures and more

 

Soultrader,

 

are you referring to Market Profile POC, value area etc or the traditional pivots, because the above site(MyPivots) provides values on the latter.

 

 

Do you know any site which posts POC, Value area info. on various index and currency futures.

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Soultrader,

 

are you referring to Market Profile POC, value area etc or the traditional pivots, because the above site(MyPivots) provides values on the latter.

 

 

Do you know any site which posts POC, Value area info. on various index and currency futures.

 

Hi monad,

 

Mypivots used to post pivot levels as well as mp levels. Not sure if they still do though.

 

I dont know of any other site that posts these levels.

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Does anyone know if anybody has come up with a 'bell curve type bar' based on mp? My point being if one can define a price pattern, then one can assume that a bell curve pattern could also exist. Confluence (the new "in" way of looking at price ) of the patterns may strongly influence direction.

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Very interesting PivotProfiler. I've tried to read the Logical Trader a few times but never quite get the hang of it. I would be interested in knowing if/how you use the opening range from Fishers ideas, that just seems like something that could incorporate well with the intial balance MP wise.

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Monday Jan. 28,2008:

 

Pretty strong trend day once we got started. The day started with some sideways action. Price was moving sideways between the Deviation Range Low (pink line) and the Harmonic Range Low (pink dotted line).

 

I can toggle on and off the Psychlevels and they are on here. These are just certain levels like "00" or "50". So for the Euro a psych level would be 1.4700 or 1.5000. I was just introduced to the idea of using these levels as such and am interested in seeing how they help. At the very least, they can serve to remind me where NOT to place stops.

Edited by PivotProfiler
corrected date from 29 to 28

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pp,

Great Chart,

Will have to take up trading forex or currency futures full time, they do trend well, don't they..

 

BTW have you tested your calculated MP pivots or index futures such as YM, ES , Dax etc.,

 

Also what is Harmonic Range High/Low and how were they calculated.

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Soultrader,

 

are you referring to Market Profile POC, value area etc or the traditional pivots, because the above site(MyPivots) provides values on the latter.

 

 

Do you know any site which posts POC, Value area info. on various index and currency futures.

 

http://www.mypivots.com/forum/topic.asp?TOPIC_ID=2531

 

Here I get the MP's VAH POC VAL for the: ES,NQ,YM, ER2

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Today's profile.

 

The key here is that this is the profile before tomorrow's Fed decision. (wed. 1/30/08). Notice that this is a complete profile. That is, every range is on the chart. The profile is very narrow as the market basically just meandered around today. Look for big movement tomorrow either way or both. In other words, the profile is also a defacto measure of volatility.

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Today's profile.

 

The key here is that this is the profile before tomorrow's Fed decision. (wed. 1/30/08). Notice that this is a complete profile. That is, every range is on the chart. The profile is very narrow as the market basically just meandered around today. Look for big movement tomorrow either way or both. In other words, the profile is also a defacto measure of volatility.

 

Hi Pivot,

 

Do you mind elaborating on why this is the case? Are you implying that a balanced profile can be seen as a contraction bar and would expect to see movement beyond the previous days ranges tomorrow?

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Hi Pivot,

 

Do you mind elaborating on why this is the case? Are you implying that a balanced profile can be seen as a contraction bar and would expect to see movement beyond the previous days ranges tomorrow?

 

Before that, take a look at this chart. The dotted line is @ 1700 hrs New York time. I've "zoomed" in by taking off Yesterday's high and low so the price action can better be seen. I need some objective opinions: am I off base here? Do these lines which were calculated based on Tues. trading 1700-1700 hrs both capture what happened on Tues. and show possible reaction levels for Wed.?

 

 

attachment.php?attachmentid=4958&stc=1&d=1201680041

 

 

 

Soul: there are really two things going on here. First, remember that the Mark Fisher's pivot range is the basis for the Profile. In his book and system he uses the pivot range as a defacto volatility measure. That is, a narrow pivot range (for example narrowest range in 4 days) usually proceeds a range expansion day. When you step back for a second, this is nothing more than what is observed on a NR4 day. Hence, what we have here is as the market contracts, it reaches a point where it tends to want to expand. Low volatile preceding higher volatility.

 

The second thing goes to the concept of Market Profile and Value in particular. As the area of Value narrows we move towards a perceived equilibrium in value. However, this equilibrium is not stable. In fact it tends to be easily upset. Which is sort of the opposite of a situation where the area of perceived value is wide. It makes intuitive sense. As both sides (Bulls and Bears) agree on value (making a narrow range) anything that changes that perception will effect BOTH groups. Where as if the value area was wide, One group would tend to be more prone to changes in perception than the other.

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As both sides (Bulls and Bears) agree on value (making a narrow range) anything that changes that perception will effect BOTH groups. Where as if the value area was wide, One group would tend to be more prone to changes in perception than the other.

 

Excellent explanation PP. Thank you very much.

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Here is a chart from today (Friday) with the Pivot Profile for Friday (to be used Monday). The only lines that change for Monday are the blue IB lines. These are based on the Opening Range (Initial Balance) and thus will be calculated after the London open Monday morning.

 

Remember the Profile is based on 1700 hrs to 1700 hrs as per my broker CMS. The dotted black separates Thursday from Friday.

 

attachment.php?attachmentid=5012&stc=1&d=1201905213

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