VPOC Shifts

[trader001 10]

you can see volume at each price and when there is low volume and price does not stay there long it means there was competition at that price... If you are interested in seeing where a market will rotate to - on any timeframe then you watch that and align your entry or exit at those levels..that is just one use for it..

 

Thanks for sharing this. Does that mean you can use the prices with low volume as a stop limit on a consistent basis? I also have some thoughts on the prices with high volume. If price does not rotate into the direction as anticipated, the previous price with high volume should serve as a stop limit, because if the price get driven back to that level, my bets were off, right? If my thinking is correct, the next question is when to use price with high volume vs. low volume? Is there a logic that can be used to choose one over the other in particular cases?

 

I do not use it alone but I also use Delta at key levels along with other price based lagging indicators..also when you use long-term composite profiles it gives you a whole different view of the market and how it functions - Auction Theory...

 

Are those lagging indicators price based only? What are your favorites? Can you talk more on the long-term composite profile? I am quite interested in those.

 

Where I find most value with VPOC's is old VPOC's. Naked VPOC's are areas that the market will come back and visit..they act like magnets... there are varibales to it but it is a tool to be taken in context with others... IMHO.

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I am confused here. Do you mean by u find most value in both old VPOC and VPOC or just old VPOC? Do they both act like magnets? If so, do you treat them differently?

[trader001 10]

Thanks, Josh. So what are some of the tools you use to help you accomplish this?

 

Can you elaborate a bit more on the price acceptance? How do you read it from VPOC shift or without?

[roztom 10]

Thanks for sharing this. Does that mean you can use the prices with low volume as a stop limit on a consistent basis? I also have some thoughts on the prices with high volume. If price does not rotate into the direction as anticipated, the previous price with high volume should serve as a stop limit, because if the price get driven back to that level, my bets were off, right? If my thinking is correct, the next question is when to use price with high volume vs. low volume? Is there a logic that can be used to choose one over the other in particular cases?

 

 

 

Are those lagging indicators price based only? What are your favorites? Can you talk more on the long-term composite profile? I am quite interested in those.

 

 

 

I am confused here. Do you mean by u find most value in both old VPOC and VPOC or just old VPOC? Do they both act like magnets? If so, do you treat them differently?

 

I really can't answer your questions using this medium..it just requires too much.. but I can recommend you read the book Mind Over Markets by Dalton. Also there is tons of information about basic Market Profile out on the web... That would be just a primer on it in the most general terms so you would understand auction theory if that is not something conceptually you are familiar with..

 

I really must stress that you can't approach this as a rigid rule-based system or process... The volume areas are not fixed locations for stops or anything of the sort.. It is a way to read market structure... I personally do use the low volume areas for support and resistance but this expands out from the current interday timeframe to daily weekly annual, multi-year... etc.. It may sound complicated but it is just a grahical representation where certain activity took place over long time periods and based on how participants behaved in the past the more probability they will be active at these specific levels again...

 

We call these participants the OTF (Other Time Frame) these are the big guns who move the market.. It is a way to identify the areas where they were active and where we might anticipate them coming in again...

 

As far as VPOC's and Naked VPOCS.. NVPOC's get tested... Often like support and resistance get tested... Low volume nodes are Support and Resistance... High Volume Nodes are areas where there was/is agreement on price... Markets come back to areas to test..NVPOC's are price magnets...

 

This is a complex topic and VP is not a rigid system but a fluid one depending on how you apply it and the timeframe you are deploying it in... It is a terrific tool but for many it is too complex and there is a lot of conflicting information on how to use it. Many fail with it since much of hte literature and the vendors represent it for something it is not.

 

Like many of the tools we use, most do not use them identically the same... This is not an easy topic and there is a very steep learning curve... While you may need to understand the whole enchilata, you do not need to actually use all of it..just identify the parts that are an asset and then throw out the rest... IMHO..

 

N, Josh & I use it and while we share a common language we also use the tool differently and at times interpret it differently - yet it is an indispensible part of what we do... of course they can give more insight for their personal points of view.

 

Success in trading is not a simple endeavor, imho. One of the things to consider is where can you get an edge or advantage... If you are using redundent price based lagging indicators and are dependent exclusively on them, you will always be at a disadvantage... (subject to your timeframe). I do use them but only to help keep me aligned..I do not wait for any indicator.. The VP helps me see where to take action..often to within a tick or two... the rest is up to me, my experience and how I read the current market condition, etc... It is an amazing tool...but since it can really give you an edge you must commit to learn it... and understand it's strengths & weaknesses... Trading is not a short term undertaking and neither is learning VP... I have spent years at it and still wish I understood it better but it does work for me and I would not step into the market without it... I hope I can encourage you to pursue it... but very mindful that vendors will gladly take your $ and most likely not deliver anything more than a rudimentary understanding. YOu would do better studying on your own initially from the web.

Edited April 6, 2012 by roztom

[steve46 12]

Interesting the types of questions that amateurs ask about MP. Clearly what everyone is looking for is psychological comfort....some data point(s) that they can consistently lean on.

 

In answer to the question, "what can you use to tell you where the market is going", I believe it was Josh who suggests that "nothing can tell you that".....I disagree....

 

"Time- Based Pivots" are used by (at least some) top tier institutions to display various price "targets" for each time period from yearly down to the previous day....While one cannot guarantee that markets will reach those targets, the fact that big institutions are willing to commit capital to that agenda is important. Last year was a great of example as institutions intervened repeatedly to move the market up to the yearly 1360+ target. This was especially apparent during the last month of the year....

 

By the way, much like "Market Profile", time-based pivots also show distributions of price activity over various time frames. They display that information in a different manner, but the principle is about the same, and time based pivots include the previous day's value area high and low (but not the POC). Instead traders who use time based pivots look for tests of each time periods open, high and low as places where they might find favorable entry or take profits.

 

As regards shifts in the VPOC, there is a school of thought that suggests that these shifts are caused in part by timing of each markets open, release of economic reports and the response that follows. It is thought that these "shocks" cause a flurry of activity that dies down (much like the aftershocks of an earthquake) with time and that "trail" of activity "causes" or is in part responsible for the shift...

 

I hope this helps

Steve

Edited April 7, 2012 by steve46

[TheNegotiator 13]

Steve, time affecting the shifts is perhaps an interesting thought which is worth exploring although just to be absolutely clear, VPOC does refer to the volume point of control. Despite the amount of time spent in an area often influencing the level of volume traded there, I wouldn't go so far as to say the relationship is always linear. Either way I do like the idea of mechanical aspects of the market being made visible by charting techniques.

 

An idea which is something I'd like to explore is simply that the shift in VPOC and its bearing on the rest of the session, has a direct relationship to pre-established balance and specific levels of importance. Also, the level of 'value' development around the VPOC in consistency of distribution of volume and total volume.

 

Any thoughts?

[karoshiman 10]

 

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As regards shifts in the VPOC, there is a school of thought that suggests that these shifts are caused in part by timing of each markets open, release of economic reports and the response that follows. It is thought that these "shocks" cause a flurry of activity that dies down (much like the aftershocks of an earthquake) with time and that "trail" of activity "causes" or is in part responsible for the shift...

 

 

 

I like the picture with the aftershocks of an earthquake!

 

What do you exactly mean with "... timing of each market open"?