Market Profile / Volume Profile

[MC]

Market Profile is a different way of looking at the market, I'll touch on that later. It basically gives greater insight into the order of events that went into building the bars or candles. It uses TPO (Time Price Opportunities) to show the prices movement throughout the periods of the day.

We all know I have love for volume by price and why right?
Well volume by price is the poor mans version of the below setup.
Using something like the below volume profile merge you can gain insight on markets price range, crucial support and resistance levels plus divergence at extremes (daily AND in relation to the merge). This is similar to volume by price, but on speed basically.

Investor/RT has some incredible capabilities for both MP and VP. Below is an example of a merged volume profile they offer. The "merge" on the far left is all volume and the overall price range from 4/18 till 6/13. That's the broad range and related volume if you will. Then zooming in, you have each day broken down in 30 minute periods capped with a daily volume profile.


I can't begin to tell you all the details I can see in this and how they relate to trading opportunities. I saw this and HAD to make a market/volume profile section here on TB.

More to come soon, if anyone wants to pool money with me I'll go in on the $250 per month it will cost to get Investor/RT and the DTN data feed and share my views here on TB.

Investor/RT: The Trader's Ultimate Toolbox
Link to Investor/RT

http://www.iqfeed.net/LinnSoftRT/ind...a&section=fees
Link to DTN data feeds.

[trustdnb]

Originally Posted by MC

Market Profile is a different way of looking at the market, I'll touch on that later. It basically gives greater insight into the order of events that went into building the bars or candles. It uses TPO (Time Price Opportunities) to show the prices movement throughout the periods of the day.

We all know I have love for volume by price and why right?
Well volume by price is the poor mans version of the below setup.
Using something like the below volume profile merge you can gain insight on markets price range, crucial support and resistance levels plus divergence at extremes (daily AND in relation to the merge). This is similar to volume by price, but on speed basically.

Investor/RT has some incredible capabilities for both MP and VP. Below is an example of a merged volume profile they offer. The "merge" on the far left is all volume and the overall price range from 4/18 till 6/13. That's the broad range and related volume if you will. Then zooming in, you have each day broken down in 30 minute periods capped with a daily volume profile.

I can't begin to tell you all the details I can see in this and how they relate to trading opportunities. I saw this and HAD to make a market/volume profile section here on TB.

More to come soon, if anyone wants to pool money with me I'll go in on the $250 per month it will cost to get Investor/RT and the DTN data feed and share my views here on TB.

Investor/RT: The Trader's Ultimate Toolbox
Link to Investor/RT

DTN.IQ - Streaming Real-time Stocks, Futures and Option Quotes, and Breaking News: Pricing
Link to DTN data feeds.

Do you want to give us a quick primer on what we see here? Isn't the basic idea that we should expect prices to move back upwards to fill in the curve and test prices in the direction of the value area?

[MC]

Originally Posted by trustdnb

Do you want to give us a quick primer on what we see here? Isn't the basic idea that we should expect prices to move back upwards to fill in the curve and test prices in the direction of the value area?

I don't need to give a primer, you just did it for me.

You're right...as volume dies down at extreme prices look for it to gravitate back to the "value area" which is the green section and/or the "point of control". The value area is typically defined by a bracket of something like 70% of the point of control. The point of control is the level where the most volume has occurred, in the middle of the value area.

You can use the merge to see full range as well as the accepted value range. Auction theory suggests this depicts the feeling out for value and why price tends to find its way back to the accepted range.

You can see the daily profiles have their own formations and a defined range within the larger merged context.

It's something I can now after about 2 years envision and actually feel but an having trouble finding simple terms to explain this. Hopefully the above makes sense and someone paypals me money to fund this venture.

I'm actually looking to find a cheaper data provider for them, or may just use EOD or delayed data to keep the costs down. I feel I NEED this to get to the next level of market psych awareness. I can get the software for about $30 a month, it's the data plan that kills my budget.

[MC]

I did miss one thing I wanted to touch on.

You said "Isn't the basic idea that we should expect prices to move back upwards to fill in the curve and test prices in the direction of the value area?"

Yes and no. Yes the value low pivot logically should be tested. It could of course have no volume there and be rejected. If it passes that and breaks into the value area the POC would be the next spot to eye up for rejection. Then on up we have the value high pivot.

If and when the value area is cleared, just like a test of a swing level we would expect the value high pivot to test and show acceptance. If not it falls back down till volume indicates accepted value. The way auctions move around to find accepted value is a fairly fluid movement which is tough to put into words.

[cire2222]

pay attentions to this stuff guys, Market profile is really catching on now days, alot of traders are starting to use it

[MC]

Originally Posted by cire2222

pay attentions to this stuff guys, Market profile is really catching on now days, alot of traders are starting to use it

With the cost of data and platforms coming down retail traders are gaining more and more access to the tools pro's have used for a long time.

This gives traders the ability to see into the psychology of the moves. Then again this is the same reason most fail at the market. They either can't grasp all the psych going on in the auction process, or they choose to not bother and think they can outsmart the auction.

This is NOT the grail, the grail is the mind and I'll always stand by that. But to someone that is wise to the psychology of the market, this data is invaluable.

[MC]

Not to turn this into a Investor/RT ad for free, but look at another custom setup it allows. Tick divergence with zigzag overlay. You can see if the number of ticks supports a test of a price level. If not the market WILL move (up or down) to seek accepted value.

The market moves because it HAS to!
When you have low volume, the level is either dry of shares or not an accepted price. The market typically will go in the opposite direction of the last trend, though nothing is a guarantee. You can be guaranteed though that the market will move to find a price where volume comes in and shows accepted value.

[trustdnb]

Originally Posted by MC

I did miss one thing I wanted to touch on.

You said "Isn't the basic idea that we should expect prices to move back upwards to fill in the curve and test prices in the direction of the value area?"

Yes and no. Yes the value low pivot logically should be tested. It could of course have no volume there and be rejected. If it passes that and breaks into the value area the POC would be the next spot to eye up for rejection. Then on up we have the value high pivot.

If and when the value area is cleared, just like a test of a swing level we would expect the value high pivot to test and show acceptance. If not it falls back down till volume indicates accepted value. The way auctions move around to find accepted value is a fairly fluid movement which is tough to put into words.

Good explanation, thanks for it. Let me know if you find a cheap data provider!

[CLF]

This is my first post so I’ll start here since I’m a big fan of Market Profile. For analyzing the HTF perspective, MP gives me a more complete look than say a daily bar chart. Prior POCs show the trend direction for me much like others might use more traditional tools on a standard bar chart. Of course there’s much more to MP. I just want to introduce myself and say hello to all.

CLF

[MC]

Welcome CLF...look forward to any MP input as well as other thoughts you can share.