Soultrader

Chart post of today's action. Notice how the value area is completely inside of yesterdays value area. We had a market in balance. A good opportunity for tomorrow would be to play the breakout of the value high pivot and target Sept. 13th's high and value high pivot cluster level.

Im still trying to devise one actually. It would make more sense to me if the markets tested the lower and upper extreme of value. I am still trying to figure out a method to understand why prices hover in between. Notice how the daily pivot was pretty much in the middle of the two value pivots. Perhaps I can set a target at the daily pivot when this happens instead of trying to ride it out towards the other extreme. I will keep you posted if I find anything insightful.

I do sense that false breakouts do occur more often in the opening hour. I tend to see prices breakout of value, get rejected, and pushed back into value. This pattern occurs more during the morning session. However, I do not have a complete data for this so I am not sure if false breakouts occur more in the opening hour or afternoon. They do occur during the doldrums but I do not trade during that time so I would not count that as part of the data.

Im testing out a trading setup based on market understanding. We had a wide value area today for 64 points. Now combining this information with the fact that we had a %TREND of 60.78% yesterday, I am interested in finding out the percentage of time the markets will remain inside of value. Today the markets chopped around all over the place inside value. This seems to occur alot after a nice trend day with a wide value area. The markets did provide good long opportunities from the value low pivot but it spend some time trending in between VAH and VAL respecting the daily pivot a number of times. This analysis will be continued....

Here is a shortcut to the online seminars presented by the Chicago Board of Trade on Market Profile. This is part 1 of 2 of Market Profile 101 presented by Alex Benjamin. CLICK THIS LINK Just input your email and press "View archived event". Make sure you have real player installed. This is part 2 of 2 of Market Profile 102 presented by Alex Benjamin. CLICK THIS LINK Just input your email and press "View archived event". This is a more basic method of market profile presented by Dan Grazma: Market Profile - Trading Strategies & Applications CLICK THIS LINK Just input your email and press "View archived event". If you would like a market profile handbook in a PDF format, you can download it here. CLICK THIS LINK The file is over 12mb in size so it may take a few minutes to load. For more information be sure to check the CBOT website at Chicago Board of Trade

For $12.95 you will not find a better book than this. One of my favorite reads of all-time. Nicolas Darvas is well known for his box theory. The box theory focuses on price action alone using support and resistance points. Price moves in brackets. As price moves from one bracket to another, the boxes pile on top of each other causing a trend. This theory made a dramatic change in my trading when I changed my style to using market profile, price action, and tape. Now, I have applied the box theory into tape reading to spot short term reversal points. For anyone interested in learning more about this theory, I recommend you to pick this up. For those interested in a good wall street read, this book is for you.

Many new market participants are lured in by the glamour of daytrading. We hear of great stories of day traders making a sizable income, working only a few hours a day, and playing golf every weekend. With the fancy advertisements of brokers and data vendors, it is easy to get sucked in without really understanding what day trading is all about. You may have had some experience investing in the stock market. Now you want to consider trading. Index futures, forex, and tech stocks are among the favorites with day traders. Do you really know what it takes to be a full-time trader? The Attraction Most people are tired of their current jobs and looking to find financial independence. Why do you think "Rich Dad, Poor Dad" made millions? Here are the perks associated with day trading: Independence: There are no obligation to anybody but yourself. You do not have to deal with customers, clients, or even your boss. You pick your own working hours and wake up whenever you feel like it. Time is very flexible. Financial Independence: If you are considered a profitable trader, you are most likely not concerned about paying rent the next month. True, traders do go bust. But once you learn how to trade you can make money almost anytime you want. Mobility: You are able to work from anywhere in the world as long as you have a computer with an internet connection. You can place orders on the phone as well but I do not recommend it when day trading. Alot can happen in a matter of seconds. Some things to consider Like any other job, there are certain things you may have trouble facing. Do you like to work in an environment full of people? Then day trading may not be for you. Many day traders work from their home and are faced with isolation. There are trading rooms and facilities that you can go to but this is limited on where you live. Day traders also spend a considerable amount of time staring at their computers. You may actually sit there for 3 hours before you make one trade that lasts 15 minutes. It is similar to going to a Mike Tyson fight. Waiting for 2 hours and watching for 15 seconds. Day trading may not be for you. It requires quick fingers and an aggressive personality. If you like to spend time analyzing before making a decision you might want to consider swing or position trading. Market analysis must be done prior to the opening. Hesitation in day trading can be costly. My Daily Routine Take a quick glance at my daily routine and if it suits you day trading may be right for you. I wake up approx 1-2 hours before the opening to go over my charts. I spend this time to analyze and devise a trading plan. I will never trade the markets blindly. Having a plan is a must. From 9:30am eastern to 11:00am eastern, I have my eyes glued to the markets and my computer. I am looking for 1-3 good setups. From 11:15am to 2:00pm eastern I will usually spend time doing some work on my website, writing articles, planning new business', and grabbing some food. From 2:00pm to 5:00pm eastern, I am back to trading looking for any good afternoon opportunities. The markets close at 5:00pm and I spend another 2-3 hours studying my trades, analyzing market action, and trying to learn anything new. I will never sleep without learning at least one new thing each day. I tend to be a night owl and a workaholic so I spend most of the time after the close working on different projects. My only break is on every Friday or Saturday night when I do go out and party hard. Sunday... I am back at the laboratory. In my case a 9-5 job offers less working hours. I tend to work over 12 hours everyday. This may not sound appealing to some people. But the biggest reason why I love what I do is that I have complete independence. I can choose to do whatever I want to do. Also day trading offers a tremendous feeling of achievement. Everyday is rewarding and you make money based on your results. There is no harsher judge than the markets. If you are trading with a hangover the markets will rip your throat out. If you are prepared with the right mindset, the markets will reward you.

Great post and thank you for sharing. I would like to ask a question regarding one trading setup you mentioned. I also use market internals to judge whether the price will hold or a breakout is likely. However, all my breakout plays are entered at the pullbacks to the breakout point. There are cases where the pullback never occurs and I end up entering at a higher price. You mentioned that you will enter before the breakout occurs. I am actually working on this technique but have trouble deciding where the stop would be. Do you use a tight stop for such setups? The only time I actually enter before a breakout is when the TRIN breaks out of its range. I will then enter using a 10 points stop for the YM. Thank you.

There is not many books that focus on price action. Since I am a pivot point trader, I enjoyed John Person's book very much. His core trading methodolgy uses pivot points on a longer time frame. Until then, I used pivots strictly on an intraday basis. However, John proved that it can work on daily, weekly, and even monthly charts. He combines candlestick patterns with pivots adding further confirmation and making the trading signal even more powerful. If you are still trading with lagging indicators, take a look at this book. You will be surprised that once you trash all your indicators away and focus on price, you trading will step up another level. Great book and relevant information. Always good to add it to your trading library.

When I first found this book as a beginning trader, I fell in love with it. Definitely a book all traders should read. This is an in-depth book on trading psychology, market indicators, trading strategies, and money management. Without controlling your risk, a trader is desinted to fail. Dr. Alexander Elder focuses on the three M's of trading: Mind, Method, and Money. I wrote to him once concerning a question I had about his trading and I recieved a reply the next day! He his a famous trader/speaker in the trading industry and also did a webinar with the Chicago Board of Trade which can be found in their archives. His writing style makes it interesting to learn about trading. Advanced traders may crave for more but I do recommend this to new and medium level traders.

Suprisingly a good book written by a Wall Street market maker. There is alot of insightful information for stock traders. As an insider, Lukeman is fully aware of the tricks market maker plays. There is good information that every trader can learn and avoid costly mistakes. Lukeman also writes about simply trading strategies such as using the 8 MA. What is amazing about his strategies are that they are simple yet effective. Trading is all about K.I.S.S. Keep it simple stupid! His section on the importance of the closing price is worth the price alone. Take a look at this thread: The Importance of the Closing Price

Never heard of the emini's? Interested in trading index futures? If the answer is yes, this is the book for you. This is more of a beginners book introducing the world of emini futures. The contents go over basic contract descriptions, simple trading methodologies, technical analysis, and market internals. If you are new to trading this book will be alot of help. The book is packed with charts making it easy to understand. If you are an experienced trader, this is probably not for you. Do not be mistaken though. New traders need to know the basics before skipping any steps. Therefore I recommend it to any new traders interested in the emini contracts.

Another great book written by a true trader. I have checked out John and Hubert's trading class in the past and I found it to be one of the best places to learn. The insight and education you will receive in this book is priceless. Although John discusses trading setups that require the use of his custom indicators, the chapters on gaps, pivots, and market internals are well worth the price. In my opinion, the best chapter in the book talks about the use of market internals to judge the "health" of the market. Just as a doctor needs to xray a patient, a trader needs to understand market internals to diagnose for strength or weakness. By gaining the bigger picture, you can then narrow it down to pinpointing your setups. The last chapter focuses on market profile and is written by Alexander Benjamin, a market profile expert. If you are looking for a good day trading book, this is it. I highly recommend it to anyone in the trading field.

Initially used by floor traders, pivot points have become widely popular among the trading public. Pivot points are simple mathematical calculations used to determine support and resistance levels based on the close, high, and low. Depending on a traders preference, one may choose to use the midpoints, weekly, and monthly pivot levels in combination with the daily pivot levels. Pivot points can also be ranked in terms of importance: monthly coming first, weekly second, and the daily pivot in third. Similar to moving averages, the 200 period moving average will act as a stronger support/resistance than the 20 period moving average. This concept can be applied to pivot points as well. The S3 and R3 pivot points are usually a good level to fade since price will usually remain between these two levels. I will use the midpoints for the daily pivot point calculations but not for the weekly and monthly pivots. Here is the formula I use for pivot points: R3 = R2 + RANGE (same as: PP + RANGE * 2) R2 = PP + RANGE R1 = (2 * PP) - LOW PP = (HIGH + LOW + CLOSE) / 3 S1 = (2 * PP) - HIGH S2 = PP - RANGE S3 = S2 - RANGE (same as: PP - RANGE * 2) Simply divide the two pivots to find the midpoints. Example: (S1+S2)/2 = midpoint There are some rules when applying midpoints to the daily pivot calculations. In trading the Dow mini-sized futures contract, the distance between the two pivots must be over 40 points when applying the midpoint. The only exception to this rule is when the midpoints line up with the previous day’s high, previous day’s low, weekly pivot, monthly pivot, value low, value high, POC, or an unfilled gap. By using the midpoints for the daily pivot calculation, you will get 13 set of numbers between S3 and R3. Calculating the weekly and monthly pivots (without midpoints) will give you an additional 14 set of numbers. This will give you a total of 27 price levels. Advanced Pivot Point Analysis My core trading method is based on identifying key price levels using pivot point cluster zones. A cluster zone is an area in which pivot points line up within 10 points of each other. In addition to the daily, weekly, and monthly pivots I will identify the previous day’s high, previous day’s low, previous day’s 50% range, unfilled gap, value low, value high, and POC (point of control). This gives me a total of 33 price levels. What I am looking for is any of these pivots to line up with each other and create a cluster zone. Let’s take a look at the chart posted below. On August 21st, we have the following: High: 11418 Low: 11342 Midpoint between daily pivot and R1: 11413 Daily Pivot: 11389 Value High: 11381 Previous days 50% range: 11365 S1: 11361 Value Low: 11349 Midpoint between S1 and S2: 11339 By looking at these few numbers, we are able to come up with 4 key cluster zones. The first zone is the cluster between the high at 11418 and midpoint at 11413. This 5 point range is a cluster zone that will act as key resistance/support. The second zone is the cluster between the daily pivot at 11389 and value high at 11381. I will take the midpoint of these two levels at 11385 to base my trading decision. The third zone is the cluster between the previous days 50% range at 11365 and the S1 pivot at 11361. This area will also act as key resistance/support. The fourth zone is the cluster between the low at 11342 and the midpoint at 11339. This will be a key support zone. Of course you will have trading days when only 1 or 2 cluster zones exist. On these days I look to get into a sniper trading mode, looking for one or two good opportunities and focusing on my entry points. Trading setups using these cluster zones goes beyond the scope of this article. I just want to introduce a different method of pivot point analysis. Learn more about this trading method on my website through multimedia presentations and charts. Good luck and best of trading.

A great book for stock traders. In depth insight on trade entries & exits, Level 2 trading strategies, and market maker games. If you are new to trading pick this book up and read 3,4 times. The book is flooded with good trading advices that can help you get started on the right track. David Nassar offers clear and straight forward advice. If you are a new trader wanting to learn the ropes, you wil find this useful. David Nassar teaches you the do's and don't of intraday trading. This is a book for traders by a trader. Do yourself a favor and add this to your trading collection. "Don't expect to squeeze all the juice from the orange" - quote from Rules of the Trade

Possibly the greatest trading book of all time. A true traders gem. Out of all the books I let people borrow, this book will never leave my library. Reminiscences of a Stock Operator is a disguised story of Jesse Livermore, the greatest stock trader of all time. Although initially published in 1923, the trading wisdom and advice is still very valuable in todays markets. The markets may change but the people will never change. Jesse Livermore was one of the earliest tape readers of our times. As a boy, Livermore spent countless hours working for the local bucket shops staring at stock prices. He was able to build his trading edge after hours of observation of the ticker board. If you have yet to read this book do yourself a favor and pick it up. There is plenty of market insight even for a veteran trader. The book is a real financial page turner and you will explore the history of wallstreet as well as the old school market manipulation tactics. You will learn about the tape and how Jesse Livermore was able to identify support and resistance through the ticker board. This should be a mandatory reading for all traders. "After twenty years and many re-reads, Reminiscences is still one of my all-time favorites." -Kenneth L. Fisher, Forbes

Do you think oil will each $100 by the end of the year?

Want to invest in real estate? We all know that real estate in the US is not a good time to be investing in. Why not consider Japan? In Tokyo, we our experiencing our first year in over a decade of rising real estate value. Compared to the bubble era of around 1989 to 1992, land prices have gone down approx 50%. I was raised in the bubble era and saw the smiles turn into tears and frowns. Many people lost everything they had during that time. Right now is the best opportunity to invest in land in Tokyo. Any thoughts?

Posted it up for you. Check this thread: http://www.traderslaboratory.com/forums/market-profile/345-calculating-value-area.html#post795

This is a method used to calculate the value area. Source: Mind over Markets "First identify the price at which the greatest volume occurred. Then, sum the volumes occurring at the two prices directly above the high-volume price and compare it to the total volume of the two prices below the high-volume price. The dual price total with the highest volume becomes part of the value area. This process continues until 70% of the volume is reached." For those who have no idea what that meant, take a look at the excel attachment below: In the excel file, the greatest volume (2500) occurred at price 110. The total volume for the two prices above 110 is 3600 (sum of dual prices) and the two price total below is 3000. Since the upper total is greater, it is added to the high-volume price as part of the value area. The same process is repeated, comparing the next two lower prices 111 & 112 to 106 & 107again. The upper total (106 & 107) is higher so it is added to the value area. Then you take 111 & 112 and compare it to 104 & 105. Since the lower total is higher (111 & 112) this is added to the value area. You repeat this process until the combined volume reaches 70% of the day's total volume. Your value high pivot would be 116 Your value low pivot would be 104 Calculating Value Area.xls

We will be waiting for your return stockinvestigator! Quick question: Are you a longer timeframe trader? Or do you also trade intraday?

Yes. Just use the weekly and monthly chart and take the high, low, and close. There will be quite some distance with the weekly and monthly pivots so some traders choose to use midpoints. I do not apply midpoints. There is a variety of ways to calculate pivots. Make sure to take a look at this thread. http://www.traderslaboratory.com/forums/derivatives/35-pivot-point-formulas.html?highlight=pivot+points

I use the PC ratio in real-time. I use it as a warning tool to judge the number of longs vs shorts. If the pc ratio is high, it means that everybody is short. If everyone is short there is no one else left to sell. Therefore, I can use this signal to find long setups. If the PC ratio is low, it means that everybody is long. There is no one left to buy so I will look for a short signal. It use it as a contrary opinion tool. The key levels on the pc ratio I look for is 0.6 and 1.0. Note: Stay away from it during options expiration week. This indicator becomes unreliable.

Hows it going studio. New to trading? Feel free to ask any questions on our forum. Thanks for registering

Thank you soooo much Antonio I have been literally dying to get my hands on a market profile for TS. I am very easy language illiterate. As a matter of fact, I have minimal knowledge of coding. To make this website was as tough as trading. I may have some questions regarding the indicator and I may pm you if its okay. Also regarding the images: you can either attach an image or post the image in your thread. To do this, there is a image button located next to the attachment button. It looks something like this: You can then place the url of the image and it will show the actual size. I will try to enable some members to be able to upload files on my server... I am still trying to figure out how to do that. I will let you know when I get this fixed. Thanks again