clmacdougall

I too have read Schwager's books on fundamental and technical analysis, he is thorough. In fact his work introduced me to Thomas Demarks books and together with Jason Perls book on Demark Indicators I bought all 4, some really good stuff. Have read Dunnigans "New Blueprints for Gains in Stocks and Grains & One Way Formula for Trading in Stocks & Commodities" it just didn't sink in with me, but maybe it's just me. Once I learned to look at the market in new ways some of those older books don't seem to strike a chord anymore, but who knows, down the road it may hit the spot.

That's a good way to put it BlowFish. What are your top 3 or 4 books that have taught you those market principles? Thanks in advance.

Forgive my cynicism, but most everything that is written and is for sale is being sold because it is yesterdays news. Nothing that truly would make you profitable is for sale. Could you imagine someone selling what really works. As crazy as it may seem you'd have a much better chance of success by sticking to this site than by reading trading books. At least then you might run into some generous and sympathetic traders who want to pass on their knowledge / help.

From which point do you begin to consider a 10 point move has begun? For example, from 3 days ago, or within the timframe of a single session?

Thanks for the explanation of how you trade, itrade. I'm looking forward to your presentation. I think that instead of getting caught up in a verbal misunderstanding I'll simply wait for your presentation and then see where similarities or differences might exist between how you use MP and how I do.

itrade, I don't have trouble with believing in some of the concepts uncovered by Mr. Steidlemayer, in particular imbalance to balance, and the philosophy of trapped money ( sort of the same thing I guess). The part of MP that seems so strange is how much information is hidden by the Profile itself. Ultimately the reason you're using MP is to give yourself more of a clear picture of market internals through uncovering horizontal rotation. But that horizontal rotation could be rising support or falling resistance when viewed in the correct timeframe with a bar chart. I guess what I'm trying to say is that support and resistance can be hidden by the profile if you're not really careful and that's what your trying to uncover in the end. I'm looking forward to electroniclocal 's presentation this weekend but couldn't help but notice in his thread a quote which struck a cord with me, " A range bar that takes a long time to form is usually a result of no distinct direction of order flow." I don't want to make more of that than he did, but on a larger scale isn't that true concerning the value area, isn't that horizontal rotation proof of no "distinct direction" as well?

I don't gamble and never have. But I want to use a gambling analogy here. The house never loses. I don't mean that you can't profit as a trader because in effect you're never at odds with the exchange, but with other traders. But for a minute just look at the real winner at all times, the CME. It wins when you win and it wins when you lose. Activity keeps it alive, and causes it to profit. The only kind of price activity that ensures it's wealth is the constant rotation of price. Price rotation entices new activity back into the market and in doing so causes the exchange to profit. You can be assured that if rotation causes the exchange to profit than it is the only understanding of price activity that matters and that without a doubt will continue and should be what someone attempts to build a science upon. Without price rotation across multiple time frames there is no opportunity / enticement for the next contract to be purchased based upon the conviction / philosophy of the new purchaser. The question for MP followers is does a traditional understanding of MP give you the edge you need to trade that rotation as it transforms into a reversal.

Seems pretty simple to figure. It looks like the guy is looking for reversals after the daily average true range ( or some take on that number ) has been accomplished. If they don't manifest, he decreases the daily ATR from the previous week by 1/2 a point ie 9 to 8.5. If they overshoot, he increases the daily ATR figure he used from the week before. I'm sure I didn't hit the nail on the head but I think that might give you guys someplace to start.

It's funny that whenever someone tries to make a science out of trading it draws so much ire. One of the best books I read before discovering MP was "The New Science Of Technical Analysis" by Thomas Demark. His relentless attempt to make a science out of price action alone was admirable and alot of fun to study. The trouble I've found with price action alone is most of it is based on changing momentum seen through a break of previous trend and in truth no one can predict what might occur simply because price momentum happens to slow, it might be taking a breather before continuing forward or it might be about to reverse, who knows. Trend is a liar too. It's not your friend. Demark taught me to look at the market at it's closest points of trend in effect drawing trendlines from what he called "right to left"! It was a great concept! In effect he made the most out of trend/price action that he possibly could. But I found a change in trend has serious limitations in what it can predict. So I found the next step, Market Profile. Market Profile is initially sold as a trading wonder drug, it's going to cure all of your trading ailments and give you confidence about where price "should" return to once it reaches its profile extremes. The only trouble with all of that is that value is elusive and the fat part of any profile means less and less as time moves on. It's a bit like catching the wind in a plastic bag and figuring that you've got it all and now know where the wind is. Don't fool yourself all profiles are yesterdays...yesterweeks....yestermonths understanding of value, or for that matter an understanding that is 5 minutes...30 minutes or 1 hour old. Key thing... it's old. And don't kid yourself if you believe in a return to value, no matter how you scale in or scale out, you are predicting / hoping for price movement in that direction. We're all predicting in some degree, to quote UB " if you can accurately read imbalance in multiple timeframes you can PREDICT future price in multiple time frames." I appreciate that the man has attempted to make a science out of Market Profile concepts.......sounds a bit like evolution.

Tommy, I'm really looking forward to your presentation. Just like you I believe that most of the trading methods attached to MP are foolish. The concepts at it's core are great, but trading those concepts successfully forward without first ditching most of the MP tagalong junk is impossible.

Look at the title of this thread, " The Evolution of Market Profile Theory,". The idea in coming to this thread was to stretch ourselves while discovering a new and vibrant way to apply MP theory. The only reason I followed this thread was because UB was doing just that. I'm not trying to offend you, just to continue the spirit of this thread forward. We can certainly question the methods by which we trade MP and at the same time why not knock around the theory a bit too. It's not sacred! The theory is simply a non-traditional means of ascertaining support and resistance, the only difference between this and traditional understandings of identifying support and resistance is that instead of looking for a pullback from those areas to the nearest areas of previous congestion, we look for a pullback towards the POC / HVP . Is that a viable means of long term success in trading? Does looking at multiple time frames of previous bell curves and POC's / HVP's in higher timeframes really help us to understand where price "might" go?Or is that part of the "pseudo-science" that has been attached to MP? I don't know if I ever once heard UB referring to the "Value Area" maybe he understood how elusive value really was and focused solely on price rejection instead. Does price really have the potential to return to a "Value Area" / POC when it gets rejected or do we simply look for opposing rejection before closing out our initial position?

Playing a piano huh.....sounds like pages 3 - 5 in Mind Over Markets, a pretty quaint analogy but useless. Please, no mention of "Beethovens haunting Moonlight Sonata" (bottom of page 3). Forget about what the book says Tommy, what do you think? Is the stuff right or off? Just because it was written and published doesn't mean you've got to quote it verbatim. Why not question it and make for a useful thread instead of quoting it and having us all go to sleep. A "feeling out process" ......"indecision and uncertainty"......."embracing the uncertainty"! That sounds like my first couple of years trading, not what I want to hear from someone who understands market structure. If you got the goods than fill us in.

Hey Tommy! Good to hear from you. UB said something to me in a post alot earlier that stuck, he called what I was doing a "pseudo-science". In effect a false science. I wonder how many trading methods based upon MP are just that and what parts of it conceptually offer a truly fractal (applicable in all time frames) and viable means of studying price action. Bar charts don't show horizontal rotation, you're right, but who wants to monitor indecision anyway? Rotation is not value, it's simply indecision concerning the direction in which price should head to next. You can monitor value via time (TPO) or volume (HVP) or through (VWAP) and you'll come to the same understanding, all you're uncovering are areas of indecision, not value. In effect the Value Area/POC (however you come about it) is a worthless lean. Look, here's what I'm saying, tell me how to take the one or two golden principles found in Steidlemayers work and apply it outside of the ways mentioned in the old books.

What's the good of a tool if there's nothing statistically significantly about it? I'm afraid I'm of the same mind Mighty Mouse, the chart is the thing. Anything that hides them bars hides the truth.

Please let us in on what "proper study" you've done. And what "levels" you are referring to.

Explain to me what is really offered by market profile outside of an attempting to discern Support and Resistance in a non-traditional manner? Nothing. Outside of Steidlemayers imbalance to balance statement what truly new concept has been found? That statement itself is what I've found to be the only gold in all the Market Profile writings. The question is can it be applied more effectively than what we've seen in UB's writings? What is the "now" application of the golden principle discovered by Steidlemayer , in a means keeping with technology while staying true to the concept?

The problems I've seen with Market Profile as a central trading ideology is that it's boundaries (areas of price rejection) and it's center (TPO/HVP) are too static. Any previous understanding of value is almost totally useless by the time price reaches those boundaries again. It seems like market profile was an attempt to discover support and resistance areas without the need of traditional price action understandings/patterns to uncover those areas. Imagine the naivety of believing that price will almost always return to it's central Value Area simply because it found itself at yesterdays rejection area. Everything for sale, with regards to trading information/methods, does not work. You would have to be crazy to sell a trading method/understanding that proved itself useful. You would be throwing away what could be passed down for generations to come in your own family. When it comes to trading, yesterdays newspaper is the only one you'll ever get a chance to buy. Sit, look at tons of charts and think. So far for me it's been the best way to learn.

Would I be correct in saying that the, "lack," of volume in either an upmove or a downmove when compared to a large price range accomplished is the only telling factor of trading sentiment. The reason being that demand overwhelmed supply ( or vice versa ) so quickly that large price moves were able to occur on low volume as resistance to the move was not able to stand in it's way in sufficient enough time to delay/slow it's momentum. In effect the most telling part of sentiment is an "ease of movement" for price when compared to the struggle through either buyers or sellers which happens in another equal price range. Thus low volume large price ranges are telling of true sentiment and high volume similar price ranges are paramount to indecision.

I find myself asking the same questions you have, especially, "What about the BIG moves that markets can make overnight on low volume? Is it the volume size that makes the big moves or the individual trades no matter their size at each given price change?" Maybe volume is a liar. Specific markets seemed to control themselves dictating their own value in the past, so the players who traded that single market had control over it's perceived value. I wonder if those days are over. Markets are reactionary now more than ever. When the ES moves through the night on low volume it is no less important than when it moves on high volume throughout the day. It is moving , be it on low or high volume, in response to whichever stock market / currency pairing at that specific time has control over the perceived value of goods produced. When volume comes into a market has the perception of value changed? This is the only question which seems to matter. What makes volume studies difficult is the repetitive nature of volume to look the same everyday, creating a "U" shaped pattern everyday in the ES. It seems like instead of seeing volume prove value, we're watching portfolio's , "reacting," to the present reality of price. And if that statement is true than price, ( minus volume ), is the only true understanding of value that we have. How's this for a step further, " all movement is commercial activity." Do you really think that any movement is going to be allowed outside of what the commercial traders want to have happen. It's a waste of time to try and split hairs over commercial /non-commercial activity. The only thing we seem to have left is an indepth study of market structure / price movement in a timeframe which is not lagging but is in touch with how the maket decides what value "now" is.

I created profiles of the emini S&P 500 for each day and night session independent of each other for three years worth of data. I then divided up each profile by it's construction, using what I thought to be a reasonable and scientific approach. If the upper tail was at least twice as long as the lower tail I labeled the profile as a "b". If the lower tail was at least twice as long as the upper tail I labeled the profile as a "P". And if neither was twice as long as the opposite tail I labeled it as an, "O". So I had the beginnings of a study in price reaction to differing profile structures. Not only that but after a considerable amount of study it became plain to see that if the evening value area was able to fully detach itself from the same days RTH value area, then it became the value area of importance come the next morning. To put it in different terms, if the evening value area was able to migrate/detach itself from the days value area , then it became the value area of choice to trade with in mind come the next morning. Then I divided it up further by deciding upon the trend of the dominant profile by simply comparing the present dominant value area to yesterdays dominant value area. If it had a Lower Low and a Lower High it of course was proof of a downtrending profile and if it had a Higher High and a Higher Low it was of course an uptrending profile. Next I went to a fourth step, Where does price then open ( at 8:30 am CST)? Within what I called the Upper Deviation (a space equal to the value area but above the value area high). Within the value area (between the vah and val). Or within what I called the Lower Deviation ( a space equal to the value area but below the value area low). Fifth, what point does price then first touch after the open, 1st Deviation High, Value Area High, Value Area Low, or 1st Deviation Low? And then finally, after all of this is said and done, the key question "WHERE DOES PRICE THEN MOVE TOWARDS?" Is there predictability in price movement after all of these conditions had been monitored closely? The answer is yes, but not without both risk and the potential for failure. I have been studying now for 3 1/2 years and I enjoy learning about the markets and market structure. I am in no ways yet successful as a trader, but I'm beginning to learn how to look at the market.............. at least I think/hope so.haha Let me know what you think, any of your own observations would be appreciated

I don't think UB is posting anymore, but I think we should carry this thread forward, anybody interested? I'm sure many of us have ideas concerning the ,"now," of Steidlemayers work. If so let me know and we can keep this thread alive if that's ok with the moderators.

For the longest time I got all the info I wanted for free from finam. I downloaded years of back data in multiple time frames, right down to the minute time frame for data concerning all the emini futures products, no delay as well, real time. It was some Russian source I stumbled across, but I just today noticed they are asking for a subscription. I guess the free ride is over with them. If you're not too picky get the free stuff from CRB, it gives you about 6 months of free info which you can build upon. Pretty good source, as Tick Data provides for them Also give TimingCharts.com a try, not bad. Nowadays I just use Esignal at $25.00 per month plus an extra $10.00 for intraday back to Mar 2007. Anybody found any better?

Don't talk about your position.

In trading, whenever there is effort, force, straining, struggling or trying, it's wrong. You're out of sync with the harmony of the market. The perfect trade is the one which requires no effort.

You can't win without an edge, if you don't know what your edge is, you don't have one. To have an edge you must have a method.