Anonymous

I have what may a dumb question for you Soul. Your left T&S is for lots 10 or less correct? If so, why do I see numbers like 20, 17, or 13 on that side?

I love the whole "universal numbers" that govern the heavens and the earth aspect of Fibs. I also like Murrey Math for the same reason. They are interesting concepts to think about and in some ways connect one to the greater whole. Trading, however, is a different story. My main problem with Fibs was when to apply them. I will give a brief tale (example): Price is in an up trend for last 10 periods. On period 11 price closes down. I ask myself, " Is this the start of the retrenchment? One down period does not a retrenchment make." The next period, price again closes lower. Now two periods down is obviously more than one, but are we in a pull back ? The 2 period pull back doesn't seem like much at this point. So right now, I will wait to see what happens. Now this is the kicker. On the next period, price trades down then closes on its high and higher than previous period. I read in a blog, or hear an analyst on CNBC say, that price in this market retraced 38% intra period and closed higher as all the people watching that key level entered. I thought I was one of them, but I never got to put the FIbs on. Looking back at the chart it becomes clear. I call my broker for a price fill some time in the past, and they hang up on me. Maybe it's just me, but things like that are one reason why I don't use Fibs. When I did use indicators, you can believe they all had periods of some length like 3,5,8,13,21,34,55,89............... or Music Math numbers like 8,16,32,64. Dynamic support/resistance levels like those of Market Profile came to my rescue.

Please explain. If pivot is (H+L+C)/3 and 50% fib level would be from significant high to significant low (H+L)/2, how is this the same number? Are you speaking of a particular case, or are you saying it is always the same?

Wow. That was very nice. So this what your typical small trader is up against, huh? You better believe that the noise level did not jump because RSI moved above 80, or because two moving averages crossed. The market truly is an auction. Auction Market Theory, Market Profile/Pivot Profile/Tape Reading/VSA these are the areas where the little guy can get his edge. Thanks.

I believe a trader should strive to UNDER-TRADE in both size and frequency. I also believe, as one of the great tape readers did, Being right and sitting tight-that's where the money is. A few thoughts: 1. Being out of the market is a trading decision. 2. When you are in the market, learn to be comfortable being in it. 3. It is possible to go broke from taking profits too soon. Losses do happen. If they are greater than the small quick profits taken on your winners, then you will go broke. 4. The best opportunities tend to be the rarer ones. If a trade set-up comes 15 times a day, it may not be as good as a set-up that comes 1 to 3 times a week. 5. Traders trade because they have identified high probability trade set-ups within the context of their trading methodology. Gamblers trade for the action.

Great article thanx. I consider myself a Market (Pivot) Profiler and a Tape Reader (Volume Spread Analysis). For me, the chart is the tape. This is partially due to the fact that I trade forex and as such do not have access to Level II type info. But also, due to the vast amount of information that can actually be gleamed from a price bar and a volume bar. **Price is reality.** **Volume is reality. Volume is activity so tick volume is as useful as actual volume figures.**

Nice video Soultrader. Thank you. My perceptions is a bit different. Looking at that chart there was a great opportunity to use the 80% rule trade. The 80% rule trades states: if price moves outside of the Value Area and then re-enters, 80% of the time it will trade to the opposite end of the Value Area. Here, we had price move out of value to the upside and then re-enter. There is an 80% chance price will trade down to the lower end of the Value Area. If one had shorted at the high, then no worries. However, if one did not and was looking for a high probability trade, shorting once price closed back inside value would be such a trade. By no means is this criticism, just an alternative take on it.

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: **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.