isamel

Hello guys, Lately I have been very interested in how the market works (market microstructure) and been focusing on the essential stuff that move the market. And my idea is that market only moves in search of liquidity. Alas, my search is therefore on what liquidity is and how to find it. That is why I turn to my favourite forum in the world I read a post around here a time ago (can't find it but doesn't matter) written by DionysusToast. He said (almost..) that the only way to know how a pullback is going to end is to find the liquidity. And as I think about it, that is true. But that works for every move in the market i.e. if it encounters enough liquidity and can't break thru it - it won't move up/down more. So, I was thinking about the ways of recognizing liquidity. I am not thinking about if a market is liquid or not, I am talking about AREAS or CONCENTRATIONS of liquidity, and where to look for them. My main idea is to look at the DOM/T&S but since I am not very proficient in using it, this will take allot of time (obviously I am still going to do it). My questions are really; what tools do you think I should use? How should (with what idea) I look at this problem? Thanks lads

Nice, thanks for getting it going. I don't necessarily believe that high volume equals large participants. It may be a area where many traders are interested of (large S/R + many retail) and larger traders can split up their orders with VWAP etc sending 1 lot orders X 1000 at different times. No I assume there is no possibility in knowing what his position is, although it would be interesting to know whether he is entering long or short. Let's assume he is going long, that would either be gonig long (obviously) or getting out of a short position. Some delta guys around here, and particularly vendors, seem to "know" what type of position they get into and also if it is closing of old business or new business. That would be interesting. For example, Fulcrum talks often of indexing players by Cumulative delta, I tried to ask him, but never really got an answer (don't get mad if you see this..) as to how this is done. So what I am interested in is a discussion, in whether you really CAN know what they are up to? Maybe looking at correlated instruments? Sometimes 6E and ES cumulative delta differs, but they are still the same "risk-on"-trade..

Hello, I usually trade FX but is very interested in the order flow and as you already know that only is visible in futures (currency futures i.e. 6E etc). I have seen (mainly on this site) that many of you "track" the commercial players in the futures market by div. tools. I am looking to discuss this as I find it very interesting. Some use proprietary velocity algos it seems, while others index benchmarks of cumulative delta. Now I wonder, which one do you think works the best and do you really think you have found a way to track the large participants that move the market? Thank you

Thanks ant and Negotiatior. Essentially there are some very important points you both have talked about but I feel I am not in the right place to comment on them as of right now. I have been trading for a couple of years, mainly order flow, and stumbled upon market profile just recently. To be real frank I started this Sunday so, two days ago. What I have taken from MP right now is that it is nothing more than a way of "viewing the market" i.e. what the participants are doing (where is value, has value changed) and if they are doing it "well". For me it looks to be a way of viewing the market participants conviction. So here are my questions: is there a way to always differentiate (with MP) what short-term traders (market makers) and long-term traders are doing, or is it just guessing within the context of MP? If there is a way to differentiate, how is that? This is extremely important to me so if one could really illustrate that I would be very grateful. The reason I am asking because I now am confused, my initial udnerstanding of the book was that LTF participants only trade beyond/outside the initial balance (range extension), but now it seems I have got it wrong. Really helpful if someone could clear this out for me. And btw, since FX is a 24-hour market and I plan to use MP for FX, is there a certain time one should have their initial balance? I mean we have Asian, European and American session - or does that not matter at all? Thank you

And you can see that they entered at value by counting the TPO's inside the Value Area? I am having problem with seeing how value is changing. What I have understood as of now is that value lies within the value area or where market makes a distribution, so, if a new MP day starts and the market makes a distribution, then moves sharply up and makes another distribution at that new level; there is new value. How could one identify changes to value? What I am taking from MP right now is that you can only see what already has happened, and also, I cant really comprehend how one would see what "type" of day the the day will close as: i.e. a trend day, range day etc. I can't understand HOW. But I am still overwhelmed by all this. Other timeframe participants ONLY trade beyond the intitial balance, so how can they trade inside value!? They only trade when price is beyond value - that is how they trade. What am I not understanding? And also, I would like to ask how one should understand which "type" of day this is and what this day represents. The only "day" I could get today to is the double distribution trend day, but then again, it really is not. In MoM the D-D trend day the market starts out inactive then shifts perception and moves to another area where it makes a new distribution and closes. This day starts out, moves down, then back up into IB, moves straight up, makes a distribution in the new "value", then moves straight down to where it started again. What type of day is this and more importantly, what does it tell? You see we have a VA above fridays VA. But then we have more TPO's above the POC then below, so the implication should be that this is initiative selling at those highs that were rejected (since price moved back to IB)? But then again, can this be bearish when VA is above yesterdays? Thanks and sorry :crap:

Thanks negotiator! A couple of questions though; you say the TPO count is used to determine other timeframe activity inside the value area.. I thought the value area was where locals and market makers traded with each other, and above/below that area is where large traders traded. How come you say it is the level of activity for the long-termers? And please, could you give an example of what you mean by outside recent perceived value: maybe a picture or so? For me recent perceived value is the value area or where price is building a new distribution, but that would by definition be what the book defines as initative/responsive activity wouldn't it?

Hello fellow Market Profile traders, I just signed up to the forum mainly because you guys seem to have the best understand of MP. I am currently reading through Mind over Markets and as I am digesting it, I have a couple of questions to ask. I hope you guys dont find me annoying I haven't found this situation yet, so I don't have a picture to show you, though I will try to explain to you guys what I am thinking about. It is about Responsive/Initiative buying or selling. What I have understood from Initiative and Responsive activity is that there are four different activities (correct me about this all if I am wrong): Initiative Buying: this occurs above yesterdays Value Area. In this new daily MP we have a POC, if one counts the numbers above/below the POC and the numbers below it are more than the ones above (for example 10/20. equals 20 TPOs below POC) then we have Initiative Buying, since it is above Value Area. The implication is that long-term participants find value higher and are defending. Initiative Selling: occurs below yesterdays Value Area. Essentially same thing as above though there should be more TPOs ABOVE the POC than below. Equals selling strenght and value is lower. Responsive Buying: Below yesterdays Value Area. In this new MP the buyers react to the falling price. More TPO's above the POC than below. Question: what is difference between responsive buying and initiative selling? Responsive Selling: Above yesterdays Value Area. In this new MP sellers react to the rising price. More TPO's below the POC than above. Same question as responsive buying. Difference responsive selling and initiative buying? Now here is the real question I wanted to ask. If I am correct in the idea of Responsive buying/selling being less TPO's than the "other" direction, what if the other side had more TPO's? Would that imply that this price is being rejected? Example: A new daily MP starts below yesterdays value area. At the end of the day, we see have a POC in the middle. Above the POC we have 30 TPO's. Below the POC we have 50 TPO's. Shouldn't this imply that buyers have control of this pricearea? Something of an "initiative buying in own area"? Now if you would flip this example, to having 50 TPO's above POC and 30 below, you would have initiative selling since it is below yesterdays Value Area. But in this example, the buyers have "saved" price from falling.. I imagine this should happen, how come it is not in the book? Thanks!!