ant

Michele, I also create composite profiles and daily profiles using Volume to compare with MP using TPOs. As you know, they can differ in a significant way, especially in the daily Market Profile. To be honest, about the HVN in the composite, I eye-balled it and wasn't trying to be that exact. I do try to be as accurate as possible in my trading, but keep in mind that being off by a tick or so is not a big deal, unless you're trying to trade mechanically. 84-81 or 83.50-81.75, what's a tick between friends?

Hi Soultrader, What you are describing is an internal trend within a trading range, this alerts me to a potential breakout to the downside. There is a way to measure internal trends, as described by Don Jones at Cisco-Futures. This is something I consider when a market is trading in a bracket. However, in the ES, we had "overlapping lower" value areas and it wasn't that strong of an internal trend. Notice how the ES traded down then back up over the last 3 days, not that persistent to the downside. Your question was an excellent example of understanding market context. Antonio

The first step of my analysis is to determine the market condition - balancing or trending. The ES, like the YM, is in a 7-day trading range as indicated by the chart below. The upper bracket limit is 1395 and the lower bracket limit is 1378. The ES closed within the high volume node of the composite profile of 10/23-10/31, so I currently do not have a bias going into tomorrow. However, I'll check the Globex session tomorrow morning to determine if the ES is trading above or below the high volume node at 1383.50-1381.75. If above the HVN, I will have a long bias and look to get long (buy pullbacks). If below the HVN, I will have a short bias and look to get short (sell rallies). If the ES is still trading within value, then I will wait about 30m or so to see if the ES approaches any key reference areas. So looking at the composite profile, the bracket limits and the HVN are key reference areas. Next, I analyze market structure. I look at the daily profiles and identify key reference areas according to the day structure. On 10/31, there was a buying tail at 1377.50-1377 and a selling tail at 1385.75-1387.25. These are key reference areas as well for tomorrow. So what's my trade plan for tomorrow? The ES is in balance so I will look to fade the bracket limits at 1395 and 1378 (just below 1378 there is a low volume area between the two composite profiles in the first chart). If the ES opens above the HVN, I will have a long bias and look to enter a long trade if it trades down to the HVN. If the ES opens below the HVN, I will have a short bias and look to enter a short trade if it trades up to the HVN. As always, I will look for confirmation from market internals as price approaches the bracket limits and the HVN of the composite profile. I will also be paying attention to the single prints of 10/31.

I upgraded TradeStation yesterday and the MP indicator was still working fine. I didn't have to do anything besides upgrade TS.

Michele, you got it! One comment though. I tend to compare the size of the balance areas (or nodes) that form in a trend, and as long as they're small compared to the balance area from where the market broke out of, I consider that to be nothing more than a retracement and the trend is still intact. For me, this is the hardest part of trading - determining when the trend is over and the market is transitioning back to balance.

Deefman, thanks for the link. There are a lot of interesting articles there.

Trading based on Support & Resistance would never go out of style because it's focus is on finding where a market will encounter supply and demand. Supply and demand are at the heart of what markets/auctions are all about. However, the art is in determining where supply (resistance) and demand (support) will come into the market. For that, there are as many approaches as there are traders (e.g., TA tools and indicators such as pivots, Market Profile, fibs, moving averages, Elliot Wave, Gann, etc). Most of these tools have nothing to do with determining where supply and demand will enter a market (most are arbitrary equations really), and they only work because they tend to be followed by many traders (i.e., a self-fulfilling prophecy). So I don't know if any of these tools will stand the test of time. Having said that, I am of the opinion that Market Profile and auction market theory do a good job at determining supply and demand. At least it is the most objective and most reliable tool that I have found that works for me.

10/25 was a break out of the short-term balance area of 10/23 and 10/24. This was basically a retracement within an uptrend. A move through the single prints of the 23rd would put price back into the balance area that formed prior to the 10/23. When a market is in a trend and then trades between two high volume nodes, this usually indicates that the trend is transitioning back to balance and a larger balance area might form. Eventually, we would look for a breakout of that larger balance area and the cycle will repeat itself.

The chart below illustrates the use of the MP_Tails indicator.

Here you go nasdaq... Use this code for the TailsExist function. It will disregard a tail if the high or low was made in the last bar of the day. I believe this is what you were trying to achieve, which makes sense. That was a good catch. Good Luck! P.S. Nasdaq, you had the right idea in your code, just required a little tweaking. inputs: LL( NumericSimple ), HH( NumericSimple ), Offset( NumericSimple ), PriceAtIndex( NumericSimple ), TickSize( NumericSimple ), NumTPOs[n]( NumericArrayRef ); variables: Index( 0 ), TailsFound( 0 ), rc( 0 ); TailsFound = 0; // Get the array index for the lowest price of the Market Profile range rc = GetArrayIndex( LL, Offset, PriceAtIndex, TickSize, Index ); // Check if there is a buying tail if NumTPOs[index] = 1 and NumTPOs[index+1] = 1 then begin if Date <> Date[1] then begin // Was the last bar of the day also the low of the day? // If not, then mark it as a selling tail if Low[1] <> LowD(1) then TailsFound = 1; end else if LastBarOnChart then begin // Was the last bar on chart also the low of the day? // if not, then mark it as a selling tail if Low <> LowD(0) then TailsFound = 1; end; end; // Get the array index for the highest price of the Market Profile range rc = GetArrayIndex( HH, Offset, PriceAtIndex, TickSize, Index ); // Check if there is a buying tail if NumTPOs[index] = 1 and NumTPOs[index-1] = 1 then begin if Date <> Date[1] then begin // Was the last bar of the day also the high of the day? // If not, then mark it as a buying tail if High[1] <> HighD(1) then begin if TailsFound = 1 then TailsFound = 3 else TailsFound = 2; end; end else if LastBarOnChart then begin // Was the last bar on chart also the high of the day? // if not, then mark it as a buying tail if High <> HighD(0) then begin if TailsFound = 1 then TailsFound = 3 else TailsFound = 2; end; end; end; TailExists = TailsFound;

You may also want to learn about Toby Crabel's and Larry William's versions of a channel breakout strategy as well and then compare. Although, I can't remember the details, I think I preferred Crabel's method over the other two.

nasdaq, The tailsfound value is printed so you can verify it by comparing it to the Market Profile. To plot tailsfound, place the Plot1(...) command under the Text_Style(...) command (shows up twice). Remember that tailsfound is computed at the end of the day. You'll see what I mean once you plot it.

Hi nasdaq5048, An array is required to store the TPO count at each price. The definition of a tail is at least two consecutive price levels with a TPO count equal to 1, either at the high or low of the Market Profile time period. This creates a selling tail or a buying tail. Tail is being defined here because this is what I would use to code the indicator. Therefore, once you have an array with the TPO count at each price, check the two high prices in the array. If both prices have a TPO count equal to 1, then a selling tail exists. Reverse to identify a buying tail. Attached is EL code that will display a number which indicates whether a tail exists in the Market Profile. This code will display one of the following values below the Market Profile: 0 = No Tails Exist 1 = Buying Tail Exists 2 = Selling Tail Exists 3 = Both a Buying Tail and a Selling Tail Exists Apply the Market Profile indicator to your chart so that you can see the profile. Then apply the indicator attached. All of the code is unprotected so that you can make changes. This should get you started. Hope this helps. MP_TAILS.ELD

Soultrader, do you find that using Volume on a tick chart is helpful? Thanks.

For 10/25, I keyed on the selling tail, the high volume node of the 2-day composite, and the single prints below the balance area. See chart. However, during the trading day on 10/25 I didn't see a good entry based on market internals so I didn't get a trade in. So I agree with James on the "no trade". I usually do not enter a trade at a MP reference area without confirmation, especially on an FOMC day.

The MP reference areas worked well today. The ES traded down towards the high volume node (POC) of the previous day and formed a volume and Tick divergence near the POC. Basically, the POC provided support in an uptrend. Pretty typical... See charts below. Towards the end of the trading day, a volume divergence formed near the highs. Did anybody feel like the ES was going to trade through the volume area? That's why I think it helps to have a trade plan prior to the start of the trading day. Identify key reference areas to monitor that may offer good trade opportunities. For me, everything else is noise.

Torero, Do you expect to get the same MP for ER2Z06 using bars from 8:30-3:15pm as you do for ER2.D for the regular session? I'm sure you know that they generate different 30m bars that would influence the MP and value area. Could you tell me what your UVA, POC, and LVA are for 10/20, for example, for the regular session of ER2.D? I want to make sure we are set up the same way. Thanks.

Thanks Soultrader. It's fine now.

ES Review The ES had a transition day on 10/23, where it broke out of the trading range that formed between 10/12 and 10/20. On 10/23, the ES started to balance (retracement) in the upper end of its daily range. It continued to build a short-term balance area on 10/24 as well, as seen when both daily profiles are aggregated together. For the beginning of trading on 10/25, if the ES is in an uptrend, then the high volume area of the two-day composite on 10/23 and 10/24 should be support. In fact, the previous day's value area should also be support. In addition, we shouldn't see a deep penetration into the single prints of 10/23, otherwise the uptrend would be in trouble. On 10/25, the ES traded down to the high volume node between 1382-1381.50 and bounced off it, closing near its high. ES Analysis for 10/26 The ES closed at 1389.25. Besides the day's high, there is no resistance above it. If the uptrend is to continue, then the high volume nodes at 1384.75-1384.25 and at 1382-1381.50 should be support. This area also includes the buying tail of 10/25. Again, if the uptrend is to continue, we should not see the ES trade far into the single prints of 10/23. I will have a long bias going into tomorrow's trading session. I will monitor internals near yesterday's high for trend continuation. However, if the ES starts to trade down, I will look to enter a long trade near the high volume nodes mentioned above after monitoring market internals. As always, prior to the trading session, I will check the Globex action. Anybody else want to share their trade plan for tomorrow?

Hey Guys, Please make sure that you are using a 30m chart with a timeframe of 9:30-4:15 EST. I believe that is what this site uses (http://www.mypivots.com/DailyNotes/dailynotes.aspx). Soultrader, the value area for the YM should match exactly with the site mentioned above. Torero, please compare your value area for the past few days with the site and let me know what you get.

Here are some of my thoughts on this topic... To develop a simple, yet effective (read as profitable), trading strategy takes time, knowledge, and experience. Developing a "simple method" that works is a very difficult thing to do! It is the end result of a very long process. On average, how long does it take for a trader to become consistently profitable? For most traders that eventually succeed, it's years. So I would say that to develop a profitable "simple method" requires one to be "smart". However, if a "simple method" is defined as using the same old trite indicators in the same old tired way that most traders do, as described in most books, than that won't lead to success either and is not that "smart". Successful traders do not follow the crowd, they carve out their own path and devise a unique system that works for them. I also doubt that most successful traders use indicators (operative word here is "most'). But that's a topic for another thread. On the contrary, a "complex strategy" does not imply that the trader is "smart". I believe most traders make their trading complex because they throw everything, and the kitchen sink, into their strategy thinking that more is better. They do not know how to discriminate between the good and bad information/ideas that's out there. As discussed in another thread, higher education is probably not required to be a successful trader, but intelligence certainly is. To me, being intelligent means being able to learn how to frame out or structure the markets in a way that makes sense (i.e., doesn't appear random or chaotic), filter out the truly useful ideas, and then use a few key ideas in a unique and clever way that allows you to extract money from the markets. More often then not, when discussing most traders at large, a complex strategy usually indicates that the trader is "not so smart". I'll get off my soapbox now.

When a market is trending, I primarily look to buy pullbacks and sell rallies - so I voted Trend Trading. However, my favorite countertrend strategy would be trading divergences between market internals and price. This would be a scalp only trade where I'm looking to exit on a retracement. I would not let this trade go against me. When in a divergence trade, I use tight stops and expect it to work immediately or I exit (i.e., use a time stop). I would not attempt this on a strong trend day. I've done it and it wasn't pretty.

Thanks for the reply Raul. Much appreciated. Hope you feel better. Regards, Antonio

The purpose of this thread is to discuss your favorite markets to trade, trading tools, and trade setups. Feel free to mention other things like your trading platform and preferred broker, and elaborate on your reasons. I think it would be best if folks were to focus on one or two aspects of their trading in each category as opposed to listing everything they do and use. The idea is to distill what you do in your trading to your very best ideas as opposed to creating a long laundry list that loses its effectiveness. I'll start... Trading Style: Daytrading Timeframes: Primarily, I start by looking at daily charts at the end of the day, use 30m charts for Market Profile, and tick/1m/5m charts for fine-tuning entries/exits. Favorite Market: ES (emini S&P) Trading Platform(s): TradeStation and Wealth-Lab (primarily for backtesting and EOD analysis, not real-time trading) Broker: TradeStation (plan on opening account with IB soon) Trading Tools: Market Profile and Market Internals (Volume, Ticks, Trin, Breadth, and Bid/Ask) Favorite Setups: Fading the the extremes of a trading range, breakouts, and buying pullbacks in an uptrend and selling rallies in a downtrend. Best Trading Advice: Determine market condition (bracketing or trending) first and then adjust trading strategy accordingly regardless of your timeframe. Treat your trading as a business. For me, trading with the trend (retracements) is the easiest way to trade. Fading bracket extremes is psychologically the hardest way to trade because the market always looks like it's going to break through the bracket limit as it approaches it, but the more I take this trade the easier it gets. Breakouts are the most profitable. Fading the extremes is my favorite setup though because the market spends about 70% of the time in a range/consolidating.

Torero, thanks for the suggestion. I will start watching the ER2 to see how it trades.