ant

Hey duhhhh, I'll try to address your question... Too long or too short refers to inventory imbalances - a very important concept in trading. If an inventory imbalance exists, the market usually has to correct that imbalance before the market can continue moving higher or lower. The inventory correction usually occurs through a short squeeze, if imbalance is to short side, or a long liquidation, if imbalance is to the long side. As they say, sometimes the "market has to break before it can rally" and "sometimes the market has to rally before it can break." Also, think about inventory imbalances in different timeframes. An inventory imbalance that occurs on a long timeframe (see the May 5th high in the S&P chart on page 78 of Market in Profile) will take time to correct (the example on pg 78 took 14 days to correct) versus an inventory imbalance that occurs in the day timeframe (you may want to re-read pages 155-157 in the book). This is important because it helps set your expectations as to when the market may revert back to the trend. Without detecting the inventory imbalance, a short squeeze or long liquidation may fool traders to think that a new trend is beginning in the opposite direction, where the reality may be that once the imbalance is corrected the market will continue moving in its previous direction. Detecting inventory imbalances is an excellent skill to have as a trader and MP could help and so can regular bar charts. Things to look for are similar highs (i.e., markets that keep trading to a high or low but can't seem to break through) or looking for a b-shaped or P-shaped profile. There are other ways that these imbalances can manifest themselves, but they are a bit more trickier, such as what Dalton calls Stealth Short-Covering, which isn't covered in the book. One last thing, to help understand the concept of being too long or too short, think about how the S&P pit works with respect to the locals trading with institutions. Locals tend to get too short or too long many times. Obviously, this would be an imbalance on a very short timeframe. Hope this helps. Regards, Antonio

Hey Frank, As I mentioned in one of my posts, I'm not sure why you need to store the bar data in the array since you have the same data in the bar chart (i.e., the high/low of each 30 min bar), but you have the code in case you need it. My guess is that you won't need it based on what I think you're trying to do. You can calculate the mode as you described by revisiting the bars, but your indicator will run very slowly. I think what you need is a basic array that stores the number of TPOs at each price that trades. You can then use an indexing function to get the number of TPOs at a particular price. For example, array cell 1500 can hold the number of TPOs for price 1052, array cell 1501 can then hold the number of TPOs for price 1052.25, so on and so forth. Tams offered you some good advice above. Study the indicator he referenced. It describes exactly how to do this. Instead of storing bid/ask volume in the array, you will be storing TPO count. I would simply adapt that code to fit your needs - why re-invent the wheel? Tams, you da man when it comes to providing coding advice on this forum!

I would do any calculations you need as you process each bar. You shouldn't have to go back to reference previous bars. Since you're processing bars as you go, you really don't know how many ticks you have in future bars. You could probably figure out the first array subscript (i.e., BarNum), but to keep it simple, just specify the array subscripts as inputs and then define a dynamic array. If you get a run-time error about an array overflow, simply increase the inputs corresponding to the array subscripts to resolve it. Usually, you don't want to make arrays too big because you can take a performance hit, especially for real-time indicators on high volume days, but it doesn't sound like this is a real-time indicator so it probably isn't a big deal. Also, 2-dimensional arrays can get quite large. For example, your array currently holds 14 x 5000 = 70000 elements.

Perhaps not, but let's see where this whole discretionary thing takes me.

I disagree. I am of the opinion that traders with strategies that can be automated by computers do not have a lasting edge whereas discretionary traders that consider context and apply market logic do (i.e., traders with strategies that cannot be programmed or automated). Successful trading in the future will require creativity and pattern recognition - the sort of stuff where human beings excel over computers. I believe that discretionary traders have a better shot at competing in the markets, can better adapt to the ever changing markets, and are not in direct competition with the automated strategies run by institutions. A book that I would recommend on this is A Whole New Mind: Why Right-Brainers Will Rule the Future by Daniel Pink. I'm sure there are exceptions, but this is my general opinion.

Frank, Your use of static arrays is correct. Nice job so far. Here are some suggestions... Instead of using a different array for each bar, use a 2-dimensional array. For example, use Array[barNumber, Index], where BarNumber is the number of the bar on each day and Index is each price level per bar. You probably have use for the array in your indicator, but so far, an array is not required. All of the information in your Excel spreadsheet can be derived from the high and low of each bar. Keep in mind that the EL code is executed as each historical bar is processed, so you don't have to process all bars at one time. That is, you don't have to explicitly loop through all bars. Below is the EL code with the suggestions made above. Hope it helps.

Hi zdo, take a look at the following thread that goes into some detail on my trading strategy. In short, my trading style is very similar to what's described in Markets in Profile, which I've learned mostly from Jim Dalton. http://www.traderslaboratory.com/forums/f6/trading-market-profile-6605.html

First, I'd like to thank Brownsfan for starting a thread on an excellent topic - Exits. This post may appear to be a little off-topic, but I do think that it is relevant, and speaks to the importance of riding the big market moves. Holding on to a winning trade as long as possible is something that I work on everyday and is critical to my bottom line. If a trader is able to read the market through price action or whatever, why can't the trader use the same approach to determine their trade exit? Traders love to discuss entries, but then once they enter a trade, they relegate the outcome of the trade to the market - they either get stopped out, as opposed to proactively assessing risk and exiting on their own, or they exit at predefined profit targets so that they no longer have to think anymore as if the trader's job is done after the entry. IMO, once you enter a trade, that's when the real trading starts. The entry is important too, don't get me wrong, but the exit is just as important. You can have a great entry, but with a poor exit strategy you can still lose money on the trade. I am a firm believer that in order for a trader to be successful over the long term, a trader has to be able to ride the big moves when it is offered by the market. Otherwise, it will be tough to make any real money in the market. Here is how I view it. The outcome of any trade can be lumped into any one of the following categories: big loss, small loss, breakeven, small win, and big win. The breakeven trades don't hurt you. The small losses are offset by the small wins, generally speaking. The big losses hurt psychologically and financially, and could wipe out many winning trades - you have to avoid these! This leaves you with the big wins, and how the real money is made, IMO. They don't come as often as we'd like, but you don't need many of these to do well. Hence, you have to ride your winners! Obviously, this is easier said then done, even if you're able read the markets. However, if you can't read the market and you rely on technical indicators to trade, then it's going to be tough. Period. It's OK to use technical indicators as a tool or crutch provided that you understand the markets and have a sound framework by which you view the markets. Now, I am also a strong believer that just like we read the market to enter a trade, we should also let the market tell us when to exit. Here's why... If, for example, you use a 3 point stop or so in the ES, which really isn't a big stop at all most of the time, it'll be tough to make money taking 1 or 2 point profit (i.e., arbitrary profit targets) over the long run. I think that it's this mentality that keeps most traders around breakeven or net losers. I think it would be better for the trader to at least scale out right before support/resistance levels then use arbitrary profit targets. It's amazing how many new traders get fooled by system vendors that have a high win rate taking a point or less profit in the ES. That is not a viable long term strategy. No approach is going to be perfect all the time, but the focus should be on what works best over the long term. It's about the probabilities and the outcome of trading a large number trades over the long run, not the outcome of a single trade. I like to grade my trades by looking at the daily swings of the markets I trade and determining the percentage of those swings that was able to take out of the market. Anyway, those are my thoughts and my opinion on riding winners, which has shaped the way that I trade. Again, sorry for the off-topic post.

No, I can't. Market tempo or moving through support/resistance levels is not something that you can measure. It's a feel for the market that comes through experience from watching the markets. It's a feel that the market is not making sufficient progress in it's price movement for all the effort that it's putting in.

See attachments for ES trade examples for today (9/16) and monitoring for continuation based on profile shape and volume. An elongated profile and higher volume indicates odds of upward continuation. EDIT: One other thing about how I monitor for continuation. I also look at market structure. For example, the fact that a market is one-timeframing higher will help keep me in a trade longer. Also, if a market is moving higher like today, and we get a poor high (i.e., no selling tail), that would also keep me in the trade longer because my expectation would be for the high to be taken out.

Once in a trade, I monitor for continuation by using profile shape, volume, market confidence/tempo, and ability (i.e., ease or difficulty) of market to trade through support/resistance levels. I don't exit at pre-defined point profit levels. I gauge the odds of continuation and lighten up or exit completely if the odds decrease significantly based on what I look at. My exits usually coincide, but not always, with key reference areas.

I had suggested that in my first post. I guess great mind's think alike. The approach I was suggesting to Brown was to verify that the problem is indeed with the Netgear router and not the modem, for example. If I had his problem, I would verify the following: The router's WAN port was assigned an IP address. The attached and wireless devices were assigned IP addresses. The wireless and hardwired devices can communicate with each other. Determine if the ping requests (i.e., internet connectivity) from the router and PCs are failing at the router or at the modem. If any one of those steps fail, I would suspect the router and would proceed with the router reset/reconfiguration, and possibly downloading the latest firmware, as suggested by someone else. If all that fails, the router most likely needs to be replaced. If all of the above tests pass, then I would direct the attention to the modem and perform similar troubleshooting steps. Probably the first think I would try in this case is bypass the router, if possible, and see if a PC can reach the internet when directly connected to the modem or if a "ping" directly from the modem to a public website is successful. There are a lot of good suggestions here, but I think Brown needs to approach this systematically to isolate the problem. Brown, if you'd like, we can start a chat session on TL! and I can step you through these steps pretty quickly I think.

Come to think of it, you probably have a different Netgear router because mine does not support wireless devices. Let's try a few other things. Open a web browser and log into your Netgear router. I'm not sure what the user interface looks like, but I would think that it's not too different from mine. Under Maintenance, click on "Router Status" and see if it provides you information about the WAN port. If so, what is the IP address of the WAN port? Under Maintenance, click on "Attached Devices" and see how many devices are attached with an IP address assigned. Under Maintenance, click on "Diagnostics" and ping the IP address of Yahoo! provided in my previous post. Are the pings successful? EDIT: Just check that the WAN port has an IP address assigned to it, no need to tell me what it is.

Brown, OK, so all your PCs lose connectivity, wireless and hardwired PCs. Some follow up questions... What type of Netgear router do you have? I dug up a Netgear ProSafe VPN Firewall FVS114 router that I used to use. If that's what you have, I could try to step you through some other steps. From one of your hardwired PCs, open a command prompt window by going to Programs->Run and then enter "cmd" in the text box and hit return. In the command prompt window that's displayed, enter "ipconfig" to get the IP address of the PC. Once you have the IP address, go to the other hardwired PC and open a command prompt window the same way, but this time enter the command "ping <IP address of the other hardwired PC>". Are the pings successful? Next, do the same thing and try to ping a wireless computer. From the hardwired PC, try to ping 69.147.76.15 (that's Yahoo BTW). Were the pings successful? If you have a Netgear FVS114 router, I could step you through other stuff. Again, you may have a bad router, but thought it would be worth going through these steps to verify a few things. Let me know if you don't think this is worth the time.

Hey Brownsfan, It may be that you need to replace your router, but before you do, here are a few questions to try to narrow it down further. Just in case it's a bad ethernet port, loss of configuration, or an intermittent internet problem... If you already went through all this, just disregard. How do you determine that the Netgear router is hanging? Are you pinging directly from the router to the internet or are you pinging from a PC connected to it? Are all your connected devices losing connectivity (i.e., have you tried other router ports)? Run "ipconfig" from a command prompt and verify that an IP address is still assigned to your PC. Is the router getting an IP address from your ISP? Check your network connection on router. Can you ping between PCs/devices directly connected to the router? You may want to try to do a "tracert www.yahoo.com" to verify that it's not getting through your router, if you haven't tried it already? Have you tried restoring to the router defaults and reconfiguring? Hope this helps.

Well, this brings me to the end of this thread and I want to thank everyone who has taken the time to read it and participate in it. I don't think I could do much more in this thread to give you a better sense of how I use MP in my trading, which was my goal. As Jim Dalton said in Markets in Profile, "Structuring and reading market generated information via the Market Profile is about identifying opportunities where risk is considerably less than the potential reward." Those that simply use MP to trade blindly off of the value area, initial balance, etc. is missing the point of how powerful MP is as a trading tool. To trade that way, one is basically putting MP in the same class as trading off of pivots, fibonacci, moving averages, oscillators, etc. and the point of this thread would have been missed. People have been asking me what resources I would recommend for learning Market Profile. By far, the best MP resources that I have found to be most useful in my trading, and which have already been mentioned by others at TL, are Jim Dalton's books, Mind over Markets and Markets in Profile, and his website at Welcome to DLC Profiles. I have also learned from reading Pete Steidlmayer's books, Markets & Market Logic and Steidlmayer on Markets. Since Feb 2006, I have gravitated to anything related to Market Profile and am aware of just about everything out there related to MP. I think learning about different ways of using MP was an essential step for getting to the point where I am as a trader today. Since the beginning of this year, I no longer try to keep up with new MP educational offerings. It's amazing how much more time I have on my hands now and how much more simpler things are for me. James and moderators, please close this thread when you have time. Thanks. Good luck to all with your trading!

pappo, I appreciate you taking the time to post. As I've said before, this thread is simply about one trader's approach to the markets. It isn't about the only way to trade or the best way to trade. I simply wanted to highlight the use of MP in my trading. Therefore, this thread only reflects my thinking about the markets based on my trading timeframe. I try to post as many charts as possible so that readers can see exactly what it is that I'm seeing and why I'm making the comments that I make. The point I was trying to make is that from an MP standpoint, if you're trading value and not price, generally speaking, you do not want to short on a day where value is developing higher. Trading value and not price is one of my basic trading principles and is an important point to reiterate in a thread like this one, where MP is the theme. But I can certainly understand you justifying a short trade in Friday's market based on a different trading style and timeframe. I think that point was well made in your last post.

DaKine, the following charts should explain it. In an uptrend, you want to buy breaks first then sell into the rally. In this case, you have an active long position in an uptrend. In an uptrend, you do not want to sell rallies first and then buy the break because the market could resume its uptrend pretty quickly, not to mention that most of the profits is to the upside in an uptrend. In this case, you have an active short position in an uptrend.

Good answer. You made 3 good points. First, you said that you would not be looking to fade the market because we were trading above the balance area. You were more specific than that because you referred to the VAH of the balance area. That's fine, but I simply refer to the balance area extremes. Secondly, you said that if we don't trade back inside the balance area (again I think you referred to the value area of the balance area), the long trade had not failed. And lastly, you said that the destination for the long trade was 1013 and then 1016, which I also agree with. I was focused on 1013 because that was the balance area low of the upper balance area and on 1016 because that was the balance area high of the lower balance area (see chart). I would also add the following. I was not looking to short today because value was developing higher from the open and all day long. We never even came close to building overlapping-to-higher value, let alone unchanged or lower value. Since I trade value and not price, why would I go short if value is building higher? Secondly, I was focused on the two and a half day balance area and the market traded above it and stayed above it for the rest of the day. That was a breakout from a short-term balance area and that signifies change - we transitioned from a short-term balanced market to an up trending market. My strategy in up trending markets is to buy breaks and sell rallies, not sell rallies and buy breaks. This is an important distinction. This is also different than the strategy for trading balance ranges, where you fade the extremes. Thanks for playing!

In my opinion, one trade was all that was needed today, but I respect differences in trading style, especially if you're successful. I think successful traders intuitively understand how markets/auctions work. MP is simply a tool that records those auctions. You may have read in MP books that all markets that are financial in nature are governed by 3 principles: price, time, and volume. Price advertises opportunities, time regulates all opportunities, and volume measures the success or failure of those advertised opportunities. If a price is unfair to either buyers or sellers, price won't spend much time there because the other side would come in and either bid it up or down and that will usually coincide with a little volume being transacted there. Acceptance or rejection is gauged by how much time (or lack of time) price spends at certain levels and how much volume (or lack of volume) is transacted there.

Just for fun... what's the one thing you shouldn't have been doing today and why?

Today is a double distribution trend day. We are getting acceptance up near the highs and we have a very poor high. I don't think the high is in yet, but not sure if it will be taken out today though. The second distribution is usually a reliable reference and you can usually take a long trade on the first test of the lower part of the distribution where the single prints start. I like this trade as long as the poor high remains. The trade becomes invalid once price gets accepted in the lower (1st) distribution. The one thing I'm cautious about though is the low volume ahead of the holiday weekend.

You bet! I look forward to it.

Something else that I should have picked up on yesterday is that since the break to the downside on Tuesday (9/1), the market has been balancing and the market has formed a b-formation that is visible when you combine the previous 3 days (see chart below). This indicates a long liquidation break (old business) and not new money selling. Being aware of this prior to today could have provided more confidence in going with the breakout from the two and a half day balance. Here is an example of why it is important to recognize poor structure. The single prints from Tuesday were completely retraced. Question now becomes do we get acceptance into the previous balance area bounded by 1038.75 and 1013.25. Volume is light today given it's the Friday ahead of a holiday weekend.

I understand. Good luck with your trading!