alleyb

A simplistic way to look for early identification of a trend day is the amplitude of the brackets together with the degree of retracement. For example in the Dow (or ym if u prefer) if the market has moved more than 34 tics in a straight line and the retracement is 3 to 4 tics then the chances of a trend day are increased dramatically. This was once expressed as being no more that 4 time brackets in a market that is not breaking rotation where the profile looks like a long and thin (as opposed to a fat) profile. Some like Don Jones at Cisco would state that you need to know where you are in relation to the previous 3 days value, others like Bill Duryea at IOAMT would suggest 5 days, others still like the Turtles would state look at 20 days etc. What all of these people misunderstand is that markets are dynamic and they are using static time intervals. You have to use the information given by the market and if that is 18 days rather than 20 so be it. IE look for the unfolding distribution (and this applies to virtually any time frame..... IE for those for example who would say but I can't scalp my 1 minute chart off a 3 day value etc take note). The reality is that trend days are frequently born out of a small early range frequently non trend in nature and not faciliting trade that then explodes into life and catches people off guard. In reality the market trends approx 22% of the time today rather than approx 12% 20 years ago brought about by computer algorithms that only seem to know the go with the momogogo momentum breakout

............yes.....

I think its time I responded to the comment of Traditional MP vs Modern Those that refer to me as Traditional MP have little concept of what it is that I do or preach. Many people believe that Tradional MP theory has little place in the current modern environment. But that is almost to hark back to the mid 1980s when the floor traders believed that MP might take away their edge. Nothing could have been further from the truth for you cannot mess with the bell curve and its mathematical/statistical functions. Yes I take the so called Traditional MP theory and I have since the day I met Pete back in 1987 adjusted it and developed it to a modern advanced and evolving world where many of the concepts that were taught have been adjusted almost dramatically. EG: the descriptions for analyzing the day type need to be re-worked or what consitutes a day and where it begins and ends (and I have done so in both these cases made dramatic adjustments and much more in other areas of MP). The original concepts had little in the way of entry let alone exit strategy and even less taught about risk managment. All of these are alive and evident in MP if one digs sufficiently under the surface. Yes it is a tool for organizing the data but in that respect as a Data Warehouse the information extracted can give probability scenarios which are still valid for P/L in excess of 80% in Stocks and 90% in Bonds. Percentages that Pete suggested back in 1989 when the 2nd CBOT Handbook was written were possible but he additionally stated that if you wanted a systematic approach by rote then you were almost doomed to failure. Now again imho I believe that those words are a bit strong and over the top for it is normal that the human requires rules. Rules = understanding = justification = measurement. To state that Tradional MP has little bearing/influence/out of date and many more adjectives does not understand that the original 2+2=4 can be adjusted to 2*2=4 or 9-5=4 or 16/4=4 or -6+10=4. ie you cannot screw with the numbers and it is through evolution and adjustment that the Tradional MP is still a valid tool. The Data Warehouse being a dynamic tool is frequently the downfall of many for they approach trading from the basis of wanting it all now where they have only skimmed the education and they use references like "I trade the VA" which is a bogus concept for surely the concept is to buy below VA and sell above VA. Even Pete Steidlmayer wrote something like that somewhere and is that not the basis of all auction market theory whether that be the price discovery of an airplane ticket or the purchase/sale of cars/houses or trying to get that extra tomatoe thrown in for nothing at the green grocers. Addendum- (Yes there is a previous CBOT Handbook version written in 1985 which I have and which imho is not just a much easier read but a better manual) -

Capital Flow 32 was developed from 1998 to 2002. It Uses Market Profile™ as the input and allows the trader to "dial in" parameters for the timeframe to be traded. This creates the code based upon the degree of horizontal and is represented by colored balls and vertical lines representing market activity. The segmentation and coding generate a directional bias together with a volume overlay database. This then is used to harness computer scanning power across markets for the best opportunity and therefore the generation of cash flow. The database is therefore using the input to scan for every available opportunity based upon that input criteria. A list is then produced with a bias and weighting representative of the cash flow. It was with this in mind that for over 10 years Pete Steidlmayer has been trying to get an exchange interested in what I would refer to as MP+. IE a basket of product to be traded as a unit. EG: 100 IBM Plus 1 SoyBean plus 1 currency Plus 1 Crude contract. The concept then would be relative performance for not all securites move vertically in the same degree nor direction The software is of use to those A. that can afford it for it is an expensive lease B. running say a fund whether CTA or Hedge Fund C. those that wish to run a dynamic multi strategy multi currency multi product global macro approach. I could post the help manual but A. its 3.69mb in size of a pdf file last updated in 2005 running to 128 pages and B. No part of the manual may be reproduced or transmitted in any form, in part or in whole, by any means, electronic or mechanical, for any other than the lessor’s personal use. If you have additional questions please fell free to ask and I will endoeavour to do my best to answer but in summary the CapFlow software is really an institutional tool

The point about the the first hour of trading is amongst others: To establish early direction from the flow of orders generated that then indicates the movement of value in relation to prior levels. The concept is that the longer term trader may try to influence (or maybe be influenced) by the the value area movement thereby generating trade. Volume therefore dictates the degree of force or power behind the movement. The need to trade is a powerful argument for many as the only guys who need to trade are those off-side, those who are obliged to follow some form of benchmark, those who need to hedge up some other position whether because they are offside on that or wish to lock in some form of arbitrage. The IB therefore serves many purposes in forcing the maximum number of participants into the trade all with different time horizons and wishes, wants and of course needs to trade. Thereby the short term guy / day trader can try to nickel and dime some form of advantage from the long term guy / institution by correctly assessing the ebb and flow and the IB helps establish short term micro trend. Pete Steidlmayer wrote (and I precis for brevity sake) that in the commodity markets it was necessary to operate early IE at the open due the small number of hours traded but in Stock Indices one would have to await as much the first 3.5-4 hours to establish the ture IB

It might interest some to know that the first hour of trading was established a very long time ago before Pete even came up with the concept of IB by UK fund managers especially in the Gilt market which used to have the local hours of trading from 10-5. They would await the usual elevenses sherry and biscuits with the Bank of England visitation that occurred every morning but at a different discount house and susbsequently Bank/Broker-Dealer. Many things would be discussed and from this the term nod and wink came about for the The Old Lady as The Bank was referred to would sometimes suggest that a particular hous position may need re-thinking. The Fund managers therefore awaitied the first hour for this visit before making trading decisions. There are other colourful stories about the Government Broker for example that when a Tap issue (New borrowing) was to be announced would walk into the Stock Exchange and if there was a slip of paper showing from his suit ticket pocket then there was going to be an announcement and the boys at the Gilt pitches would have time to adjust positions before the Goverment Broker arrived at the pitch where he would declare the details of the Tap

Marketguy . Many thanks for the info re JPJ - wish him speedy and full recovery and many thanks for the kind words All I can say is that I first met Pete back in 1987 and have been an avid MP fan ever since. JPJ applies the methodolgy in the very way that MP is meant to be analyzed and traded and I have nothing but high regard for his work. The issue that most people have in all fields of trading not just related to MP but tends to be about leverage and risk management. MP is a data warehouse that if mined correctly will give you not just entry but exit levels together with risk management

I have no wish to advertise here but as someone else has posted the link I will confirm it as being correct. My website is a Membership site and full details are available via the site. On another note I hear JPJ is a little under the weather right now and when I aksed whether it was just a cold or something more serious I received an ambiguous answer so hopefully the old fellah is doing ok

Soul Trader. Thanks for your kind words

Market Profile works on any product whether that be Stocks, Bonds, Futures, Spreads (whether calendar or inter-market) even options as well as multiple baskets (eg: 100 IBM plus 1 Gold contract plus 1 SoyBean contract plus 1 Currency contract etc) Being a statistically based product creating a Data Warehouse one can then extract probability scenarios which naturally can be applied to all products for in essence the stistical variances plotted on the bell curve have been used since.............

Each decade has its own market characteristics. I’ve, therefore had to make many adjustments in my trading style and approach over the years. Moreover, in order to continue trading successfully I’ll have to continue to adjust since market change is ongoing and inevitable. The ability to adjust comes from thinking for myself. In other words, using sound market logic rather than following formulae by rote or automatically accepting the conclusions of others. You can’t respond mechanically and expect to succeed on a regular basis. In other words, while you might be able to beat the standard probabilities in the short run, but the odds in favor of that happening in the long run are infinitesimal. There is a reasonable chance, for example, that a coin tossed in the air five times might land heads up five times in a row. However, as you increase the sample size and toss the same coin 1,000 times, the probability is that the nickel will land heads up closer to 50% of the time, not 100% as it did in the smaller sample. By developing a logical approach, it is possible to identify data parameters that work 60 times out of 100 – sometimes 90 times out of 100. The key to using these parameters effectively is thinking about the conditions in which they will succeed. You can separate the winning situations from the losers more often than not when you don’t react automatically. By way of explanation, the characteristics that classify daily market activity – Normal, Trend and Non-Trend – are defined data parameters. Once you recognize the characteristics of a Trend Day, for instance, the appropriate response is to go with the market. This strategy won’t work on normal days because normal day’s activity creates a different kind of opportunity which requires a different approach or response. Consistent performance depends on LOGICAL DEDUCTION – About WHAT is ACTUALLY happening in front of you on the screen. That’s why the only effective tools in today’s uncertain investment climate, in my opinion, are those that DON’T treat all process and opportunities as equal or alike. To evaluate the situation developing in front of you on the screen realistically, you need experience gained in the marketplace and tools that DON’T rely on happenstance.

I could elaborate further on JPJ trading in that I am aware of his style and teachings and I have great respect for the gentleman but feel that it would be wrong to comment more than that yes in essence his teaching follows those style of strategies mentioned.

I apologise I never got around to replying to the setups referred to above. The setups originally appeared on CQG's website back in the early 1990s are and were the result of extrapolating the information from Dalton's Mind over Markets and Pete Steidlmayer's various books neither of whom give genuine trading setups and triggers and neither of whom give exit strategies. The strategies mentioned are standard, in that I mean a good place to start and if followed likely to produce consistent positive results. What they don't tell you is the exit strategy nor the risk management that is so necessary for long term success

The 30 year or Long Bond or T.Bond has always had a 90% plus MP or Market Profile correlation. The bond markets were in essence the first guys to really take to MP back in the 1980s and I don't know anyone who trades bond markets again whether that be US, EU, UK or Japanese as these are primarily where the main futures markets are who doesn't have a MP chart up all the time. as for saying that the 30 yr is slow I think that is a matter of being in the eye of the beholder and suggests something about their trading style. obviously taking different data sets from the Data Warehouse will produce slightly different results. For example taking S&P since inception in 1982 then the daily ATR is 9.44 per day but taking just 2008 then its 30.56. Doing the same excercise in the T.Bonds starting again with inception since 1977 the daily ATR is 24/32 but taking just 2008 then its 33/32 (1-1/32). The Nice thing about Bond markets is the ability to trade the curve postioning 2 year vs 5 year vs 10 year vs 30 yr in the US and Europe where saily volumes are almost obscene. Note that the T.bond will move from being traded in 1 tic increments 1/32nd to half tics from March 3rd. Likely impact I am sure will be higher volumes as the flipper brigade spin their wheels looking at the 5 minute voodoo chart even more

the LIBORS if spread on an inter-market basis mixed in with opposite risk trades in bond markets also offer interesting alternative strategies to trading currencies outright but again this is an area that one could almost write a book on. What I am trying to say is that to their are many different ways to create a currency trade without using the FX

where do I start for what can become a very lengthy subject. Any LIBOR based contract whether Short Sterling, Euribor, EuroDollars, EuroSwiss or 3 month Yen of which there are several genres are primarily the domain of the big banks but as previously posted really just about any type of institution is willing to be involved. This is still despite the electronicmogification of the marketplace still a product where the local (albeit upstairs now) is still a major player The volumes transacted are huge and the capability in the LIBORS to be able to trade the packs (groups of 4 quarterly contracts) to create yield curve and TED spread strategies adds to the appeal. The major influence in options these days is likely the hedge funds. The purpose of the product is to offer a hedging capabilty against or for a directional move in short term interest rates but of course like any tradeable product the spec are just as likely to be involved as they try to anticipate the Central Bank's next move.

As time moves on so things evolve and change It is right for people to be skeptical, it is right for people to challenge but we live in a world where there is a cost of doing business and the old adage of there is no free lunch comes to mind. Yes it is true it was discussed between Billy and I in the fall of 2007 to be partners as it was referred to above. The idea was for me to merge my website into his. It became clear within a couple fo days of those discussions that that was never going to happen and to date my relationship with Billy and IOAMT stands as it was originally posted. Nothing has changed. I do not get remuneration from him but he does afford me the luxery of particpating in his room and allows me to freely post details of my website. Much in some respects as when I particpated with John Carter prior to writing Chpater 17 in his book Mastering the Trade. Billy is in terms of his day trading purely about reading the tape. Yes you can dress it up as Auction Market Theory - For that is the title of his website/institute - Yes he does bring in an element of MP and other things but because his focus is narrow IE he only trades the S&P there is then an (imho) overly concentration on the one product. My website is the largest source of MP materials collated in one place. I spend 3 hours per day updating my site for it is also a global financial portal and for that the remuneration/subscription is the equivalent of a part time job at less than the minimum wage. I really do not mind whether people join my site or not for let me say first and foremost I am a trader who trades for a living. As to whether anyone makes money following Billy that surely is not the criteria for within trading following other people and their calls is not the way to success. Surely it is a case of extracting the best from here there and everywhere to marry that infomation up with your own and then to develop a style and risk management that is yours. From this the concept of value comes to mind which has to be described as being in the eye of the beholder. Value for and of the information that is presented and evaluated. Value for the result that it produces. IE Value is different to the same person at different times for different reasons much as it it is manifested in the market place. The whole basis of MP is that the information as collated is in reality a data warehouse and from that warehouse one extracts probabilty scenarios to aid in the decision making process to be on the side of the dominant trader. Billy presents that in a form of the Bid/Ask volume analyzer that he reads and discusses and explains constantly throughout the day talking about scenarios that are likely to unfold in advance. What is clear is that Billy is developing a database that imho has limitations but it is a good start and may in time prove to be a good compliment/addition/update to Don Jones's cisco-futures. The reason why I say it has limitations is because Billy's database does not have the capability of being interrogated. IE it is a static database not dynamic I started this reply with the concept of making sure the record was correct re my association with Billy and I apologise for the lengthy and mild deviation in the discussion

I will reply during the Christmas period. In between time 6 trading days to go so I wish everyone haPPY HOLIDAYS

tasuki on my website under the MPCourses you will find at the bottom of the page MP101 MP102 a copy of Chapter 17 a chapter on MP that I wrote for John Carter's book Mastering the trade and another document entitled What is MP.

as for PVPs there is nothing unusual in that. High volumes have always been the ending and starting of distributions in Stocks and Low volumes in Bonds. since 1982 and 1978 respectively. Prior PVP levels will always act as a magnet and is in fact not the area to trade at as the only advantage is for the broker. PVPs should be viewed as a get out jail card unless of course your objective is to scalp as for some it is for minimum trend returns

fair enough re your comment on 40k as a tipping point in volume. Re: ES Take yesterday Nov 13th and look at the break down of volume at price and one can see the buying that came in seems to have been roughly 100k net with an average at 1478. Then a quick glance today Nov 14th shows roughly 50k were sold today at an average of 1476 leaving the buyer net long 50k average 1480. So what apparently happened was that the buyers became a little exuberant at todays highs and were forced into chasing their tail. No doubt you will say this is conjecture or subjective and maybe there is an element but if you look at sells vs buys and look at statiscally high levels of liquidity then you can see that yesterday there were several instances of 20k on the way up per price but that today it was a maximum of 14k at one price but most were 10k or less. There is still some selling to be done whether on weakness or on a rally

Bryan thanks for your kind words re the Videos and I hope that if you have any questions then please drop me a line

OAC. Vendor is not a catorgary that I would place myself in persee. I trade for a living first and foremost but I also run a subscription member financial portal website which specializes in MP. From my website I teach/educate on Market Profile and unlike others I will give you not just the entries but the exits as well including how to originate both short, medium and long term strategies. I have been doing MP since 1984 when I first met Pete and am considered by some to be an expert on the subject. I offer my members on-going support and although I place a huge amount into the public domain I also consider that it is only right and proper that as an expert I should occassionally be remunerated for my expertise and time. The difference between someone like JPJ and myself is that he offers a narrow based teaching on a single product whereas I cover the whole spectrum. Free is great and I urge all to take as much advantage of free when it is available but I have found that free means a slow track. One might eventually arrive in the instant gratification world that we live in that properly researched paid education is not just a pre-requiste but also a fast track way to learn. After all I elaborate on the my earlier post if you could have the opportunity for total freedom presented to you together with untold riches would you not grab it with both hands therefore someone like JPJ is a cost effective way of gaining that expertise. as for John Carter and Chapter 17 it is a fact that I wrote the chapter just as I did the CBOT MP101 and MP102 videos which now are only available from my website to all comers. Some things in life are free but other things must be paid for. I don't feel I need to defend myself in anyway for my own track record goes before me with absolutely full disclosure and archives and I still have friends from the 1980s who continue to state that they are amazed at the accuracy that I can deliver on a consistent basis. Unfortunately I have not arrived in life (post 2 ex wives and 2 expensive Daughters ) at a stage whereby I can be philanthropic but to date all of either my students/members have found that I give good value for money and that is the measure by which all things are evaluated.

Does anyone have any material written by Charles Drummond and/or that they can share or point me in a direction to find it? looking for Charles Drummond Advanced P/L and Charles Drummond P/L Labs

The only thought I have on volume at a price before a break out occurs is that markets are dynamic and evolving with increasing volume. One day next year I fully expect ES volumes to trade 8 million in one day. Don't get stuck in eternity and also understand how volume changes at moments like option expiry, roll-over, day before/after market holidays plus the traditional so called holiday months like August or December. IE I am saying a degree of flexibility is warranted rather than pure precision.