Dogpile

just to clarify, you mean 8 TPO's in the same day as a fat profile for that day?

hi alleyb, you say "the normal day turned into a Normal Variation Day (NVD) with 1521.30 and possibly 1530.6 as tartgets".... just curious what these numbers are? are those Fib retracements or something else?

ok walter, thx... I was just describing the high-level 'structure' of the day. Traded below previous day low and then formed low of day in period 'A' -- opening 30-mins. Traded up and touched 15-min 20-EMA in period 'B' -- 2nd 30-min bar. Very common to form a coil around lunch time (periods F-G) following a trend day. Note that you can draw converging trendlines and can see low 5-min ADX(14) -- see link to chart. Converging trendlines and low 5-min ADX describe a market that is coiling/balancing for an afternoon breakout attempt. Market breaks the coil in period H and trends up into the close. POC for Friday was 1919.00 --- odds are that NQ will test this level at some point on Monday. Has done this on 78% of days (tested previous day POC) this year. here is 15-min NQ.D chart. NQJune82007.jpg - Image - Photobucket - Video and Image Hosting

The S&P opened lower and traded up to its 15-min 20-ema. then formed balance at 1509.25 with low 5-min ADX (a coil). It broke out of this coil to the upside and trended up for the remainder of the day. NQ formed its POC at 1919.00 and closed on a price spike to 34.50. Will 'value' migrate up to price or was it just a 'price spike' which will form value significantly lower than 34.50 on Monday? There is 'Pinball Sell' pressure as per Rashke concept given todays high close. See the 'Street Smarts' book for the concept. There is a tendency to return to previous sessions POC which suggests a good flush down on Monday. As always, there is a very strong tendency to touch the 15-min, 20-ema. That said, the trending nature of the afternoon with strong close suggests that the near-term 'up auction' may not be over quite yet. For Monday, I will look for opportunities to short if suspect that the 'high is made first' -- for a play back towards the 15-min EMA and/or to go test the previous day POC. As always, I will remain flexible in the case of a strong trending environment to the upside. Was Friday morning the climax in the bearish bond market move? Sure looks like an 'excess low' could have formed as responsive buyers rejected the lower price (higher yield). Of course, its is quite possible some other shoe could drop to cause the next leg of downside in the equity markets? I don't really care, so long as we get some nice swings along the way. cheers comments appreciated

In a nutshell: The bond market got crushed and the equity markets had trend days down. The market tested up early on in the session, off an opening gap down but this led to the highs of the day being made during the second 30-minute bar. There had been momentum lows on the 60 and 120-min timeframes on Wednesday and the market made more momentum lows today. The market did test the 15-min EMA late in the session and this led to a good short play back down. Technically, the S&P's did touch 1513.50 on 6 different 30-min bars, my general guideline for a fat profile... but there is no hard & fast rule for what exactly makes for elongation vs fat profile. The fact that NQ, YM and ER2 all had trend days down seals it -- it was an elongated trend day indicative of eventual continuation. That said, the market does have extremely high odds of touching the 15-min 20-ema at some point tomorrow. I will look for 2-way action in the morning session as is typical after a clean trend day.

bonds in total crash mode today.... no long trades

10:15am update.... market gapped down but did 'open-drive' up. watching for buy divergences on next push down. I was expecting the global interest rate surge to cause opening hour weakness and instead market went up off the opening price -- probably a squeeze. but screws up timing of a clean morning reversal up to test 15-min EMA will have to monitor momentum of this push down and then look for 15-min 20ema test.

<<How do you calculate "Summation Ticks" ?>> the exact formula is actually confidential but you can follow it here on the homepage... Linda Bradford Raschke - LBR Group todays reading is extremely low indicating sell-programs have dominated for an extended period of time. This would add fuel to the fire if there were a reversal. In a big massive downtrend the sum-ticks will get run over. But as a short-term trader, I am less concerned with big massive trend moves since I care only about the swings and not about the 'close to close' move.

Personally, I like to combine Market Profile with other concepts so I can't really talk just about Market Profile but here is my thought for today: Market looked strongly like a trend day yesterday but in reality it was not. The market formed a 'b' profile, indicating likely participation of long-term, patient buyers. Elecotronic markets generally fall quickly. Forming a 'b' on a big down day is generally indicative of a market that may reverse (which may end up as temporary but useful as a trader). Re Today, Raschke says that there is a very strong tendency for the market to trade below the previous days low when the market closes with extremely bad breadth. Yesterday was the worst breadth since 3/13. The market appears to want to do that given globex action. Thus the market will be opening below yesterdays POC. There is a stong tendency to want to touch previous days POC. Buying Pressure. The 2-period ROC is a George Taylor type of gauge from the book 'Street Smarts'. It is buried and indicates there should be some buying pressure at some point today provided the market does not trade up first (which it isn't). Buying Pressure. I watch 'Summation Ticks' as an indicator of buy/sell programs that have become too one-sided. Sum-ticks are at an extreme today and due to flush up some today. Buying Pressure. Re Momentum: The market did make a momentum low yesterday using 60 & 120-minute oscillators. This calls for lower prices today. It looks like we will get that this morning. I will be watching for buy divergences on the next push down. Net Net, Expectation is for a morning reversal back up toward the 15-min 20-ema but will monitor the action closely to not get run over if the market does do the unlikely trend day (true trending days are quite rare). George Taylor would call today a 'Buy Day lows made first'. late caveat, the bond market is getting absolutely slammed today. The morning might have a strong move down -- usual reversal time is more in the 10am to 11:30am timeframe (EST).

fyi, yesterday was 'open drive' -- not open-test-drive...

my tradestation charts are always too big for this site to handle. got a tip for how to make it work?? I was under the impression that if you are at this site, I don't have to chart the obvious 'single prints' on the S&P futures. but I will gladly add charts if its easier for me to do than it is presently. The market formed a 'b' profile today indicating presence of long-term buyers or lack of seller conviction. that said, I did short the market very late in the day after NQ tested its 30-min 20-ema. The closing price was below the POC today but I carried 1/2 position home short in anticipation of potential drubbing of the Nikkei. The Nikkei has shrugged off the Chinese market meltdowns but the DAX showed major range expansion down today and I think odds are that Nikkei will drop hard tonight. If not, I will stop out at breakeven on the globex session.

the reason I think this is important is what it really means for the following day. in my view, electronic markets may go up either with hard, momentum based 'dogpile' action or they go up in creep mode as buy programs just hit over and over again. but electronic based markets are different on downside. they generally do not go down in slow, creep mode -- they generally just freefall quickly. we did have a day about 2 weeks ago where market went down really hard with single prints... then chopped around and formed a somewhat 'fat' profile (a 'b' profile) -- and then it had a 'price spike' down late in the day. but all this did was set up a great buy for the next day as it gapped up and ran hard -- you were offered asymmetric location for a buy late in the day on the hard push below the point of control. Now beware, you must have a good entry technique with a very reasonable stop loss point as the market did form a 'b' profile on the day before it crashed on February 27th. But having a good short-term entry/stop loss technique will get you out of the market when it breaks hard lower but will also allow you into the market for the majority of times that the market squeezes back up...

ok, trend day should be 'elongated' on 30-min. Fat profile shows lack of conviction in the directional auction. ie, today (June 6) -- S&P futures have touched 20.75 and 21.00 on 6 different 30-min bars. I call 6 touches as a 'fat profile' and say that the market is balancing if it touches the same price on 6 different bars. What do you use as your 'line in the sand' as to what makes for an 'elongated profile'/trend-day and what doesn't? (FTR, I don't base any trades on this directly, just context for other set-ups). I am not saying 6 touches means anything specifically, just seems like electronic markets have a tendency that when they go down --- they go down quickly... and so hanging around for 6 30-min bars is sign of possible longer-term, patient buyers coming in to nibble and offsetting some others long liquidation.

One difference today vs yesterday is that we did have good single prints this morning on S&P's. Also, German DAX down stunning -2.6% today.

just throwing it out there as an idea... could do some kind of online Traders Lab Market Profile chat room to discuss 'levels' or profile based patterns for the day.

notouch said: <<I think I can safely say it's time to drop the long bias for the time being. The next few weeks should be good for MP day trading.>> there has actually been some sustained initiative selling on the incredible German DAX -- for the first time in a long time (@FDAX or FDAXM07 on Tradestation)... a market with very high correlation to the S&P's.

working backwards yields a similar figure. RUS is trading near 850. forget leverage for a minute. a 1% return per month is 8.5 pts (would equal 12.7%/year). Assume 20 trading days and you need to avg 4.3 ticks per day to get there -- 5-6 ticks with trading costs. So I agree that 6 ticks per day for RUS is a good goal if you can do that with 'surgical strikes' -- not being in the market very much and can do it with reasonable stop-losses. Compounding 6 ticks per day is powerful on its own if you can do it with low variance. Then just add contract size and you can leverage returns while maintaining the same low variance. But this doesn't necessarily mean the profit target for a trade is always 6 ticks. You might have a 1 pt target for a set-up. Or a 1.2 pt target. Linda Rashke says their modeling shows that you should be targeting 0.5 to 1.0 ATR to optimize your results. Depending on the timeframe you trade, this probably isn't all that much. Another way to do this is to make sure to take 1/3 or 1/2 your position off for a small scalp (0.5 - 1.0 ATR) and then play the other 1/2 to 2/3 for normal profit goal. This might yield the 6 tick target and your risk in dollars drops exponentially if you can get a small profit at very high % on 1/2 your position. You need to also occassionally have big wins to offset those dead fat profile days when the market trades narrow range. But I agree that if you wait for a really choice set-up, they aren't going to come around much more than once per day -- per market you watch. Sometimes twice. Very rarely three times. Wait patiently. Get in with your surgical strike and get out. It might not achieve your trade target (which is likely higher than your daily goal) on the first entry -- but if it does, strongly consider calling it a day. Trading one time per day, per market is a beautiful thing.

My key trade today was very similar to Tin's so here is one I did late yesterday. This one is fun because it combines lots of different buy and sell pressures that I envisioned (and was proven right). Here was my thinking: 1. Fridays gap up push to new highs was a weaker push up than the previous strong move up on Wednesday to Thursday Morning. This is an obvious momentum divergence that can simply be seen by the slope of the lines drawn on the chart. This divergence often implies some sell pressure will enter the market at some point. 2. Fridays high also showed 'single prints' on 30-min chart (excess high could mean participation of 'higher timeframe' sellers. 3. Monday was a very low volume day which formed very fat market profile. Value was established near 1538.25 nearly identical to the previous day. This balancing culminated in a late day 'price spike' up to test the single prints from Friday. This test was on very weak volume. As in Daltons book 'Markets In Profile' -- there is a strong tendency for the market to test up above/below previous key pivots to test if any more business (activity) remains to be done there. Exceeding the previous peak/trough is very common... The fact that this late, low-volume price spike occured on very low volume and fell short of its strong tendency to exceed the previous excess high was a sign of weakness. I felt that the location for a short taken very late in the day could be held over globex overnight session for a play back down as sell pressures had been building for a flush down and this looked like good 'asymmetrical location' -- it was above well established value point and the lower high was being made on weak volume, which should be faded for a play back down. Here is the link to the chart: S&P+Futures+June+4+2007.bmp (image)

Tin, I did a similar trade but on NQ. Curious what it is specifically that you are referring to when you say "Rejection of VAL"... do you wait for some kind of push away from the VAL? are you looking for just a 5-min reversal candle? or are you shorting on the test of the VAL anticipating the rejection and just covering with a stop at a set point above the VAL if it continues up? thx in advance for any follow-up...

This thread is to discuss how you are applying Market Profile to actual specific trading. We are competing against advanced algorithmic-based program trading. Let's share some ideas.

<<but how do you determine how to enter a trade? >> yah, this is the hard part... here is a single timeframe of a mechanical method to demonstrate an entry technique. the entry technique is crucial but getting direction right is also crucial -- which MP certainly aids. NQ+week+of+June+1.bmp (image) notice that we are in a clear uptrend so 'lower lows' are all considered corrective ABC waves and are buyable. there are better ways to enter ABC's than this parabolic method used in the chart... but I drew the lines on there in any case...

<<I'm more inclined only to trade in the direction of the migration of the POC which for the past few days >> I see your logic in what you say about looking long at previous days POC. I have studied George Taylors technique and what you say is kind of consistent with that concept -- find meaningful pivots to use as guidelines. this is similar to what I am saying about the 15-min 20-ema. btw, Taylors Trading Technique has a lot to do with fading the multi-day migration of price. ie, look for a spot to short if up 2-3 days in a row and vice versa. Linda Rashke has made practical indicators based on his work. I highly recommend 'Street Smarts' the book for its practical interpretation of Taylor (particularly, the '2-ROC' fade and the 'Pinball Buy' chapters). <<I can see how you determine your exits but how do you determine how to enter a trade?>> This is an entire new thread but to answer in general, I like to use short-term parabolics for NQ --- NQ tends to swing a lot in spikey fashion so parabolics work well. doesn't work so well for other contracts that chop around a lot. it also has nice time component to it... gives your trade some room to work for a while and then tightens up. the best trades tend to work right away. once you get some initial movement in your direction, take part off and then use more discretionary stop...

nah, ABC is standard Elliott wave speak... markets often go up in 3 impulses (2 counter moves) for 5 'waves' markets often go down in 2 impulses (1 counter move) for 3 'waves' makes sense, first there are the pullback/bull flag buyers... when that test fails, they all get stopped out on a break of the swing low -- leading to a better set-up to test the highs. If that low is taken out -- then that is considered a 'trend reversal' (3 impulses down)...

sure. let me try a youtube video... YouTube - MP Concepts of Value Extended to 15-min EMA Thursday did not touch previous day POC --- but this wasn't unexpected since Wednesdays profile was 'elongated' (skinny)... showing higher prices were attracting more buyers --- value was trending up, not balancing. Concept though is to find good statistical tendencies (touch 15-min EMA, touch previous day POC etc..) through market profile 'concepts' in order to improve your pattern recognition (ie, morning reversal pattern, A-B-C correction, momentum oscillator patterns etc...) comments appreciated

nice example in todays (Friday 6/1) market... 1st play was to find a short set-up to play back for the 15-min EMA... it did a nice test of that level though missed it by a tick or two on first try... Nevertheless it was nicely profitable... then the next play was to find a set-up to play for yesterdays POC since yesterday had a real 'fat' profile (1931.25 on NQ, 1533.75 1534.00 on ES). Both touched their levels in ABC form down. Then the play was to look long.