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tony1d

Market Profile for YM

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I recently moved off the ES to trade the YM and as a user of the Market Profile i found it very useful on the ES for adjusting my trading style depending on whether price was within or outside the value areas. I was wondering if any YM traders use the market profile and if they find it effective.

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Hey Tony,

 

Yes I think you'll find that many YM traders on this forum use MP but then again its up to everyone's individual styles.

 

Check out the MP forum itself and the video section for some of Soultraders fantastic videos on MP.

 

Enjoy your stay.

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I wanted to try the YM due to better spreads and wider daily range. More of an experiment. I am finding mixed results so far. As far as MP, on the ES, when prices are in the value area, the locals are in control and will scalp within the V/A and basically take prices from the upper to lower range. Now at about every 1/2 hour, especially in the morning, locals tend to take prices above or below the V/A looking for other timeframe players to initiate / either accept or reject the pricing. If prices are near the upper or lower value areas, i look for major moves at this time, if no takers, pricing pulls back into V/A and usually tests the opposite end V/A loking to see if there is play at the other end. This was identified to me as the 80% rule which is if pricing is above or below the V/A and pulls back in (rejected), 80% of the time it will test the opposite end of the V/A. Trending days will usually occur when prices are outside the V/A indicating initiators are participating and non trending days are when prices stay within the V/A keeping the locals in control. Other timeframe participants are not present every day. I wanted to understand if the YM works similarly, my guess is not really as it is not nearly as liquid but i am not sure. Thanks for the responses.

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Liquidity doesn't have any bearing on a markets reaction to the auction process. All you need is more than 2 participants to create varying aspects of value.

 

The YM does respect the theories of Market Profile. It just needs to be treated more as a mindset rather than an actual indicator to trade off of. If one uses MP as simply a VAL and VAH to trade directly from, it won't work as well as if you think in terms of the auctioneer as price and the auction participants as the traders.

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Thanks for the response and makes sense. Only trades i sometimes take is the breakout of the Value areas looking for initiators. I'll scalp 1/2 to a point on the ES then if there is a rejection i'll play the reverse looking for the 80% rule but will take whatever portion the market gives me. Its a fairly high % play when i do take it. some days you get more than 1 opportunity.

 

Looking at Fridays YM 3 min chart, i plotted the VH, VL and POC from my pivots and it clearly shows several profitable opportunities, starting at 10:45am on a VH rejection prices pulled back to the POC then rose above VH and rejected at noon, faded to VL and swung from Val Low to Val high all the way into the close. It was almos a 30 point swing each time. after filling the opening gap lack of initiators kept prices in the Value areas all day. Very interesting to me. Any thoughts of this not as a trading system but as a potential methodology on non trending days?

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Thanks for the response and makes sense. Only trades i sometimes take is the breakout of the Value areas looking for initiators. I'll scalp 1/2 to a point on the ES then if there is a rejection i'll play the reverse looking for the 80% rule but will take whatever portion the market gives me. Its a fairly high % play when i do take it. some days you get more than 1 opportunity.

 

Looking at Fridays YM 3 min chart, i plotted the VH, VL and POC from my pivots and it clearly shows several profitable opportunities, starting at 10:45am on a VH rejection prices pulled back to the POC then rose above VH and rejected at noon, faded to VL and swung from Val Low to Val high all the way into the close. It was almos a 30 point swing each time. after filling the opening gap lack of initiators kept prices in the Value areas all day. Very interesting to me. Any thoughts of this not as a trading system but as a potential methodology on non trending days?

 

Do you mean the MP that is developping during the trading day? If so, when would you initiate the first possible trade (in the beginning of the day it quite meaningless I assume) ?

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No, i used the previous days YM value area and POC points from mypivots.com. Once prices fall back into the value area as the gap is filling, they oscillate all day long within the value area. Locals testing the high and low value areas looking for initiators. I used 13676 VH, 13656 and 13648 for POC and VL.

 

tony

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No, i used the previous days YM value area and POC points from mypivots.com. Once prices fall back into the value area as the gap is filling, they oscillate all day long within the value area. Locals testing the high and low value areas looking for initiators. I used 13676 VH, 13656 and 13648 for POC and VL.

 

tony

 

Tony,

 

if price is above VH ... would you initiate only long trades in that case?

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When prices are outside the value areas, say above and remaining there, initiators are active and a new value area will be developing. I do not trade the developing value area but i will tend to look for long trades. On a rejection back into the value areas, i look for the 80% rule for prices to test the lower value area or at least test the POC. Market Profile is not an indicator tool like MACd etc. It gives you clues as to the where the market may be going, it gives you strong S/R areas and potential trading ranges when inside the V/A and clues you in to whether the trading day will be a trend or non trending day. It most importantly tells you whether the market is in or out of balance, the further price is away from the V/A the more out of balance the market is and other timeframe players are in control. Inside the V/A locals are in control and market is more in balance. On those days I'll look more to scalp in between the lower and upper V/A with POC as my taking of partial profits. Been working well for me as part of my trading plan.

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i use mp on trending days,it shows where the pauses or temporary congestion will be ,the pov i call the nipple is always a pause area good for day trading,wait til it gets there to scale out

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I daytrade and use 133t charts for the YM mainly and 55t charts for entrys. Candle patterns become more unreliable as you go to shorter and shorter timeframes. i only enter trades when the 55t chart is printing a candle in the direction of my trade. I'll get my setups on the 133t and confirm using 13min and 60min charts to see whats going on in the longer term. I try to trade in the direction of the dominent trend based on the longer timeframes. Most of my losing trades are countertrend trades.

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