"Back in 1986 Pete Steidlmayer wrote about needing to wait for the first 4.5 hrs..."

[Dogpile 10]

alleyb wrote: "Back in 1986 Pete Steidlmayer wrote about needing to wait for the first 4.5 hours in ES to pass before establishing a trade and as per usual I contend nothing has changed over the years"

 

I wasn't aware of this. Market Profile trading per Steidlmayer generally waited/waits this long before doing a trade?

[brownsfan019 17]

I don't use MP, but can't imagine waiting until 4+ hours have passed before placing one trade. That's all of the morning and into lunch...

 

To each his own if you can make it work, right?

[momentom 10]

Dogpile, I remember speaking to Pete and he said 30 minutes. He was looking for price rejection/acceptance, but that was over 15 years ago.

 

With markets of today, I often trade within the first 5 minutes if the setup is there.

[CCP1200 10]

We used to wait for the initial balance to take place before we considered trading the order flow imbalance out of it... so that would mean that you would wait an hour... but the entire subject of initial balance is not invalid because of the 24 hour markets.... when the market only traded in chicago, all the overnight orders were in the hands of the pit brokers and they would open the market to their advantage to fill the orders that they held... and it would take the initial balance to work out where the value in the market really was and any price movement out of that area was caused by order flows that came in after the opening... so we were really blind at the opening when you were looking for the condition of the market from the overnight orders... now we can see them because they traded and we can evaluate the exact imbalance that is offered to us on the opening...

[alleyb 10]

alleyb wrote: "Back in 1986 Pete Steidlmayer wrote about needing to wait for the first 4.5 hours in ES to pass before establishing a trade and as per usual I contend nothing has changed over the years"

 

I wasn't aware of this. Market Profile trading per Steidlmayer generally waited/waits this long before doing a trade?

 

 

Dogpile

If I may be so bold to interpret

what Pete was trying to suggest was to isolate the Initial Auction versus the Secondary Auction. He started out life in the Bean pit and the curtailed trading hours versus the Stock Indices meant that one had less time to establish the IB. Less time to isolate what he referred to as the Other Time Frame Participant or in terms of English the more dominant guy with the longer time frame / horizon.

He observed that in Stock Indices their (OTFP) influence was early (and patient) in the Initial Auction and therefore frequently was responsive in nature where they would attempt to influence the auction. This influence had far greater impact later in the day where anxiety was introduced into other traders who started to clock watch and therefore the OTFP had greater influence and by default less patience and more initiative in nature.

 

The interpretation is that one wants to be on the side of the dominant trader who frequently is the commercial and therefore identified as CTi2 in the LDB and therefore be in the direction of the trend.

Clearly within the 24 hour market one needs adjustment, flexibility and evolution. The issue for many is their need to trade and trade often and the degree of volatility, which really needs to be refocused and renamed velocity (maybe more about this another time), is forcing traders into the minimum trend almost in a copy cat version of The Algo. One should as in real life learn from the mistakes of ones peers rather than copycat. Stepping back from the voodoo chart as I have frequently referred to the 5 minute chart can produce a bigger picture scenario that identifies the 5 point trade rather than the 0.5.

 

Pete effectively suggested that less is more in terms of waiting for the trade that had setup and probability stacked heavily in your favor and this becomes more important within a world that is demanding instant gratification rather than tantric reward.