Mind Over Markets Opening Types Question

[BrandonLG83 10]

I've been studying the book, Mind Over Markets, and I'm having trouble discerning between the Open-Test-Drive type of open and the Open-Rejection-Reverse. On page 66 is an example of the Open-Test-Drive open. It shows that in the E period, price traded right to the opening price then stopped. On page 69 is an example of the Open-Rejection-Reverse. I see that in the Z period, price traded all the way through the opening. I, at first, concluded that the fact that one was unable to traded completely through the open and the other was able to, that this distinguished the two typed from each other. However, on page 75, where it shows the summary of each, it shows that neither type trade through the open. From the last example, I really see no difference between the two except the Open-Rejection-Reverse has a longer selling tail. I know I'm missing something, so could someone please help shed some light on this for me?

 

Thanks in advance,

 

Brandon

[Soultrader 12]

In my opinion, they are fairly similar except the fact that in an open-test-drive, the other timeframe enters early to extend the ranage. On the other hand, other time-frame participants enter slightly late in an open-rejection-reverse. Please see charts below.

 

 

The chart above shows an open-test-drive. Initial balance was upset early in the day by D period. Notice how A period left a single print tail as well. Later on, price did not come back to test the intial balance. This presents strong conviction.

 

On the other hand, the chart below shows initial balance break in D period but a fall back in price into the initial balance in I, J, and K period. This somewhat resembles an open-rejection-reverse. The example is not the greatest because the day ended up being a double distribution trend day. However, the point here may be how price falls back inside the initial balance in an open-rejection-reverse pattern while a more convictional open-test-drive pattern will usually trade away from the initial balance without having to test back into it.

 

 

Perhaps someone else could shed us some light into this topic as well.

[BrandonLG83 10]

Thanks SoulTrader. It's starting to make sense now. It's more about the level of conviction that separates the two types. Thanks for the charts very helpful.

[Soultrader 12]

No problem. Good luck studying market profile. I had to reread that book several times before really understanding it. Pick up Steidlmayer once you read Dalton. Itll help expand your understanding.

[Dogpile 10]

The idea is just to gauge conviction off Opening Price. Extremely strong trend days often show Opening Price as Low or High of Day (Open-Drive).

 

Next is open-test-drive, small quick test but still strong conviction.

 

Next is open-rejection-reverse, test one way and drive the other -- good conviction.

 

The more action around opening-price, the less conviction --- you can call them both 'open-test-drive' -- and just grade the conviction based on how big the tail is, IMO...

 

On page 66 is an example of the Open-Test-Drive open. It shows that in the E period, price traded right to the opening price then stopped.

 

stopped? I don't see that. it shows that price traded down off opening price and then back above in period D. Period E tests opening price one more time and then launches up. it doesn't stop in period E.

 

maybe you can elaborate if I mis-interpreted what you are saying.

[BrandonLG83 10]

The idea is just to gauge conviction off Opening Price. Extremely strong trend days often show Opening Price as Low or High of Day (Open-Drive).

 

Next is open-test-drive, small quick test but still strong conviction.

 

Next is open-rejection-reverse, test one way and drive the other -- good conviction.

 

The more action around opening-price, the less conviction --- you can call them both 'open-test-drive' -- and just grade the conviction based on how big the tail is, IMO...

 

Thanks for the reply. I think I'm getting this now, but when you say grade it on how big the tail is, would a longer tail be considered stronger conviction or weaker? The fog is slowly being wiped away for me as the book says and I appreciate you guys baring with me here.

 

 

 

stopped? I don't see that. it shows that price traded down off opening price and then back above in period D. Period E tests opening price one more time and then launches up. it doesn't stop in period E.

 

maybe you can elaborate if I mis-interpreted what you are saying.

 

I misworded this. I really just meant that price did not trade through to the other side of the open in E period. I really haven't gotten a sense of how price would have moved within the profile. I couldn't tell if the E period price started above the open, traded down, tested, then moved away or if E started at the open then moved up from there. But from your post, I gather that it did indeed start above the open, tested, then move away, so that answers another question that I was kind of wondering.

 

I appreciate your help.

[BrandonLG83 10]

No problem. Good luck studying market profile. I had to reread that book several times before really understanding it. Pick up Steidlmayer once you read Dalton. Itll help expand your understanding.

 

Hey, thanks. I actually read the old '80s Steidlmayer book first. Now I'm working my way through Mind Over Markets for my second time. I already have the new updated Steidlmayer book waiting to read, but from the few quick glances I've taken so far, it doesn't seem to be all that different from the first, but I'll read it anyways. After I finish that, do you recommend I pick up Markets in Profile, or is that just a reiteration of what the above mentioned books teach?

 

I appreciate your help,

 

Brandon

[Dogpile 10]

when you say grade it on how big the tail is, would a longer tail be considered stronger conviction or weaker?

 

yah, I see how this can be a little confusing. the longer tail actually means less conviction in this context. in other places, it shows a period of 'higher timeframe' activity.

 

whenever you see strong 'range expansion off opening price' --- be on alert. this is especially the case if you 'gap out of value'.

 

the vast majority of days, price will trade back to opening price. so when it doesn't do this -- and instead 'dogpiles' away from opening price -- check to see how much activity there was on other side of opening price.

 

also, see this video on trading the first 30 minutes of the day:

 

http://www.cciclub.com/marketvu/linda-raschke-30mins.html

[Soultrader 12]

Hey, thanks. I actually read the old '80s Steidlmayer book first. Now I'm working my way through Mind Over Markets for my second time. I already have the new updated Steidlmayer book waiting to read, but from the few quick glances I've taken so far, it doesn't seem to be all that different from the first, but I'll read it anyways. After I finish that, do you recommend I pick up Markets in Profile, or is that just a reiteration of what the above mentioned books teach?

 

I appreciate your help,

 

Brandon

 

Theres some really good insights in Markets in Profile so it wont hurt to read it. Steidlmayer's book is pretty similar to Daltons but its one of those reads that may you go Ah Ha!

[BrandonLG83 10]

I thank you both for your help. Great video dogpile. I'll have to watch it again because it was a little over my head but very informative stuff. And thanks again SoulTrader. I just love this site and I'm following your Market Profile thread very closely. Keep up the great work!