Recommened Books?

[156 10]

Hello,

 

I am interested in learning market profile but I am not sure where to get started as I don't know almost anything about it and I really need something that explains the basics. It would be greatly appreciated if you guys could recommend me any good book that will be suitable for beginners or any online resources!

 

Thank you so much for your help!

[omni2006 11]

Hello,

 

I am interested in learning market profile but I am not sure where to get started as I don't know almost anything about it and I really need something that explains the basics. It would be greatly appreciated if you guys could recommend me any good book that will be suitable for beginners or any online resources!

 

Thank you so much for your help!

 

Hi 156 -

 

the two primary texts i would recommend would be Mind Over Markets and Markets In Profile, both by Jim Dalton.

 

i would also recommend Steidlmayer On Markets.

 

Jim Dalton also has a list of resources over at the DLC Profiles site. one of the resources listed is for a presentation Jim gave on Market Profile.

 

i don't know how capably i can convey this to you now, but i would definitely recommend keeping a couple of things in mind as you go along. first, Market Profile is not all about entries and exits. second, Market Profile is about understanding market generated behavioral information. third, context is king; all things are not created equally in the market and studying Market Profile can facilitate that understanding.

 

i hope this is helpful and that yours is a positive journey.

 

take care -

 

omni

[BlowFish 10]

Market Profile section here. Cbot webite and Dalton are the usual answers to this question

[matinthehat 10]

I am a beginner and am reading Trading and Exchanges: Market Microstructure for Practitioners by Larry Harris. This book is amazing. It will not teach you about market profile, but it will teach you everything you need to know about the markets and trading.

[mike_ITL 10]

Hi 156,

 

I agree with Omni.

Just take the time to read "Mind over Markets" and "Markets in Profile" a couple of times (or more).

 

I would first go for the free CBOT free handbook, that will give you the basis, but you will have to be patient to go through the entire manual!

 

Nice avatar! (I have a GTV)

 

Mike

[DaKine 10]

If you've read both of Dalton's books does the cbot manual provide any value?

 

How would you rate steidlemayers works?

 

Thanks

[BlowFish 10]

Personally if I wanted to "learn MP" I'd read the lot it's not like its an extensive list. If I was limited to one I'd go with one of the Daltons though haven't picked up P.S.'s latest book. having said that I don't use MP!

[thomas95003 10]

Hi,

 

A great resource to really dig deep into the Market Profile concept is Donald L.Jones book Value-Based Power Trading, I am using it a lot and his website is of great help as well, my next book in line is Mind over Market it was written by James F.Dalton and Donald's son Eric T Jones. Tom Alexander has written a very nice small book called "Practical Trading Applications of Market Profile", his 10 day ATR potential concept is worth the reading, it is a very nice summary about Market Profile and how to use them. But my all time favorite is Value-Based Power Trading, the concept to use the overlay demand curve MP's like 3days, 5 days, 10days & 20days is a great way to pinpoint trends and breakouts in advance.

 

I am using footprint Bid Ask charts to read the orderflow in relation to Market Profile rotation points, TPO high and low volume points.

 

CISCO Futures

http://www.alexandertrading.com

 

Cheers

 

Thomas

[cleon 10]

Has anyone else read PRACTICAL TRADING APPLICATIONS OF MARKET PROFILE that can comment on it's utility?

[clmacdougall 11]

Got it a week ago and almost done it, a pretty good read, I've read every book and article there is on MP and this did add an ease and flow to understanding how to use other market generated info along with MP in order to look for good risk to reward entries.

Ultimately you are going to have to put the greatest importance on his key phrase " do the work for yourself."

He encourages self study and your own angle of applying MP. Did a free week on his website,and thought it was really good. Hope this helps.

[cleon 10]

It does help quite a bit clmac. Thank you for the detailed commentary. I enjoy Dalton's books but was curious if there was anything out there that discussed more tactical uses of the profile, and was updated to incorporate the increased activity in the 24hr markets, etc.

[swisstrader1 10]

I liked Tom Alexanders Book "Practical Applications to Market Profile"! It really helped me with my risk management to be more agressive with entries during the first hour (IB) and less agressive after the IB as about 2/3 of the time the High or Low is put in in the first hour.

A great trade f.e. is when you are in an overall higher TF downtrend and you trade up to a naked POC and you see sellers stepping in to take a short. If this happens to be in the first hour (IB) then that is a HIGH probability short trade with awesome risk:reward ratio because now its likely that the current low of the day will be taken out. As Tom stated in his book, 95% of trading days have range extension so if you caught the possible high of the day, which is not so unlikely with the set-up i descibed above, then chances are you will make a new low.

I use oderflow to manage my entries!

Other books I can recommend on MP are the Daltons books (Mind over Markets, Markets in Profile)! I havent read Don Jones, as they dont ship overseas :-( but im trying to get it somehow!

Hope this was useful!

[clmacdougall 11]

You can get Donald Jones book for free on his website. No need to purchase it.

[clmacdougall 11]

I've read alot of books on Market Profile

1. CBOT Market Profile Study Guide

2. Markets and Market Logic

3. Value Based Power Trading

4. 141 West Jackson

5. Practical Trading Applications of Market Profile

6. Mind Over Markets

7. Steidlmayer on Markets 1st edition

8. Steidlmayer on Markets 2nd edition

9. Markets in Profile

10. Markets 101

 

Only 2 were worthwhile. Firstly you must read "Markets and Market Logic" and then read "141 West Jackson (A Journey Through Trading Discoveries)". None of the others are as powerful or impacting as the ones I've mentioned. Hope this helps.

[swisstrader1 10]

You can get Donald Jones book for free on his website. No need to purchase it.

 

Yes, i found that out and have his PDF (unprintable) book now but thanks for sharing again!

[Kiwi 16]

Great recommendation clmacdougall.

 

I have read both of Dalton's books and found them interesting but I didn't find them really insightful - perhaps they are but they didn't click for me in a big way.

 

After seeing your post I got a copy of 141 West Jackson and can finally understand why people are so impressed with Peter Steidlmayer. Brilliantly insightful and adapting to the changes in the market - not the one trick pony that some self-professed trading geniuses and gurus seem to be but a great trading mind. I'm only at page 51 and really looking forward to the rest of the book.

 

Thanks.

 

 

I've read alot of books on Market Profile

1. CBOT Market Profile Study Guide

2. Markets and Market Logic

3. Value Based Power Trading

4. 141 West Jackson

5. Practical Trading Applications of Market Profile

6. Mind Over Markets

7. Steidlmayer on Markets 1st edition

8. Steidlmayer on Markets 2nd edition

9. Markets in Profile

10. Markets 101

 

Only 2 were worthwhile. Firstly you must read "Markets and Market Logic" and then read "141 West Jackson (A Journey Through Trading Discoveries)". None of the others are as powerful or impacting as the ones I've mentioned. Hope this helps.

[clmacdougall 11]

No trouble Kiwi, glad to be of some help. Please do try and read, "Markets and Market Logic," it really is a great read as well.

Unfortunately Steidlmayer is so smart that he found out what many followers of MP discovered as well, it's not at all as useful as it was thought to be initially. He has been quoted in one of his most recent interviews as saying:

"Steidlmayer says today markets don't actively form profiles each day because "imbalances," or directional moves, are now so overwhelming the market can't integrate them and form an efficient price by day's end as it did 40 years ago."

The interviewer went further to ask him' " What would you say to traders who are using Market Profile as a visual display on different charting platforms and are studying your original theories?"

To which Steidlmayer answered,"It's a pass-through cost (i.e., it won't be very helpful), not an asset. I'm building a database with Market Profile . Everyone should have their own database and understand the nature of the markets they're trading, which allows them to create opportunities instead of finding them - a big step."

Yikes, if the originator of Market Profile "Theory" no longer considers his "theories" to be very helpful than why should you? The truth is his theories are only useful when deciding upon the potential best timing for "your" setup but the rest is just nonsense.

Notice that his parting words in that interview places the onus upon the individual trader to understand the nature of the markets which they are trading, something which was outside of the scope of MP and some foolish bell curve for sure.

At least Steidlmayer was man enough to admit the weakness of his "theories" instead of trying to keep it alive for ego's sake.

[TheDude 10]

I've read alot of books on Market Profile

1. CBOT Market Profile Study Guide

2. Markets and Market Logic

3. Value Based Power Trading

4. 141 West Jackson

5. Practical Trading Applications of Market Profile

6. Mind Over Markets

7. Steidlmayer on Markets 1st edition

8. Steidlmayer on Markets 2nd edition

9. Markets in Profile

10. Markets 101

 

Only 2 were worthwhile. Firstly you must read "Markets and Market Logic" and then read "141 West Jackson (A Journey Through Trading Discoveries)". None of the others are as powerful or impacting as the ones I've mentioned. Hope this helps.

 

LOL. I have a break coming up so I thought I could use some reading material. I looked on Amazon for 141 Wet Jackson. $200 used. No thanks. Google - found it free on pdf in the 2nd-3rd item!

 

Good trade!

[TimRacette 11]

Ya Mind over Markets is where it's at for MP. Here's some other's that offer some great insight ( URL Deleted by Moderator ) MP is not looked at nearly as much as you would think. From a pit trader's perspective it's a great way to trade.

Edited February 7, 2011 by Mysticforex

[daVinciLite 10]

No trouble Kiwi, glad to be of some help. Please do try and read, "Markets and Market Logic," it really is a great read as well.

Unfortunately Steidlmayer is so smart that he found out what many followers of MP discovered as well, it's not at all as useful as it was thought to be initially. He has been quoted in one of his most recent interviews as saying:

"Steidlmayer says today markets don't actively form profiles each day because "imbalances," or directional moves, are now so overwhelming the market can't integrate them and form an efficient price by day's end as it did 40 years ago."

The interviewer went further to ask him' " What would you say to traders who are using Market Profile as a visual display on different charting platforms and are studying your original theories?"

To which Steidlmayer answered,"It's a pass-through cost (i.e., it won't be very helpful), not an asset. I'm building a database with Market Profile . Everyone should have their own database and understand the nature of the markets they're trading, which allows them to create opportunities instead of finding them - a big step."

Yikes, if the originator of Market Profile "Theory" no longer considers his "theories" to be very helpful than why should you? The truth is his theories are only useful when deciding upon the potential best timing for "your" setup but the rest is just nonsense.

Notice that his parting words in that interview places the onus upon the individual trader to understand the nature of the markets which they are trading, something which was outside of the scope of MP and some foolish bell curve for sure.

At least Steidlmayer was man enough to admit the weakness of his "theories" instead of trying to keep it alive for ego's sake.

 

Keep in mind that Steidlmayer tried (and is still trying) to make Market Profile into a mechanical system. The problem with that endeavor is that the markets are not mechanical. The failure rate of traders proves that point. On the other hand Dalton's "Markets in Profile" admits this fact and tries to help you with the current context of the market. Of course that makes trading harder since you have to increase your understanding. Most people don't want to bother with that.

[BlowFish 10]

Not quite sure about your logic DVL. Just because markets are not mechanical does not mean that a mechanical approach to trading a 'chaotic' system can not succeed. You just have to look at the published figures for program trades. Are you saying the failure rate of traders proves that mechanical systems don't work or that it proves that markets are not mechanical? Either way I don't really see it as a logically intact argument.

 

I should quickly add that neither am I a 'mechanical' trader nor am I a MP trader (which probably makes me eminently unqualified to comment ) but it seems to me that one of the cornerstones concepts of MP is to provide context to the market.

 

I wonder if you have come across the '80% rule'? First time I saw it it was used as justification for a pretty simple approach to trade VAH VAL in a systematic fashion, you don't even really need to know anything about MP. I once saw some pretty rigorous testing that strongly suggested that it could be used mechanically and profitably.

 

Edit: Must read 141 West Jackson, one of these days.seems several people enjoyed it.

[clmacdougall 11]

It's funny Blowfish, yourself and the previous poster used the same phrase when describing MP. You both used the word "context." The idea being that background MPinformation gives you an edge when trading forward. The last conversation I had on the phone with Pat Dillard, ""UrmaBlume", which was a long time ago, I asked him that very question, " does the market have context," just as quickly as I asked it he said"no".

MP falsely tries to put that chaos into context but in my opinion it fails miserably. Context has lost alot of people tons of money when they hold onto a concept when losing money until they have no more money left. In my opinion the closer you are to accepting randomness and trading srictly on probabilities the closer you are to being ready to trade.

[daVinciLite 10]

Well you have huge hedge funds like Renaissance (not sure of spelling) that have made money for 25 years using mechanical systems. So maybe I was being too general. But I am sure they have to change their systems as the market changes.

I was talking about Steidlmayer. Most people are out there trading mechanically and loosing money. Just stating that fact. If the 80% Rule is that simple, then other traders would pick up on it and that edge would be gone.

 

I have the pdf of 141 West Jackson street and will read it in a few months.

[daVinciLite 10]

I wonder if you have come across the '80% rule'? First time I saw it it was used as justification for a pretty simple approach to trade VAH VAL in a systematic fashion, you don't even really need to know anything about MP. I once saw some pretty rigorous testing that strongly suggested that it could be used mechanically and profitably.

 

 

Yea I heard about the '80% rule' from. the trading zone. at a free webinar. I started using intra day value area lines after that. Yesterdays ES range was contained by the previous days value area.

 

clmacdougall,

Trading context is trading the probabilities.

Edited April 1, 2011 by daVinciLite

[TimRacette 11]

Yea I heard about the '80% rule' from. the trading zone. at a free webinar. I started using intra day value area lines after that. Yesterdays ES range was contained by the previous days value area.

 

I know a guy, Eric Utley who trades Market Profile and 80% rule. It works well with wider stops and on a 30-min chart, from my experience anyways. The fascinating thing is that there are so many ways to enter a trade, manage a trade, and exit the trade, most of which can give the same result.