VOLUME or TPO's ???

[jimbo320 10]

Sorry if this is a bit off topic.

 

Am i right in assuming the followings.

 

The TPOC is the line of price, where 50% of tpos are above and 50% of tpos are below.

 

The VPOC is the line where the greatest volume traded.

 

Rgs,

[qewcool 10]

The TPO POC is the price at which the greatest amount of TPO has accumulated during the day ie the fattest part of the profile.

[clmacdougall 11]

Would it be too strange to consider that a volume based profile would be exactly whats wrong with trying to decipher and find trading rules for Market Profile?

It's a fact that the opening of a market and the end of that same day are times of incredibly high volume everyday. Already then, the volume profile becomes a strange endeavor, leaning more towards these high volume times then towards the truth.

Can we trust that the truth is found in looking for more information (ie volume) while discarding the past (ie rotation).

Because something seems simpler does not mean that it is. A rotation based profile evades the daily routine of the volume "U" formation. If you trusted in the volume profile, it would almost be akin to trusting the open or close of each day as the center of your bell curve, due simply to the height of volume at those times.

Thoughts anyone???

[BlowFish 10]

Trades are trades and they are reflected by volume. Would you rather know where the most trades took place or where price spent the most time? If the former use volume profile if the latter use TPO's. It is possible (but unlikely of course) for the POC to be at a level where a single trade for a single contract took place. The peak volume is by definition where the most trade took place so where the buyers and sellers where most in agreement. The PoC will exist where buyers and sellers are in agreement but it certainly wont necessarily be where the most buyers and sellers are in agreement.

 

Jperls excellent trading with market statistics threads have some discussions on this. They are compelling on various levels. In short volume profiles (and VWAP's with SD bands) are statistically relevant. TPO's are most certainly not.

 

if you want some arbitary 'lines' to trade against, sure, use POC, VAH, VAL, floor pivots, S1, R1, yesterdays mid point, whatever floats your boat . They are all decent heuristics but that is all.

[MightyMouse 12]

A good way to decide which is more important is to compare the reaction of price at the high TPO low volume overnight activity to the price reaction at the higher volume low tpo areas from yesterday or from earlier in the day session. Many times you will see that the high TPO low volume overnight areas trump the high volume low tpo areas in terms of reaction. I have concluded that the high TPO's are more relevant for my trading as far as the market profile is concerned.

 

I know a lot of people who only look at the market profile for the day session only. Why look at only a quarter of the picture? I took the Dalton course and know he refers to the overnight activity as "weak hands" which is truly silly since major trading firms all have overnight trading desks and most major independent traders treat the 24 hour markets like a 24 hour market and use the overnight to get in and out of positions.

 

Of course, you can certainly trade without using MP too.

[clmacdougall 11]

Thanks for the input guys. I appreciate it. I've got another weird observation to throw out there, please tell me what you think. Here goes!!!!!

"Volume is irrelevant!"

Here's the theory: Markets are 24 hr a day instruments. With this in mind all price movements are equal unless they overlap which makes them more valuable ( or at least more telling as places of value). The reason being that what happens around the world to influence price movement in the ES for example, is happening in various world stock markets and dollar relationships at potentially high volume but as most ES traders are asleep it is unfolding as low volume areas on the ES profile, fooling traders into thinking that certain price areas are not valuable due to low volume.

Notice that all night profiles are skewed towards the end of the night session as volume is picking up, making a volume based night profile completely and totally useless, and proving a rotation based profile as far more valuable.

The only incorrect assumption of Market Profile by Steidlemayer may have been his first, that TPO's are a proxy for volume, instead of possibly being more valuable and telling than volume.

Please let me know what you think.

[FuturesTrader71 10]

This is a lengthy thread and I haven't actual read through it, but I will agree completely with Omni's original comment. I use MP extensively (I used to compute POC moves in my head well before they happened...pretty geeky, but that is my approach). I must say, however, that I don't look at TPO's at all. I believe that, for my approach, it is a completely outdated look on the market. 30 min TPO's made sense when Steidlemeyer didn't have access to real time and accurate volume data (mostly floor trading at that time).

 

I look at volume profiles almost exclusively when it comes to assessing and using the auction as my main market-generated input. I tweet a lot on this subject and have held a couple of chats/webinars on it at various places.

 

I think the most important thing to take away from here is that MP or VP is NOT a system. It is simply a way of categorizing or organizing the market. It is what you do with that information that dictates which one suits your needs. Again, I find it easier to go with volume than TPO, but that is just a personal preference for the setups I trade.

 

Cheers,

FT71

[FulcrumTrader 10]

I have never cared at all how long price traded somewhere (TPO's).....but I do care is there any inventory resting at the levels I am tracking and who is in control of the order flow (Cumulative Delta).

[Frank 10]

TPOs are useful as a measure of imbalance.

 

So long as the bid or ask moved, there was enough volume to move price and that is what is most important and this is what TPOs approximate, the # of ticks of movement in X amount of time. A market can grind sideways on huge volume --- which would be low TPO counts.

 

This is an example of a useful MP concept -- just not in probably how most think of it -- high TPOs to me are not a 'proxy for volume' --- they are a proxy for 'imbalance'...

[clmacdougall 11]

This is a lengthy thread and I haven't actual read through it, but I will agree completely with Omni's original comment. I use MP extensively (I used to compute POC moves in my head well before they happened...pretty geeky, but that is my approach). I must say, however, that I don't look at TPO's at all. I believe that, for my approach, it is a completely outdated look on the market. 30 min TPO's made sense when Steidlemeyer didn't have access to real time and accurate volume data (mostly floor trading at that time).

 

I look at volume profiles almost exclusively when it comes to assessing and using the auction as my main market-generated input. I tweet a lot on this subject and have held a couple of chats/webinars on it at various places.

 

I think the most important thing to take away from here is that MP or VP is NOT a system. It is simply a way of categorizing or organizing the market. It is what you do with that information that dictates which one suits your needs. Again, I find it easier to go with volume than TPO, but that is just a personal preference for the setups I trade.

 

Cheers,

FT71

 

Would you care to let us in on just how you would specifically use a volume profile for the setups you trade. Thanks

[eurotrader 10]

Would you care to let us in on just how you would specifically use a volume profile for the setups you trade. Thanks

 

Seems like this thread has come to a sudden halt.

 

FT71 does a blog at Simplicity in Trading you might be interested in in which he has discusses what he does in detail. Also in Twitter.