YM Analysis for Oct. 24, 2006

[Soultrader 12]

Today we had a monster trend day with a %TREND at a whopping 79.31%. Breaking above the 12100 with ease, we saw significant volume on the daily chart.

 

If you watched the tape throughout the morning session, there was heavy buying pressure and no sellers at all. On a market profile chart we have a nice "P" structure with higher value placement.

 

Also considered to be a short covering, a "P" formation is something to watch out for. However, by looking at market conditions and the fact that we are in an uptrend indicates new market participants instead of old business.

 

My bias is still to the long side. The breakout point at 12100 will act as key support. Several other levels include:

 

12100, 12120 - 12130, 12170, 12200, 12250

[nasdaq5048 10]

What's a %Trend? How do u get that number? I mean what's the logic behind it? Is it your propiotary indicator?

[Soultrader 12]

Here you go

 

%TREND Definition

[winnie 10]

Dear sir,

I am new to this web but find it has a lot of useful information. I have a few questions to ask :

 

1) I have learned Market profile in a few months, read all the books about it. However I do not know how to use it in real time trading. I notice that you mainly use its VAH and VAL to trade. Do you just use it ? How about Single print and POC ? In addition, do you need to watch the Market Profile develpement in real time ?

 

2) Are you a scalper ? What is your daily goal and how many trade you would need to take evey day ?

 

3) What is your basic trading methodolgy ? If you trade only Support and Resistance , why you need to do homework before market open ?

 

I am sorry to bring you so much question

THANKS

[Soultrader 12]

Dear sir,

I am new to this web but find it has a lot of useful information. I have a few questions to ask :

 

1) I have learned Market profile in a few months, read all the books about it. However I do not know how to use it in real time trading. I notice that you mainly use its VAH and VAL to trade. Do you just use it ? How about Single print and POC ? In addition, do you need to watch the Market Profile develpement in real time ?

 

2) Are you a scalper ? What is your daily goal and how many trade you would need to take evey day ?

 

3) What is your basic trading methodolgy ? If you trade only Support and Resistance , why you need to do homework before market open ?

 

I am sorry to bring you so much question

THANKS

 

I use market profile to help me understand market concept. In order to apply it to real-time trading you need to start practicing with it. You will eventually feel comfortable applying it into your methodology.

 

1. I watch VAH and VAL as well as any cluster points. Do a quick search for "pivot point clusters" and you'll find a good amount of threads on this topic.

 

2. I am not a scalper. I like to place 2-5 trades a day at high probability trading points.

 

3. I do my homework to identify these high probability trading levels as well as understanding the language of the markets. The homework allows me to create a trading plan or a roadmap for the trading day. Trading blind is a sure way to lose.

 

What else besides do you use market profile? I ask because I think traders combine a set of methodology that do not work well together.

 

Soultrader

[winnie 10]

Dear sir,

 

Thanks for your reply. Now I am analysis the Market Profile after the market close and it give me the roadmap of which one has strong controlling. Like Tuesday, Monday's Market Profile tell me the buyer is in control. However I do not know how to trade in real time ? Where to buy ? Finally the anlaysis is works, it shows higher high on Tuesday. However I cannot win as I do not how to entry, I just sit there....

[winnie 10]

Dear sir,

If Market Profile tell you the buyer is in control. Will you still sell in real time ? do we need to have a fix view on the market ?

[Soultrader 12]

Hi Winnie,

 

I'm going to talk about the YM only since this is all I trade at the moment. On Tuesday, Oct 24, we had a small victory by the bulls as the markets closed slightly higher than the open.

 

However, I dont quite like to apply the last 30min action into the final market profile structure. If we take a look at a profile chart, the market is in complete balance with overlapping value from 10/23. We broke above the 12100 mark and after the second day above it we now see a clearer picture of the markets. It seems like there is price acceptance in this new zone.

 

 

I wouldnt necessarily say there is complete buying control.. more like balance. So based on this information what you need to do is develop a trading plan. Where is a good buying point? Shorting point? Should I play the ranges? Or should I play the breakouts?

 

Trading requires creativity but theres a limit to what type of setups you can develop. Also don't apply market profile word by word from the textbook. Play around with it and be creative.

 

Okay, going back to the chart. I see several opportunities. First: the 10/23 VAL looks yummy. Possible bounce? Or play the breakdown to 11200?

 

Second: Notice the point of control of 10/23 and 10/24. They are very close to each other. I like to refer to them as cluster zones. So if price bounced off the 10/23 VAL, I would look to exit at this cluster zone around 12155 - 12160.

 

Third: Are we likely to see price consolidate a little more? If so, fade the VAH or perhaps the 10/24 high. If not, play the breakout of the 10/24 high.

 

This is an example of understanding how to filter pivots. The 10/24 high is right above the VAH. In my opinion going long on the break of the VAH is risky.

 

This is just a basic method to develop a simple trading plan. Now do you see why I need to do my homework? Also dont think this is all I do. I analyze the daily charts and intraday charts as well. I just wanted to show you what I see just by glancing at the market profile charts.

 

do we need to have a fix view on the market ?

 

Bad idea... good to hold some kind of opinion but divorce your ego from the markets. You are trying to make money, not trying to be right. Stay flexible and trade as if you were surfing. Ride the waves and dont fight it.

 

Btw you can just call me James

 

Hope this helps.

[winnie 10]

DEAR JAMES,

 

Thank you for your help. It makes thing very clear ! By the way ,do you know how to get the tape reading information you shows in your video ? I don't have TradeStation and use Interactive Brokers as a trading platform.

 

Anyway you are very helpful

 

Winnie

[Soultrader 12]

Do you mean how to obtain the tape for your trading platform? Thats just a time of sales. All platforms should have it.