Using MP for Opening Hour

[john67 10]

I have been looking into various trading methods for awhile. I ran across VSA awhile back, and the premise of using volume to trade was introduced to me then. I have also discovered that MP also uses volume. Using volume as a factor just makes sense to me, which all the MACD, grid trading, etc stuff I had looked at before didn't.

 

Anyway, I can only trade for the 60 to 90 minutes of the day since I have a day job I have to go to after that. Can I realisticly use MP, or some derivative thereof, for entering and exiting trades during that timeframe?

 

I would think so based on what I have read, but wanted to get some input from others.

 

Thanks!

[rajatheroyal 10]

Day trading is also a profession.If u are not able to find time for trading then better not to trade.As far is Market Proflile is concerned it requires full attention and concentration regarding , anticipating market structure in advance and act accordingly.so if u can spend time then only think of trading.

Happy Trading;

[86834 10]

Personally I would say no. If you can only trade the first 60mins, then maybe you should look at swing trading. For example, i don't trade the first hour of the day as the information the initial balance gives me extremely important.

[Frank 10]

In my opinion, market profile is not a trading method -- it is used for context for intepretation of order flow.

 

That said, I think you opening 60-90 mins is excellent time to have to trade --- just have to be disciplined and not force trades just because you have to leave.

[TimRacette 11]

I disagree, if you trade the ES and 6E the highest probability times to trade are 10:00-11:30 EST (Euro closes @11:30). At the open I look at MP to see whether or not we are opening within or outside of value. If you're trading the 80% rule then you just need 30-mins of price action to determine whether or not the markets are likely to trade though value or not.

 

I do agree with raja though, even if you only trade a couple hrs of the day, there's a lot that goes on behind the scenes. I trade the Euro open & NYSE open.

[1johnson1 10]

IMHO- You are wasteing your time and money trying to trade. This is not a part time job. You would be better served to use that time learning to understand what a market is truly for and how and why it does what it does. If you really are serious about trading 90 mins a day -I and my trading acct. thank you

[steve46 12]

Ok then so much for the urban myth part of the thread....as for using MP, if you want to know whether it is a valid approach...yes...quite a few folks use it, including professionals although those of us who do use it have modified it somewhat from its original premise. For example I use a version of volume profile that I developed for my own purposes.

 

As regards you time limitations, actually you have an advantage IF you take the time to get a good education about how the markets really work. As you can read for yourself, the previous posters like good sheep, think you have to play during regular market hours to make money...actually...while you can make money that way (depending on your skills, education, experience) the regular trade sessions are not the place to find the highest probability opportunities. Not here to put on a seminar but when all the lemmings are leaping off a cliff I do want to suggest to a few that there may be a different course of action...lol

 

First, this is global marketplace...and the financial markets are interdependent. One should get a basic education about how this works....or find a trusted advisor to fill you in on the details....Second once you know how this interdepence works, you can decide which time frame is appropriate for your participation, Third, once you decide what time frame to operate on, you need a strategy...its just not that hard to figure out once you get a systematic approach in place...I use a combination method that includes a couple of ideas that work very well including "time based pivots (trademarked) , Volume Profile, and identification of supply and demand...once you have a couple of these tools in place, trading is MUCH easier, much less stressful and for once in your life, you have the opportunity to make money and have a life....

 

I hope some of this helps

[TheNegotiator 13]

Market profile and other techniques can and are applied to intraday and longer timeframe trading. I kind of agree with johnson in that if a trader only has 60-90mins a day and is not what some might call proficient, wouldn't that time be best used to learn rather than blindly trade? Also, as steve points out, markets are global. If you can only trade for 1hr because the markets of the country you live in are open while you are at work, either trade a different market(eg if you are in US trade Japanese markets) or swing trade over the course of multiple days.

[steve46 12]

Nice coincidence that we open so far above traditional MP "value" today.....so the obvious question is "what do you do in these circumstances"?....What Market Profile numbers do you focus on.....daily, weekly monthly....what? and that question is (in my opinion) one of the primary problems that new traders face when trying to find a useful application for Auction Market Theory or Market Profile....

 

Interestingly, on this day I used a combination (as I often do) of several data points including identification of supply and demand, Time-based pivots, and simple common sense as regards "the distribution"...I am managing a position at this point so I will have to be brief

 

In my thread "an institutional look at S&P Futures" I posted a couple of charts showing todays identification of Supply/Demand Nodes....As you can see, we had overhead supply 2 pts above the open....

 

Also, we have the backdrop of the weekly Time-Based Pivots (open at 1289.50, high of 1296.50 and low of 1287.75)

 

and finally the "common sense" issue relating to the distribution..Clearly the market is extended from the overnight Globex session....in that session institutions marked the market up from 1290...in the process they "got their 10 points plus" and after that frankly the rest is gravy (from a professional standpoint)....to me that means that there is an "implied short bias" on the open....that and the fact that we had supply only 2pts above, lets me have a nice, low risk, short entry at the open...

Edited March 24, 2011 by steve46

[TheNegotiator 13]

Interesting. Another way to look at things is if the market signals that there is no additional selling other than this overnight rebalancing and a bottom is formed, a push back higher would probably create the conditions for a probe higher some time this afternoon...

[steve46 12]

Kind sir or madam

 

If I may, the overnight action in the S&P futures was for the most part consolidation until just after the "global handshake" that occurs at about 1:30 PST in the USA...At that point the Europeans marked it up taking their 10+ pts. I don't mean to quibble, but I am paid to attend to these details....

 

From our standpoint (in terms of profit opportunity) the entry was several days ago when the market displayed what I characterized as an "obvious bias" (from my thread "trading adverse events")....At that time skilled participants had enough visibility to sell the market down, both on news and on the premise that one would, in the future have the opportunity to buy inventory back at distressed prices. Near the end of that thread I point out where the opportunity to buy became obvious, and how institutions would act, stepping in tentatively at first in order to lower the basis of their existing portfolios and then when they saw the first favorable news, to maximize their profit potential by selling risk as the market stabilized (as seen in the put/call and open interest data)....

 

As it applies to the individual, the message is always the same.....if you have skills and capital. Then in situations like this you are going to make money IF you can manage risk (and your emotional reaction to managing risk)...To the extent that people bought on the turn, they now have a nice profit, and I expect, absent more negative news, that it will probably continue...

 

On a final note, most by players took this opportunity to institute hedges to protect this recently acquired windfall profit....Generally speaking retail would not have the expertise or the capital to do that....so no point in going into the details...

 

Good luck everyone

[steve46 12]

Perhaps this chart puts my prior comment in better perspective

 

Although it is not al displayed in the main chart, the overnight (Globex) market consisted primarily of consolidation as sometimes happens when we have a trend move.

 

Just after midnight US time, a "Global Handshake" process occurs in which the European banks effectively take over from Asia. This process begins with the open of the DAX in Germany. The lower green arrow shows price at the open of the "handshake process" and of course one can see how markets were marked up through the balance of the early morning. Participants who traded this overnight move got 10 points.

 

Price tested overhead supply and retreated as expected, then the US market opened and with the backdrop of overhead supply only 2 pts away, it was obvious to many that we were going to retrace off the open. The market retraced until it hit another supply demand node and then we see what many professionals call a "peekaboo" move...This is essentially the pit taking price down in an attempt to activate resting sell order and to evaluate interest (to see if they can activate automated execution to sell). As can be seen there was no interest in selling at that point....all sellers had left the market...Automated execution was activated, followed by active participants trying to get on board before the train left the station....As can be seen in the chart, the market was then marked up another 10 pts.....(coincidence?)....

 

And now being somewhat sleep deprived I am going to sign off.

[bobajob 10]

Just a point - all this 'if you can only trade for an hour' then you're not committed.

 

What should he do - give up his day job to trade?????

Rubbish.

[MightyMouse 12]

Just a point - all this 'if you can only trade for an hour' then you're not committed.

 

What should he do - give up his day job to trade?????

Rubbish.

 

If you want to trade for trading sake, then sure trade for the hour. Go to the casino instead. Al least you have some smoking hot waitresses walking around serving drinks and sporting cleavage.

 

If you want to make money you have to be committed to trading your market when the move occurs which may not be when you are there for an hour. Almost all futures markets trade 24 hours with a small break. Likely, you will be left holding the bag for those who did take advantage of the move that occurred outside of the hour that you were there either by you providing liquidity for them to exit their trade, or your stop providing them with a better entry for the next move.

[TimRacette 11]

If you wanna be there for the good times, you've gotta be there all the time.

[abuguapo 10]

Ok then so much for the urban myth part of the thread....as for using MP, if you want to know whether it is a valid approach...yes...quite a few folks use it, including professionals although those of us who do use it have modified it somewhat from its original premise. For example I use a version of volume profile that I developed for my own purposes.

 

As regards you time limitations, actually you have an advantage IF you take the time to get a good education about how the markets really work. As you can read for yourself, the previous posters like good sheep, think you have to play during regular market hours to make money...actually...while you can make money that way (depending on your skills, education, experience) the regular trade sessions are not the place to find the highest probability opportunities. Not here to put on a seminar but when all the lemmings are leaping off a cliff I do want to suggest to a few that there may be a different course of action...lol

 

First, this is global marketplace...and the financial markets are interdependent. One should get a basic education about how this works....or find a trusted advisor to fill you in on the details....Second once you know how this interdepence works, you can decide which time frame is appropriate for your participation, Third, once you decide what time frame to operate on, you need a strategy...its just not that hard to figure out once you get a systematic approach in place...I use a combination method that includes a couple of ideas that work very well including "time based pivots (trademarked) , Volume Profile, and identification of supply and demand...once you have a couple of these tools in place, trading is MUCH easier, much less stressful and for once in your life, you have the opportunity to make money and have a life....

 

I hope some of this helps

 

 

Steve46...(or anyone who might have an opinion)...I've often wondered about the potential of pre-market trading as being a method of (simply) finding good market placement before the 9:30 crush. It seems that (I'm simply picking a number out of the air) say 30-40% of the time - if you were to simply 'go with' the current market action you'd be well placed through 9:30 - 10 crush. But then when best to get into the premarket action? (for instance I've seen things start at times as early as 3 or 5 or 7...with a definite bump (in volume) happening around 8-8:30. Does anyone (who would care to chime in) do this as a matter of practice? Any resources as suggestions where a 'lemming' like me might look for answers...any help is much appreciated...hope this is still on topic for thread...

 

g

[steve46 12]

Steve46...(or anyone who might have an opinion)...I've often wondered about the potential of pre-market trading as being a method of (simply) finding good market placement before the 9:30 crush. It seems that (I'm simply picking a number out of the air) say 30-40% of the time - if you were to simply 'go with' the current market action you'd be well placed through 9:30 - 10 crush. But then when best to get into the premarket action? (for instance I've seen things start at times as early as 3 or 5 or 7...with a definite bump (in volume) happening around 8-8:30. Does anyone (who would care to chime in) do this as a matter of practice? Any resources as suggestions where a 'lemming' like me might look for answers...any help is much appreciated...hope this is still on topic for thread...

 

g

 

Sir (or Madam) Mr or Ms Guapo

 

Based on your comment, I see you are able to think critically about this subject....you have it nailed...most of us try to position ourselves outside the formal open and close of RTH....We do that by looking for favorable entry based on time-based pivots, and by evaluating the local distribution (depending on your preference that might be hourly or say every couple of hours). Alternatively some professionals define a series of "critical time periods"..where they see other participants moving to position themselves prior to the open of various markets (this is done so that we can position ourselves in markets around the world)....

 

The most obvious example is the currency markets...where some of the best opportunities are found when two primary markets open or close and also at the close of any two primary markets... If we are talking about the US (the S&P Futures for example) then I suggest you look at the timing of the various economic reports in relation to the US open....Most of the time, those reports are released about an hour prior to the open....and often they impact market significantly...

 

Finally there is the subject of timing in the "Macro" scale...you may want to ask yourself, what do the big institutions do just prior to the end of a quarter (where we are right now) or at the end of each month (what some call "window dressing"), what kind of decisions do they make in terms of mobilizing capital?

 

Finally, I think your best resource is between your ears...your ability to think about what the other players are doing....take a look at your charts and ask yourself, what is happening just prior to the open...what is happening (generally on daily charts) just prior to the end of each quarter, end of each month, end of each week....in a couple of my charts (an institutional look at the S&P futures) I pointed out at least one example where on a Friday, the market rallied after testing the previous week's open....is that a coincidence?...well all I can say is in a trending market, I am willing to take that bet every time....

 

Its an important subject that retail traders mostly ignore...

 

Good luck to you

Edited March 28, 2011 by steve46

[TimRacette 11]

abuguapo-

 

I always put on my gap fill trade during the 1.5hrs leading up to the NYSE cash session open. That is I look to enter in the direction of the prior day's 4pm close. This has been one of my highest probability trades.