Price Acceptance / Value

[MightyMouse 12]

The POC of high volume node is the price or set of price points where there is the most disagreement.

[BlueHorseshoe 10]

How does that make the mean dynamic? Simply because it moves? It moves almost no differently than a MA or an EMA. You are drawing your context of the market from the past and in my opinion you want as little of that as possible in order to define the predictable lean/nature of price movement in the near future.

 

Yes, because it moves, or changes. That would be my understanding of 'dynamic' (ie as an antonym to 'static') - did you have a different meaning of 'dynamic' in mind?

 

While I agree that there are pitfalls and limitations to basing market decisions on the past, I think that's about the best that we can do. I know that I can't predict the future as you seem to suggest, otherwise I would forget about trading and just buy a lottery ticket this weekend. So I'm very much of the opinion that predicting the nature of future price movement is a fool's errand, and that the best we can achieve is to trade according to historical probabilities. In the markets I trade, these statistical probabilities favour a reversion to the mean.

 

I should add that I am using the term 'mean' in a very loose sense now. A better description of this belief would be to say something like 'a market is more likely to head back where it just came from than to explore new price territory'.

[clmacdougall 11]

Yes, because it moves, or changes. That would be my understanding of 'dynamic' (ie as an antonym to 'static') - did you have a different meaning of 'dynamic' in mind?

 

While I agree that there are pitfalls and limitations to basing market decisions on the past, I think that's about the best that we can do. I know that I can't predict the future as you seem to suggest, otherwise I would forget about trading and just buy a lottery ticket this weekend. So I'm very much of the opinion that predicting the nature of future price movement is a fool's errand, and that the best we can achieve is to trade according to historical probabilities. In the markets I trade, these statistical probabilities favour a reversion to the mean.

 

I should add that I am using the term 'mean' in a very loose sense now. A better description of this belief would be to say something like 'a market is more likely to head back where it just came from than to explore new price territory'.

 

My apologies, by dynamic I meant meaningful.

Prediction is our business, whether it's through massive probability sets we've developed or by following only a singular market element like price, semantics don't matter!! You are resting on your model to produce past results, sounds like prediction to me! That defines responsible speculation, but it does not erase speculation def: speculation is a financial action that does not promise safety of the initial investment along with the return on the principal sum.

Though you may or may not be responsibly speculating, based upon how many elements of the market are included in your statistical model set, you are certainly trading with a hope/plan/desire (semantics) that your statistical set will show you the likelihood of the markets next move aka "prediction"!!

Why beat around the bush or hide behind words that are only one to two steps removed from "prediction", call it what it is. How in the world does MP in any of it's forms help to improve your statistical model set for the endeavor of speculation, beyond what is available from the individual and seperate elements of the market itself?

[clmacdougall 11]

Mac: I am a user of MP and would not trade without it... One of the things I have observed over many discussions re: MP is that in it's most stictest rule based definition I would also dismiss it. Notwithstanding when I first learned about it in the early 1980's that's how I tried to use it. I did not succeed with it and dismissed it. You mentioned the 70% Distribution, etc. for me that is not important.. I guess the best way for me to describe my interpretation of it is that I learned the tool and then deconstructed it and found the elements that integrated with my view of the market.

 

We all live at the right side of the screen and MP is another view... it is just another way to organize data.. It works for me and I'm sure if it fits the psycology of the individual and adds an element of realtime market generated information which can be integrated into an overall process then it is a good tool to have in the box. For me it is the horizontal view of price.volume and the integration of VOlume generated price information over Market Swings from most recent swing high to swing low to the March Crash Low... to current high. These swings with horizontal price/volume creates nodes of high/low volume. The market seems to come back to these volume levels which were signifigent in the past just like support and resistance but they are not price based but volume based... This part of the MP process is cumulative volume nodes and they were not part of what I learned originally - no volume was available at that time.

 

You did mention charts, etc. When I started out that was all I had... Studied Edwards & McGee, got a new chart book weekly, pencil and a ruler did them daily by hand. Charts still are important to me..I can't imagine anyone who uses MP not also having charts up. I especially like 15 minute candles along with other timeframes for the interday picture..let's me see where the stops are piling up and where the market will probably rotate to get them or in MP lingo - facilitate trade.

 

Good discussion..

 

Regards,

 

Tom

 

In effect you are using high volume nodes as support and resistance? Were you privy to Steidlmayers latest endeavor, sounds alot like what you just described. You can watch his latest video from the CME last year here at TL. It seems right up your alley.

How do you personally use MP to develop a statistical model that is meaningful? On what level do you trade? It sounds, by your use of 15 min candles, that you are not merely a day trader, as you are trading off of these volume nodes with a setup that would remove you from the single day timeframe for sure! Especially if you are looking at the market in context to a crash from months ago!

[roztom 10]

In effect you are using high volume nodes as support and resistance? Were you privy to Steidlmayers latest endeavor, sounds alot like what you just described. You can watch his latest video from the CME last year here at TL. It seems right up your alley.

How do you personally use MP to develop a statistical model that is meaningful? On what level do you trade? It sounds, by your use of 15 min candles, that you are not merely a day trader, as you are trading off of these volume nodes with a setup that would remove you from the single day timeframe for sure! Especially if you are looking at the market in context to a crash from months ago!

 

I have not watched or read Steidlmayers latest interpretation... I already have a process that works.. I suspect I should...but I find my weakness is not in my tools but only in myself.. I have a toolbox that works - for me.

 

One problem of integrating MP into my trading process is that it cannot be backtested.. My interpretation is subjective...pattern recognition.. "sense of smell" This is a dilemma since I cannot strictly define or program my methodology so I do not have the comfort of a stictly mechanical process that can be backtested with the typical statistical support that we all like to lean on to define our edge.

 

I am a daytrader but I do not ignore where the market is and what it appears to be trying to do... The market is either range bound/bracketed or testing/moving to a new level.. Of course I can see the same thing on a chart but adding the profile adds where the longer timefram traders were active... I want to detect their activity as soon as possible and try to determine which side of the market the strong hands are active in... Like any tool it does not predict the day but develops and allows me to see the behavior of the participants in the auction process and who is dominant and when/if the balance shifts see the opportunity develop. Again this is not in a vacumn I integrate this with other tools...

 

When the market seem to stairstep it will often pause/rest and rotate/consolidate. In MP terms this is a new balance area or distribution.. On a counter rotation, I can see where stops would have built (Swing H/L) and where the volume was low, indicating there was competition for price and price jumped away from that level... The market will take those stops (unless a one-way freight train - low probability which would be evident by the shape of the profile - a Trend Day in MP - I think it is an 18% probability but I don't care) and then at the low volume level where there was previous competition at price - will they show up again?... Just one way to use it...IT is really no different then watching stops get picked off under a recent Swing H/L... but the volume at these levels can reveal what behavior might be expected if the market is going to continue in its initial direction... after the weak hands pockets are picked by a few ticks.

 

Just one way to use it...

 

As far as longer term.. for me the longer term charts allow me to overlay previous areas along the same concept as the interday developing High Volume/Low Volume Areas. I look at it as internal support/resistence.. Depending on the type of volume (High or Low) tells me what kind of price behavior to anticipate at a specific level as we revisit them... High Volume was previous price agreement - the market balanced there and everyone tended to agree on price.. These are obstacles but behave differently than Low Volume Areas. Low Volume is where there was competition for price.. the market moved away from there quickly.. there was competition at that area. Who moves the market? Not us - not retail but the big $. At Low Volume Areas will they show up again...? I always want to try to align with the Big $ that is what moves the markets directionally and creates range expansion, IMHO. These are integrated into my more recent daily profiles with the longer term nodes going back to that Crash low since that is the last signifigent swing low.. I also use the most recent swing that we are in to creat another level of minor nodes... While this may seems complex the minor nodes are only important when thry are close the the Major ones.. This is just one aspect of it but one of the most signifigent parts to my trading. Sometimes the market stops within a tic or 2 of the levels - other times after a pause it will go to the next..no different then Supp/Res. For me these are targets and I scale along the way... They have given me a high level of confidence to enter a trade at these levels when price action is confirmed with other tools.

 

One thing I don't do is "predict" the day. I was quite good at that for swing trading back in the stoneage when you had to hold for several days :haha:- 30pts was a big day in the Dow but in the day timeframe I am often wrong.. as to how it will develop. For example I think the market will go down on a day. It opens head fakes down, then squeezes early shorts, rallies and then sells off in the afternoon .. so I let the market tell me and I usually wait for the market to come to me at a key node or let the daily profile develop so I can see how the participants are handling the auction process and how I can participate on a rotation while targeting the nodes.

 

Let me apologize in advance if this comes across like Voodoo or something. This of course is only a general conceptual explanation and not a specific set up or anything but an attempt on my part to share some of how I integrate auction theory and volume into my trade plan and also the limitations and potentially lack of duplicability of how I use it... maybe there are others here who can offer a more specific mechanical approach tp setups. While there are some mechanical aspects to it for definitions.. Market behavior and the integration with other tools is what makes it viable for me. It was not an easy process to integrate and is not a quick study, imho.. It is not an indicator one can slap on the screen and use tomorrow.

 

I hope this helps shed some light on MP. It really depends on how one trades...

I shoot for ranges and will trade maybe 4 - 8X per day if the market offers it... my activity is dicated by what the market offers.. I wait for the market.. I am a big believer in trade location - if I miss it I wait for a rotation to align myself with the strong hands (assuming they will still be there) or if not - there is always another bus coming by..

 

Regards,

 

Tom

 

"I have met the enemy and it is me"

Edited January 21, 2012 by roztom

[SunTrader 10]

MP like Momentum/Range/Kase Bars and Point & Figure charts take time out of the equation which IMHO is equally important to Price.

[clmacdougall 11]

Excellent post 'mac and just the kind of conversation I'm wanting to have on this thread; all dissenters and believers alike from all sides join in!

 

In response, I really don't see profiling as a methodology at all, at least not how I use it (perhaps it should be more of one for me! ) I'll put it this way: in the same way that horizontal support and resistance of price levels based on past price gives a structure to the market and gives a context to where we are now, so does volume at price. I tend to use shorter term profiles, like the day or spanning several days to a few weeks, and only use the distant past if we are in new territory and I have nothing recent as a contextual reference.

 

What does a volume at price profile really represent? Well, speaking objectively, it only presents a view of volume traded at price. That's it. Anything beyond that is us inserting our own personal, subjective analysis. Notions of "value" or "unfair high" or anything of the sort are what we as viewers of the market project onto it; it says nothing about value, or fairness of price, or any of that. So, I try to keep this view and understand that a volume at price histogram is simply a presentation of data. I am still developing what exactly a profile "means" to me.

 

I don't know exactly how you trade but based on our prior interactions, you and I are probably more similar than different. I use a profile much like I use a 30 minute chart: where are we in relation to yesterday, this week, this month? But at this very moment, that really is not as important as what is happening NOW. Is sentiment bullish or bearish? Does this market at this time want to go up or down? That's my question always, and when I am on the wrong side of the market, in about 70% of those cases I was uncertain when taking the trade to begin with and need to simply be more patient.

 

Does Schulz reach any particular conclusion regarding horizontal development? I take it that you have rejected this, and would like some of your opinions as to why specifically, if you can concisely explain your thoughts. I will certainly pick up the book and give it a read. Sounds very interesting.

 

Does MP provide a reliable context to the markets? In my opinion no. Multiple timeframes won't erase that fact. In my opinion MP is eye candy with no usefulness which errantly draws the user into incorrect assumptions about the lean of the market.

It shows you a picture of what was, but becase each market decision is made apart from your individual psychology so will each reaction to change be different from yours. Decisions in finance are not made based upon nuclear models or statistical mean reversion models, they are based upon pain, euphoria and expectation.

We are not dissecting a dead frog in biology class. The markets are a mass of human psychology based upon differing levels of pain and expectation, volume at price hardly models this. The markets aren't difficult to trade simply because they change, if this was the case static models would be great as reaction to change would be easy to predict. Same players = same reaction. But we all know this is not the case.

The diversity of entrants coupled with multiple expectations spells the need for a more meaningful model with realistic expectations of the change it can predict. Yes I did say "predict". That is the point isn't it. Whether your statistical models were done responsibly or not, probability is just another way of saying prediction.

[khamore1 10]

MightyMouse:

 

The POC of high volume node is the price or set of price points where there is the most disagreement.

 

In my opinion

 

It is also the price where is the most agreement……

[roztom 10]

MightyMouse:

 

The POC of high volume node is the price or set of price points where there is the most disagreement.

 

In my opinion

 

It is also the price where is the most agreement……

 

MMOUSE: I think you may be mistaken on this. High horizontal volume is acceptance... equilebrium the market stays in an area...buyers/sellers agree on price it has achieved a fair value or acceptance... thus the price does not move out of there until something changes...

 

Horizontal volume is not the same as vertical volume. I think this is what you are thinking.

 

Low Volume on a horizontal plane indicates urgency since price moved away from it quickly if up the bids were stong and the price moved away and not much got done at those prices and there was competition so the market did not stay there..that is what creates speed..or directional movement.. the same at a top: low volume except it can be no bids and then the offers come in as price rotates down and volume increases as price moves back across the range...

 

You can see this on the profile at the edges or extremes where there is low horizontal volume development... Think about it..if the market is going up the high tick doesn't have high volume but almost no volume.. the bids dry up - buyers stop buying.. At the top the volume drops off. Remember Horizontal not vertical... If it is a top then depending on your timeframe you can see a high volume "bar" as sellers come in and reverse it but not at the high ticks...

 

In the ES you can see contracts traded..or any market...pull up a Volume profile - you'll see what I mean.

 

On a bar chart..you will see high volume on range expansion or reversal bars but you are seeing the volume for the entire bar. On the profile/price you will see inside that bar.. and each tick and the cumulative horizontal volume at each tick..

 

I think that is the difference.

 

Regards,

 

 

Tom

Edited January 21, 2012 by roztom

[khamore1 10]

I'm not sure how it can have 2 opposing definitions at the same time - how can that be true?

 

One can see half a glass full, the other can see half a glass empty

[roztom 10]

I'm not sure how it can have 2 opposing definitions at the same time - how can that be true?

 

One can see half a glass full, the other can see half a glass empty

 

KHamore1: I was responding to MightyMouse but I took your quote in there by mistake.. and read them as part of the same post... :crap:

 

I edited my response..

 

Regards,

 

Tom

Edited January 21, 2012 by roztom

[joshdance 10]

The POC of high volume node is the price or set of price points where there is the most disagreement.

 

I'm not sure how it can have 2 opposing definitions at the same time - how can that be true?

 

One can see half a glass full, the other can see half a glass empty

 

It's simply a matter of perspective, and it really goes to the heart of why I started this thread.

 

MM is simply saying that a price where the most trade occurs means maximum disagreement, IF the definition of high trade activity is indeed disagreement. I buy from you, you sell to me. We disagree with each other, else we would both be buying, or both be selling, from someone else. MM is seeing a trade as, by nature, a disagreement as to value. That's where MM is coming from I'm sure.

 

MM is slick and always rocking the boat ;-)

[clmacdougall 11]

Excellent post 'mac and just the kind of conversation I'm wanting to have on this thread; all dissenters and believers alike from all sides join in!

 

In response, I really don't see profiling as a methodology at all, at least not how I use it (perhaps it should be more of one for me! ) I'll put it this way: in the same way that horizontal support and resistance of price levels based on past price gives a structure to the market and gives a context to where we are now, so does volume at price. I tend to use shorter term profiles, like the day or spanning several days to a few weeks, and only use the distant past if we are in new territory and I have nothing recent as a contextual reference.

 

What does a volume at price profile really represent? Well, speaking objectively, it only presents a view of volume traded at price. That's it. Anything beyond that is us inserting our own personal, subjective analysis. Notions of "value" or "unfair high" or anything of the sort are what we as viewers of the market project onto it; it says nothing about value, or fairness of price, or any of that. So, I try to keep this view and understand that a volume at price histogram is simply a presentation of data. I am still developing what exactly a profile "means" to me.

 

I don't know exactly how you trade but based on our prior interactions, you and I are probably more similar than different. I use a profile much like I use a 30 minute chart: where are we in relation to yesterday, this week, this month? But at this very moment, that really is not as important as what is happening NOW. Is sentiment bullish or bearish? Does this market at this time want to go up or down? That's my question always, and when I am on the wrong side of the market, in about 70% of those cases I was uncertain when taking the trade to begin with and need to simply be more patient.

 

Does Schulz reach any particular conclusion regarding horizontal development? I take it that you have rejected this, and would like some of your opinions as to why specifically, if you can concisely explain your thoughts. I will certainly pick up the book and give it a read. Sounds very interesting.

 

Schulz is a believer in horizontal development being a precursor to vertical development. This is the notion offered in the point and figure methodology which you're probably aware of.

I don't accept it's validity as it pulls away from the markets complexity and sets numerical targets instead of encouraging a constant monitoring of it's health as it moves.

Consider the market as a patient on life support and in my opinion you'll have a better chance of understanding it. No one knows for sure whether the patient will live or not but we may know through monitoring if it's getting a little better or worse as time moves on.

His book is excellent. It challenges you on so many levels to think about what you believe concerning technical analysis. One of the best I've read so far. I've got 5 books on the go right now, The Definitive Guide To Momentum Indicators - Pring (stinks, based solely on price, fixated on indicators widely known already) The Definitive Guide To Point and Figure - Duplessis ( historical understanding of P&F, but not complex enough. focuses on price too much) Trading and exchanges - Harris (historical in nature, but interesting) The Profitable Art and Science of Vibratrading - Lim ( risky but interesting study of martingale system) Reading Price Charts Bar By Bar - Al Brooks ( 2-3 bar setups under or over a MA. Surprised it got all the attention it did)

[roztom 10]

Hi Joshdance -

 

I'm attaching a screen shot of the 5 minute chart from 1/18 (the same day as your screencast). As it happens, this was a perfect example of how the VWAP / PVP relationship might have you into a good trade. (note: CST is shown on screen, so 8:30 is 9:30 ET).

 

When the PVP built in around 1287, it was about 3 point below VWAP (the red line). Price could go either way from here, but if it goes over VWAP you have a pretty good chance it'll go up at least to a 1 std dev profit target (the yellow line). There was a second trade opportunity above the 1st Std Dev (the yellow line) to the 2nd Std Dev (the blue line).

 

When the second PVP built around 1297, it was above VWAP, resulting in a negative skew. Again, this doesn't predict what price will do, but if price went below VWAP you have another good short opportunity. As it happens, price continued going up. If you followed the rule "don't short over VWAP" you would have kept yourself out of any shorts at this point.

 

Squishy: One thing I have observed with VWAP/MP is that when VWAP & VPOC align it can be a strong Supp/Res level. Also when VWAP aligns with IBH/IBL this can be another area for potential trade location with the caveat that it must align with other confirming tools..

 

For those new to MP: IBH/IBL, VPOC, VAH/VAL are some MP terms refering to the profile structure/elements.

 

Regards,

 

Tom

[MightyMouse 12]

MightyMouse:

 

The POC of high volume node is the price or set of price points where there is the most disagreement.

 

In my opinion

 

It is also the price where is the most agreement……

 

Think it through. It can't be both agreement and disagreement. When price spends a lot of time at a price, possibly creating a POC or HVN, there is lot of disagreement on price. Price moves when there is a lot of agreement on price. Price sits when there is a lot of disagreement on price. Price moves when there is an absence of one or the other.

[roztom 10]

Think it through. It can't be both agreement and disagreement. When price spends a lot of time at a price, possibly creating a POC or HVN, there is lot of disagreement on price. Price moves when there is a lot of agreement on price. Price sits when there is a lot of disagreement on price. Price moves when there is an absence of one or the other.

 

I don't know if I'm agreeing or disagreeing.. :doh:

 

For some that might be new to this:

 

Think of it as a car dealership who is the seller and the public who is the buyer...

 

If the dealers price is too high he will sell very few cars (shut off buying). If the price goes down to entice buyers then the dealer (seller) will move volume to the buyers.. he will facilitate trade..the purpose of any market - retail or otherwise... He will sell the most cars at and create the most volume at fair value - both sides have to agree on a narrow range of price, the buyer and seller.. If price goes too low the dealer won't want to sell cars and will stop selling. The buyers will have to pay up if they want to buy a car.

 

That is why you will see the fat distribution curve on a profile with a high volume price point where the majority of sales took place...When proce moves to high it shuts off buying when it moves too low it shuts of selling..

 

I'm talking a Normal distribution. High horizontal volume on a profile at a price is agreement on value, not rejection of it...

 

However, if perception of value changes then price can change and find or explore for a new agreed upon fair value... ex: A car plant blows up and they can't get the most popular model...perception of value will change and price will go up to reflect shortage of supply..(lack of sellers) and then find a new fair value that buyer/seller agree upon again.. same as an Economic report or some other external event that creates changes in perception of value.in the market..

 

The market moves to discover fair price - along the way price can move to extremes away from fair and then return or establish a new fair price... at a new level...

 

On an interday basis the HVN/VPOC will chage as the market searches for agreement on value..also depending on what type of volume takes place and where the High Volume can have a different meaning... It is a dynamic indication not a directional one...

 

I wrote earlier on this thread that I use it with Delta and other tools to acces it's meaning but when it shifts it can signal an important potential change and a potential opportunity. Like everything it is the context and also the shape and widrth of the profile that helps determine it's meaning...that is a more complex topic.

 

In addition price can move away from VPOC/HVN and as it moves to discover a new fair value...When that happens the VPOC will still show the high volume but price will be moving away from it... "disagreement" since price is moving to a new level...Agreement comes first..that is what VPOC/HVN is. Disagreement is a change in value when the price moves to discover a new agreed upon fair value or HVN/VPOC (Vol Point of Control). Once the market agrees on a new fair value after rotating in price discovery, the market will balance and a new fair value/high volume price point will be established... IMHO..

 

Regards,

 

Tom

Edited January 21, 2012 by roztom

[Lornz 10]

Think it through. It can't be both agreement and disagreement. When price spends a lot of time at a price, possibly creating a POC or HVN, there is lot of disagreement on price. Price moves when there is a lot of agreement on price. Price sits when there is a lot of disagreement on price. Price moves when there is an absence of one or the other.

 

That is wrong. There is an agreement on price, but a disagreement on value.

[khamore1 10]

Mighty Mouse: Price moves when there is a lot of agreement on price

Here is what I learned

Every market moves about this three steps 1. Vertical development 2. Stop 3. Finding a balance area

 

1. Vertical move happens when the market DOES NOT AGREE on value

 

therefore it moves to search for a value (either up or down)

 

2. Stop

 

3. Found the balance people agreeing on a price

 

What you say also make sense to me, I referred your question to Mr. Dalton when I will get the answer I will post it here

[MightyMouse 12]

When I say disagreement on price, I mean disagreeing on the direction of price. So, when price spends a lot of time at a set of prices, then there a lot of disagreement on the direction of price. Buyers think price is going higher and sellers think it is going lower. When there is agreement on direction, then price moves vertically.

 

When I studied MP, I struggled with the concept of MP value. It is a statistic that develops each day or preferred time period and nothing more. It is easier for me to focus on direction rather than value since direction of price tells me which way I want to be trading if I decide to trade.

[roztom 10]

When I say disagreement on price, I mean disagreeing on the direction of price. So, when price spends a lot of time at a set of prices, then there a lot of disagreement on the direction of price. Buyers think price is going higher and sellers think it is going lower. When there is agreement on direction, then price moves vertically.

 

When I studied MP, I struggled with the concept of MP value. It is a statistic that develops each day or preferred time period and nothing more. It is easier for me to focus on direction rather than value since direction of price tells me which way I want to be trading if I decide to trade.

 

Value is another way to define Support/Resistance...not the same but based on the Statistical aspect of the profile that is what value area is : 70% of price over time (TPO based) or 70% of Volume ...choose your preference...

 

Value does not give you direction just like Supp/Res doesn't give you direction...

 

Support/Resistance have nothing to do with creating directional moves unless of course they are breached ie breakout... they are just sign posts...A Value area is just another sign post based on previous market behavior..Todays behavior is a Developing Value Area DVA...no different from todays developing Supp/Res..they represent different things but develop based on market behavior...

 

Regards,

 

Tom

[MightyMouse 12]

Value is another way to define Support/Resistance...not the same but based on the Statistical aspect of the profile that is what value area is : 70% of price over time (TPO based) or 70% of Volume ...choose your preference...

 

Value does not give you direction just like Supp/Res doesn't give you direction...

 

Support/Resistance have nothing to do with creating directional moves unless of course they are breached ie breakout... they are just sign posts...A Value area is just another sign post based on previous market behavior..Todays behavior is a Developing Value Area DVA...no different from todays developing Supp/Res..they represent different things but develop based on market behavior...

 

Regards,

 

Tom

 

Value and S/R do not give you direction. However, expecting price to remain in the value area or to reverse at support, frequently leads to losses when price direction is counter to support or the VAL. There are certainly times when S/R or value will hold, but there aren't tools that I know of in MP to assist you in determining whether or not they will hold.

[roztom 10]

Value and S/R do not give you direction. However, expecting price to remain in the value area or to reverse at support, frequently leads to losses when price direction is counter to support or the VAL. There are certainly times when S/R or value will hold, but there aren't tools that I know of in MP to assist you in determining whether or not they will hold.

 

Of course not.. that is not the output of those tools... Direction though can be determinded as the profile develops by a number of indications - the primary one being who is domininte at any particular time in the developing timeframe. Technically it is called Range Extension. This is where the initial balance (IB) is tipped over and one side dominates after the first hour. In the context of Value if the market is building higher value and it is accepted vs the previous days value then the market is gaining acceptance and is moving higher... As far as interday rotation and direction it has little to do with how it will develop or rotate.. The profile will often give you clues of whether the day time frame is changing and also indications if it will fail, etc... If the structure is holding then you will be able to identify areas of rotation to align yourself with the strong hands - is that directional? Yes.. Can you lose? Yes.. Can you step in front of a reversal yes..is their any indicator plan, system that doesn't take losses? No...

 

I certainly do not use it alone..I couldn't use it that way though many MP novices try to.. I don't know how they do it.. apparently most don't. Maybe we'll meet some here...

 

Timeframe is important.. If you trade the day timeframe and the day gaps up and takes out yesrterdays high - get the breakout players in and then reverses and closes near the lower part of the range but builds higher value is the market going up or is it a top? The profile will give you hints as to what is going on.. Will the market fill the gap down on the open the next day maybe test the previous days close or Value Area High (VAH) and then rotate out of there to continue the uptrend? Nobody knows..

 

Only as the day type develops will we know... As far as direction it is only probabilities..I personally don't worry about that - I trade in the now. How the market gets there is the unknown. Other indicators guide that ..

 

The profile helps me align but it is only a component.. certainly not an indicator perse but knowing the prices that are important from the past and also observing how it delelops in the day timeframe helps me substantially... In addition, the integration of longer-term cumulative High and Low Volume nodes is a major contribution from profile theory that is indispensible to me.

 

I'm not suggesting everyone should trade with the profile..no tool can work for everyone..it just isn't that simple. If trading was we'd all go buy a blackbox and do "plug & play."

 

I have found that the tools individual traders use successfully are very diverse... What works for one doesn't work for another which is why it is difficult if not impossible to replicate what another successful trader does...

 

How many times do we buy a book, hear of the latest fad, software, etc. invest time, $, brain damage only to go on a wild goose chase... The profile is no different...

 

I have spent years with it..have abandoned it, told people not to waste their time with it...scoffed at it.. eventhough when I learned it from Pete Stedilmeier he had made a fortune with it. You'd think I could replicte him, right? Wrong.

 

This is the challange..seems you are defending or advocating what is wrong with it..if we were discussing any other technical tool we would be having the same discussion but most tools out there from one degree to another are used successfully in some manner by some and not by others... and the opinions are as diverse as we see here. Look at the huge number of canned technical tools that comes in todays software.. do we really need all of them to trade successfully? No, just the right ones - for us.

 

The only thing I know is that I have forgotten more about MP than I can remember..I have taken a different track with it then what is traditional I believe...; I don't even know if I am technically accurate from an academic standpoint - I can't remeber the last time I referenced a text on it. But there is a huge gap between those who teach and those who do. I am not an expert on it..never claimed to be one, never will.. but I do make $ with it..

 

Here is what I know - just for me. I trade full time, MP is about 30% of my process.. I know what it can do and what it can't - for me..

 

Those who read some book and blindly follow a rigerous structure probably will not succeed with it... that was my experience. It is probably the same for most technical tools.

 

I do appreciate your comments...I hear myself in them - I was there once also... If you knew me back in the early 1980's when I was first exposed to it after I spent countless hours, months, $ and gave up - you would be shocked to know that it is an important part of my trade plan today..

 

The thing you might consider is this: some very successful large traders - retail traders the $7 figure annual income crowd will not trade without it. Traders who have successfully migrated off the floor, will not trade without it - This also includes Prop Traders, Fund Mgrs, etc.

 

There are also other large successful traders who will have nothing to do with it.. They are both right.. and so are you.

 

Thanks for your posts.

 

Regards,

 

Tom

Edited January 22, 2012 by roztom

[roztom 10]

[Deleted by Tom: accidental duplicate post

[MightyMouse 12]

Of course not.. that is not the output of those tools... Direction though can be determinded as the profile develops by a number of indications - the primary one being who is domininte at any particular time in the developing timeframe. Called Range Extension. In the context of Value if the market is building higher value and it is accepted vs as an wexample the previous days then the market is gaining acceptance and moving higher... As far as interday rotation and direction it has little to do with how it will develop or rotate.. The profile will often give you clues of whether the day time frame is changing and also indications if it will fail, etc...

 

I certianly do not use it alone..I couldn't use it that way though many MP practitioners say they do.

 

Timeframe is important.. If you trade the day timeframe and the day gaps up and hits a new high and then reverses and closes near the lower 30% of the range but builds higher value is the market going up or is it a top? The profile will give you hints as to what is going on.. Will the marget fill the gap down the next day maybe test the previous days close or Value area and then rotate out of there to continue the uptrend? Nobody knows..

 

Only as the day type develops will we know... As far as direction it is only probabilities..how the market gets there is the unknown.

 

 

The profile helps me align but it is only a component.. certainly not an indicator perse but knowing the prices that are important from the past and also observing how it delelops in the day timeframe helps me substantially... In addion, the integration of longerterm cumulative volume nodes is a major contribution from profile theory.

 

I'm not suggesting everyone should trade with the profile..no tool can work for everyone..it just isn't that simple. If trading was we'd all go buy a blackbox and do "plug & play."

 

I have found that the tools individual traders use successfully are very diverse... What works for one doesn't work for another which is why it is difficult if even possible to replicate what another successful trader does...

 

How many times do we buy a book, hear of the latest fad, software, etc. invest time, $, brain damage only to go on a wild goose chase... The profile is no different...

 

I have spent years with it..have abandoned it, told people not to waste their time...eventhough when I learned it from Pete Stedilmeier he had made a fortune with it. You'd think I could replicte it, right? Wrong.

 

This is the challange..seems you are defending or advocating what is wrong with it..if we were discussing any other technical tool we would be having the same discussion but most tools out there from one degree to another are used successfully in some manner by some and not by others...

 

The only thing I know is that I haave forgotten more about MP than I can remember..I have taken a different track with it then what is traditional I believe...; I don't even know if I am technically accurate from an academic standpoint. But there is a huge gap between those who teach and those who do.

 

Here is what I know - just for me. I trade full time, MP is about 30% of my process.. I know what it can do and what it can't - for me..

 

Those who read some book and blindly follow a rigerous structure probably will not succeed with it... that was my experience. It is probably the same for most technical tools.

 

I do appreciate your comments...I hear myself in them - I was there once also... If you knew me back in the early 1980's when I was first exposed to it you would be shocked to know that it is an important part of my trade plan today..

 

Thanks for your posts,

 

Regards,

 

Tom

 

We really do not know if Pete S. made money trading or with trading using MP. We do know he at least tried to make money selling and writing about MP. Claiming he did make money using MP, does not add much without evidence to support it. And if he did make money, it could have been as result of the market, time and place he was trading.

 

I am not suggesting that it doesn't work. I do know how to use it, but I do not include it as a factor in trade decision. And, just to be clear, I am not stating that I do not use it because it doesn't work. Frequently my trades coincide with good trade entry with MP analysis and frequently my trades counter MP logic. Since some of my trades coincide with good mp trade entry, I could claim that I use it 25-35% of the time too. I suppose I could also claim that some of my trades coincide with Elliot wave, MACD, Gann, etc, etc.

 

I am not trying to prove or disprove MP validity or any indicator or trading system, so I do not keep stats on how often I would have been better off or worse off one way or the other. However, on balance I take more than I leave which is what is important to me.

[roztom 10]

MMouse: True: How we get there is the key..also we all probably see different things in the tools that are useful.. and use what works for us..

 

I hope there are more users of MP that will join this thread and share what they get from it and how they use it.It probably will be quite diverse.

 

Regards,

 

Tom