CBOT Market Profile

wavetrader · Mar 17, 2003

Does anybody use Market Profile for technical analysis? I'd like to hear how you've used them to make your trading decisions. I hea that it really gives you a very clear picture of the market as it is changing. Some have even said it's better than traditional indicators, which are mostly lagging.

Any thoughts?

Tacsian · Mar 17, 2003

Check out this thread Wave,

http://www.elitetrader.com/vb/showthread.php?threadid=9727

TSOKAKIS · Mar 18, 2003

Quote from wavetrader:

Does anybody use Market Profile for technical analysis? I'd like to hear how you've used them to make your trading decisions. I hea that it really gives you a very clear picture of the market as it is changing. Some have even said it's better than traditional indicators, which are mostly lagging.

Any thoughts?

You will find details (codes, gifs etc) at
http://www.elitetrader.com/vb/showthread.php?s=&threadid=9727&perpage=6&pagenumber=23
http://www.elitetrader.com/vb/showthread.php?s=&threadid=9727&perpage=6&pagenumber=24

2traps · Mar 18, 2003

Its my experience that people expect the MP to have some magic signal or entry/exit component! As a method of organizing data that treats the concept of time differently and incorporates the bell curve concept....I think its awesome. It can't tell you what to do any more than a chart can. However, if you take time to break down the steps of development (like how vertical and horizontal price action relate to eachother) and such a method of quantifying data makes sense to you, then perhaps it could help you in decision making. It comes down to preference, I do not use Elliot necessarily, but the broader concept of larger and smaller waves working together fits into the MP way of thinking.

ZBEAR · Mar 18, 2003

Quote from 2traps:

Its my experience that people expect the MP to have some magic signal or entry/exit component! As a method of organizing data that treats the concept of time differently and incorporates the bell curve concept....I think its awesome. It can't tell you what to do any more than a chart can. However, if you take time to break down the steps of development (like how vertical and horizontal price action relate to eachother) and such a method of quantifying data makes sense to you, then perhaps it could help you in decision making. It comes down to preference, I do not use Elliot necessarily, but the broader concept of larger and smaller waves working together fits into the MP way of thinking.

2traps...........Agreed.

I'm "in process" of integrating MP into my pattern trading style.
One thing I notice is that although it is just a different way of looking at
the same thing - - that in and of itself is quite valuable.

I am seeing trading opportunities that I would have hesitated at before - in fact,
it seems that I am slowly developing a "Second" trading style.

2traps · Mar 18, 2003

ZBEAR...great to have new ideas by looking at the same situation from a slightly different angle. I have watched and used for years and eventually even without the profile in front of you, you end up dividing up the moves the same way to assess an opportunity. I think it is a very clean way to view price action, and assembling various time frames seems to offer more perspective than a regular chart. I would prefer to organize price action move by move, rather than just the hours in any particular session.

ZBEAR · Mar 18, 2003

2traps........

What's your thinking on Point & Figure charts ?

2traps · Mar 18, 2003

I don't have a strong opinion there other than the MP seems to be a logical extension of point and figure. Its not to say PF is not useful, I just like to be able to manipulate the data more. I always remember reading about the profile and slowing bending toward another way of looking at the chart...loosely paraphrased...'the mkt is in a constant process of acceptance and rejection in an effort to find equilibrium'. So, vertical / horizontal and rejection / acceptance. Not exactly chart reading 101, but it gets you thinking!

ZBEAR · Mar 18, 2003

I take your point 2traps.

P&F seems to be one dimension short of MP.

P&F = Price - Time
MP = Price + Time + Volume (participation) = Value

Value fluctuates - and MP seems to most accurately portray that.

How do you get your data into MP format ?

2traps · Mar 19, 2003

I agree with your look at it, and the value area makes it interesting. I understand it to be the first standard deviation or roughly 70% of the time frame you choose, the default being 30 mins, but you should be able to manipulate that. If your time frame is much larger, use daily or weekly profiles. Can't say enough about looking at the market this way...for example...how many times have we seen a crap week or several sessions of tight ranges for whatever reason, then look at daily or weekly profiles, find 'value' on the larger scales, and find two huge distribution points within which the mkt has been filling in! Now, as that bulge grows with all that horizontal, the chances for vertical movement increase. This will never give you the 'answer' but it is awesome perspective and therefore helps me narrow down the decision.