Does market profile system have the potential for generating good retruns ?
- Thread starter golfdude
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Market Profile is not a system. It is a way of viewing trade data. Some people prefer viewing trade activity in a horizontal histogram vs a series of bars or candles, some like to view both overlaid on top of each other The trade data can be used for building RTM systems, trending systems and levels to scalp around.
Steidlmayer did publish what he called the steps/stages of profile development. See the image below. Which is basically consolidation and a breakout from it. Again, one would still need to decide if they are going to jump on to the breakout or fade it for actual system development.
Volume Profile attempts to drill down further into the profile for an indication of whether the breakout should be traded or faded. Different rabbit hole.
The link below provides an example of one of the concepts of Market Profile (POC) on an intraday time frame - five minutes.
https://www.elitetrader.com/et/threads/what-is-inside-your-5-minute-candle.328126/
Steidlmayer did publish what he called the steps/stages of profile development. See the image below. Which is basically consolidation and a breakout from it. Again, one would still need to decide if they are going to jump on to the breakout or fade it for actual system development.
Volume Profile attempts to drill down further into the profile for an indication of whether the breakout should be traded or faded. Different rabbit hole.
The link below provides an example of one of the concepts of Market Profile (POC) on an intraday time frame - five minutes.
https://www.elitetrader.com/et/threads/what-is-inside-your-5-minute-candle.328126/
Based on that answer you probably think if you really want to get into trading.
No. I have been part of a Market Profile trading room for a few months. There are few traders there who seem to get it and make consistent profits every day. I have just been observing since I am still learning the theory. The MP theory also has a steep learning curve which I am still trying to get over. Also I have seen lot of attrition in term of people trying it out and leaving.
Thus my question.
You are going to find using Market profile, TA, charting, fundamentals or combinations of some/all to be filters to either allow/disallow a signal, still comes down to "risk" management. What this means building a trading system, what is to "left of now" showing no negative patterns to negate a signal and what happens after a signal as far as managing the trade is 99% of the trade. Perfect signal entry generally needed for scalpers, day traders being a tick off should not make huge problem and the longer the timeframe, signals generally are a matter of nothing but risk, if entry not good enough, risk might be larger than wanted and this is part of "left of now" and where extensive back testing gives you an idea what are probabilities of the past, it won't necessary be the future depending on how much data is used for back tests and over how much different kinds of volatility, ie trending or extremes.
I prefer to be a chartist first, trendlines for support/resistance-tightest risk, price patterns medium risk and breakouts-largest risk. I think best who use market profile are very good chartists as well. Way too many people think trading will be easy as advertising makes it seem this way, but it is tough to remember all the nuisances, better you understand breakdown of price, as in waves and swings, it is more knowledge you have over the masses. Many will say 10,000 hours not needed, but most who put in the time have better tricks of the trade and get over the hump and yet always some who lack discipline of this is a business about making money and non back tested bias have no clue how it did in the past.
Good luck.
I prefer to be a chartist first, trendlines for support/resistance-tightest risk, price patterns medium risk and breakouts-largest risk. I think best who use market profile are very good chartists as well. Way too many people think trading will be easy as advertising makes it seem this way, but it is tough to remember all the nuisances, better you understand breakdown of price, as in waves and swings, it is more knowledge you have over the masses. Many will say 10,000 hours not needed, but most who put in the time have better tricks of the trade and get over the hump and yet always some who lack discipline of this is a business about making money and non back tested bias have no clue how it did in the past.
Good luck.
I was a part of options trading room where the trader is using MP. However, that trader's edge, imo, is really coming from having a great feel for the market. That feel comes from experience. Once you have that, you can say that the alignment of the stars spoke to you, and it will appear so
Yes!
I wasn't trying to be disrespectful or cocky. I really think you should not trade at this point and probably should not even think about starting.
Thing is: Profits in trading come from having an advantage over other people. You either are faster so you can grab the risk free profit before everyone else. Or you are smarter thus you understand interrelations and context better than everyone else so the chance of being on the right side of the market or dodging bullets is bigger.
That said, I'm using volume profile and bar charts...but in no single way are those two tools P/L drivers.
I don't make money because I use charts and profiles. I use charts because somehow I have to figure out which price I want to trade, how big my position is going to be and how many contracts I need to hedge. So I use those tools to organise myself.
To come back to your question: How is a graphic that is available to everyone who pays for it giving you an advantage over everyone else?
There are a lot of people who are way smarter than I am. I learned everything I know by falling on my face, getting up, learning a lesson, rinse, repeat. And I know that if something works so well that you can make millions with it, at least the smartest people will take advantage of it.
Yet nobody who is either making or managing millions (two different things, really), uses this stuff to generate alpha.
Again, to come back to your question but digging deeper now: When you ask "Does it have the potential to generate good returns when applied to different timeframes" you imply that markets have some intrinsic...lets call it riches...like a goldmine and the only thing you need is some tool that allows you to dig up the nuggets.
The course sellers/educators are abusing that thinking. They'll be like "yo, u just gotta work hard and practise dis shit, dis tool is better tool...makes u dig faster and has nugget finder attached. 3000$ for the tool and the course.
In reality, everybody just needs to dig. The big guys have excavators and dig everywhere, the money managers and hedgefunds have a couple of PhD students with shovels who do the digging for them in very special places they researched.
Problem with the retailers is they come up with kids plastic shovels from Walmart and try to compete with the big guys and the money managers and no education and no course and no nugget finder will ever help them. The big guys will outmuscle you and the money managers will outsmart you.
The only way to make a profit in the markets for the small fry is finding a niche neither the big guy nor the smart guy is interested in and nobody will help you with that.
So Profile charts can be a nice support because they are much more accurate than price charts, but at the same time they don't tell you the direction and when to pull the trigger.