Market Profile Plus by bolter
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bolter,
Great journal, btw. Can you explain how you may have traded the YM today (Friday) if you had been in the trading mode?
As a total newbie to MP, I spent the whole day filling my brain with MP info.
Based on what I've read in your journal and today's YM open below the LVA I would assume that you would have been looking to short the rallies into the LVA and POC. I see multiple trading opportunities at the LVA and one at the POC. My question is where would you have taken profits?
Thanks in advance for answering any newbie questions you might get from me.
Great journal, btw. Can you explain how you may have traded the YM today (Friday) if you had been in the trading mode?
As a total newbie to MP, I spent the whole day filling my brain with MP info.
Based on what I've read in your journal and today's YM open below the LVA I would assume that you would have been looking to short the rallies into the LVA and POC. I see multiple trading opportunities at the LVA and one at the POC. My question is where would you have taken profits?
Thanks in advance for answering any newbie questions you might get from me.
Papertrader,
If you take a look at todays chart for the YM the gameplan worked perfectly. Although, your resolve would have bee n seiously tested around 1:15 at the POC. I'd guess this was a big buy program in the cash markets because the TICK hit 1500+. Gotta learn to spot these as they happen, so you don't get panicky. The way to play these things (usually) is immediately add to short position. The market has just handed you a gift and you need to be greedy enough to take it. I'll talk further about opportunitsic trades at a later date.
bolter out!
Ba-da-bing-ba-da-boom! 9 times out of 10 that's the gameplan, with a stop just above the HVA (remebering that I like to work the stop). Before you enter the trade you need to validate the risk:reward (ie: this will compel you to have an plan for exitting the trade before you hit Transmit) and ensure that you are within your risk tolerance. This technique has too much initial risk for alot of traders (caveat emptor), especiialy if you're the type that likes to cash in a 2 point profit on the ES. I'm looking to make maybe 2 or 3 trades per day per market, and I'm generally looking for a risk:reward of 1:2. The other key piece advice I would offer is to ship your orders as soon as you've decided on the plan. Mentally write-off the trade as loser immediately and then be patient and give the trade time to work out while looking to "lean on your position".
If you take a look at todays chart for the YM the gameplan worked perfectly. Although, your resolve would have bee n seiously tested around 1:15 at the POC. I'd guess this was a big buy program in the cash markets because the TICK hit 1500+. Gotta learn to spot these as they happen, so you don't get panicky. The way to play these things (usually) is immediately add to short position. The market has just handed you a gift and you need to be greedy enough to take it. I'll talk further about opportunitsic trades at a later date.
Tough question - and the answer depends upon what sort of trade I am in. What I might do is leave this to a later date when I have more time, because it is crucial and deserves to be answered varefully. Hope thats ok.
bolter out!
Thanks bolter! I'm gonna spend the weekend reading They's thread.
Geez! What'd you get? Like 4 hours sleep?!
Geez! What'd you get? Like 4 hours sleep?!
PaperTrader,
http://www.oldielyrics.com/lyrics/warren_zevon/ill_sleep_when_im_dead.html
I'm on medication for a flu bug I picked from my 5 yo and one of them is a little speedy. Anyway, I gotta song for you:
http://www.oldielyrics.com/lyrics/warren_zevon/ill_sleep_when_im_dead.html
Thanks for the song bolter. Hope you feel better soon.
Have you ever included/overlayed floor trader Pivot Points with MP? Also, how heavily do you rely on the TICK?
Have you ever included/overlayed floor trader Pivot Points with MP? Also, how heavily do you rely on the TICK?
slacker,
Wind the clock forward 20 years and I believe we now have a superior basis for measuring "activity" real-time - volume. In the case of electronic markets this is actual contract volume that goes across the tape, and pit contracts we can use tick volume. Incidentally most people don't realise that the volume numbers for pit markets delivered intra-day by data vendors is actually tick volume and not contract volume. Important to bear this in mind.
Instinctively, we all know that activity (there's that word again) is not evenly distrbuted across the session. Activity is U-shaped. There is far more activity at the open and the close. Well guess what, volume is U-shaped also, whereas time is linear.
Now, to answer your question. There is actually only one way of constructing a MP and that is by price. A MP is simply a distribution of TPO's - which is necessarily time@price. But, and this is what I think you were alluding to, there are NOW two methods available for determining VALUE. Given the premise that more acivity indicates fairer value, then by deduction, you can assess value on the basis of either time or volume, and more importantly, calculate LVA, POC and UVA.
Being a pragmatist I use volume for determining LVA, POC and UVA. See the MP chart below for YM 2/2. I also calculate VWAP (cell DG96) and identify the TOP POC (DE103). Often I arrive at the POC as a consensus between volume POC, TPO POC and VWAP, placing more weighting on the former. The volume based UVA, POC and LVA are cells DE91, DE105, DE113. I actually moved the UVA down to DE97 because I divided the day into two value areas (the division was between rows 92 and 93). To me it is illgoical to have single prints (DE92,3,4) in a value area.Single prints are a sign of price "rejection". And that my firends is how I arrived at the levels I sent Fri morning.
I would encourage all MP newbies to study the the method as the originators intended it, and over time adapt it to suit their personal market philosophy as I have done.
Ok, let's examine the theory (or my distant memory thereof) first. MP is predicated on examing relative levels of "activity" at discrete price intervals. Bearing in mind that Steidlmeyer conceieved MP specifically for futures and it was back in the early 80's, when Warren Zevon was top of the charts and all futures markets were pit traded. In those days volume came as single figure - a total for the day - and it came the day after. Similarly, an accurate real-time tape (T&S) was a pipe dream. Therefore he had no choice but to use time@price as the basis for measuring "activity".
Wind the clock forward 20 years and I believe we now have a superior basis for measuring "activity" real-time - volume. In the case of electronic markets this is actual contract volume that goes across the tape, and pit contracts we can use tick volume. Incidentally most people don't realise that the volume numbers for pit markets delivered intra-day by data vendors is actually tick volume and not contract volume. Important to bear this in mind.
Instinctively, we all know that activity (there's that word again) is not evenly distrbuted across the session. Activity is U-shaped. There is far more activity at the open and the close. Well guess what, volume is U-shaped also, whereas time is linear.
Now, to answer your question. There is actually only one way of constructing a MP and that is by price. A MP is simply a distribution of TPO's - which is necessarily time@price. But, and this is what I think you were alluding to, there are NOW two methods available for determining VALUE. Given the premise that more acivity indicates fairer value, then by deduction, you can assess value on the basis of either time or volume, and more importantly, calculate LVA, POC and UVA.
Being a pragmatist I use volume for determining LVA, POC and UVA. See the MP chart below for YM 2/2. I also calculate VWAP (cell DG96) and identify the TOP POC (DE103). Often I arrive at the POC as a consensus between volume POC, TPO POC and VWAP, placing more weighting on the former. The volume based UVA, POC and LVA are cells DE91, DE105, DE113. I actually moved the UVA down to DE97 because I divided the day into two value areas (the division was between rows 92 and 93). To me it is illgoical to have single prints (DE92,3,4) in a value area.Single prints are a sign of price "rejection". And that my firends is how I arrived at the levels I sent Fri morning.
I would encourage all MP newbies to study the the method as the originators intended it, and over time adapt it to suit their personal market philosophy as I have done.
Now slacker on to your second question...
When I learnt MP (way back when) real-time MP software wasn't available. Also after you've been doing it awhile you can build a mental MP just by looking at a chart. Having said that I am testing the eSignal MP add-on at the moment and I am quite encouraged but what I see. If you have MP software by all means use it during the day - it will accelerate the leaning process. But you can certainly live without it if requires an expensive add-on. Most charting packages offer volume profile studies, and you can build your own MP with a pen and paper during the day (you do remember how to write don't you?).
b
ol
ter
When I learnt MP (way back when) real-time MP software wasn't available. Also after you've been doing it awhile you can build a mental MP just by looking at a chart. Having said that I am testing the eSignal MP add-on at the moment and I am quite encouraged but what I see. If you have MP software by all means use it during the day - it will accelerate the leaning process. But you can certainly live without it if requires an expensive add-on. Most charting packages offer volume profile studies, and you can build your own MP with a pen and paper during the day (you do remember how to write don't you?).
I can't imagine why I would ever use anything less than the entire session. Also note that I only use RTH data, although I am opened minded to the idea of using 24hr data. It certainly would make sense in markets like currencies and bonds, and if I thought about it hard enough, probably equities also. I'll look into this more in the coming weeks. I would welcome input on this issue?
b
ol
ter
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