Australian (ASX) Stock Market Forum

Price by volume vs. Market profile

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Joules MM1 said:
the only thing i recall is that Linn always said stuff that made sense to me.....i found this thru FT71

disclaimer: not connected, i make no dosh from you looking at it or buying it.....free trial as at the todays date, just a heads up s'all!

http://www.linnsoft.com/landing/index.php?ref=3871

http://www.charthub.com/images/2012/09/18/DayTypes_3.png

lol@ft71 chart sizes.....he likes them size of your bedroom wall
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I looked at both Marketprofile and Investor RT. the thing that got me though is all I needed was something to organize the data on my charts. So in the end I just went with Rancho Deniro because I could import the stuff into ninja trader...

I wish I had done that twelve months ago though...

CanOz
 
Thoughts from Jim Dalton

I subscribe to James Dalton's daily updates for the dollar, oil, gold, bonds, and the S&Ps...

Every now and then he comes out with a real gem that resonates with me...this was today's...

Also like gold, crude has formed an upward trading trend line.
When markets are trading with only limited or no meaningful participation relative to longer-term timeframes they become more dependent upon traditional technical tools; one of those traditional tools is the trend line. When a market almost perfectly fits a trend line it flashes a warning sign to me; the message I get is that weaker trades are being placed very mechanically on the line. If the trend line fails to support higher prices it is not unusual to see a substantial liquidation. - J.Dalton
Click to expand...

For more information on James Dalton this is his site here:

CanOz
 
Link explaining Peter Steidlymayers comments regarding market profile trading methods....

This is a summary of one of latest videos...too difficult for me reproduce the whole summary using my iPad but my point is that his statement gets taken out of context...he still uses the profiles but uses the information differently...
. Due to the rise of the quant, the market has become much more focused on the short-term. Movements away from "value" now have the potential to become a positive feedback loop, wherein movement begets more movement, and fading breakout moves can lead to disaster, as prices can simply keep going without laying down much volume (translation: if you trade size, you can't get out easily).
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That's why most people consider Dalton's work the most current work on market profile, in my view. Also, I find Dalton better at articulating his thoughts better...

Anyway, with today's software, it's much easier to split the profiles. Here is a link to peter steidlmayers recent webinar...


This is the ppt...
CanOz
 
I emailed you the PDF, the link just goes to the CME site, no idea why...can you attach the PDF of the presentation for me?

iPads are a pain sometimes...

CanOz
 
I've only just started scratching the surface of this topic and was hoping someone could please explain a couple points?

1. In the preceding posts the terms 'market profile' and 'volume profile' appear to be interchangeable. Is this correct, or is there a difference between the two? From what I've read, it seems market profile is just a volume profile plot at regular time periods.

2. There was a comment that HFT don't use MP (or VP) anymore. Would this be because more effective methods have evolved, even though using MP can improve your edge. Or has it been proven to provide no benefit at all?

Thanks
 
ChaosHedge said:
2. There was a comment that HFT don't use MP (or VP) anymore. Would this be because more effective methods have evolved, even though using MP can improve your edge. Or has it been proven to provide no benefit at all?
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I wouldn't worry what HFT'ers do or use or find beneficial. Whatever they do isn't on a time scale or type of trade that will effect you.
 
ChaosHedge said:
I've only just started scratching the surface of this topic and was hoping someone could please explain a couple points?

1. In the preceding posts the terms 'market profile' and 'volume profile' appear to be interchangeable. Is this correct, or is there a difference between the two? From what I've read, it seems market profile is just a volume profile plot at regular time periods.

2. There was a comment that HFT don't use MP (or VP) anymore. Would this be because more effective methods have evolved, even though using MP can improve your edge. Or has it been proven to provide no benefit at all?

Thanks
Click to expand...

1. MP is plotted based on how much time price spent at a price, VP is how much volume trades at a price
2. I have no idea, think a few guys on here use it, sure they will chime in.
 
Is it any use? I reckon you could get by without it just using Prior OHLC's, and defining the ranges by eye balling. It provides a context for the market for me, its very handy for key levels too.

The high volume areas known as Points of Control are quite uncanny. If one has not been tested before it is said to be naked, or untested. If the market is making a bee line, chances are its heading for one of these....

All in all its a great way to understand the auction market theory and put the structure of the market in context.
 
Thanks for all the replies!

CanOz, your comment about the market making a bee line towards a point of control sounds very useful. I've just started incorporating the volume profile into my trading to help decide whether a sweep through a key level is more likely to revert or continue further. When it does continue I had no idea what I should be looking for in terms of a target level. I'm looking forward to testing this tonight. Cheers!
 
ChaosHedge said:
Thanks for all the replies!

CanOz, your comment about the market making a bee line towards a point of control sounds very useful. I've just started incorporating the volume profile into my trading to help decide whether a sweep through a key level is more likely to revert or continue further. When it does continue I had no idea what I should be looking for in terms of a target level. I'm looking forward to testing this tonight. Cheers!
Click to expand...

Yeah, that's the best way too, just watch how the market behaves in context...i think you'll be surprised.

The thing is, a level is only as good as the key players. The locals could play a range all day and then a big knob comes in and smashed it to pieces on news etc...sometimes no news too...

As soon as i started putting things in the context of "where are the stops", i found my opportunities for sweeps have increased.

Watching for size in the book at these levels is valuable too.
 
Gringotts Bank said:
Where are the stops, most often? Can you show a chart with points of control? Thanks.
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The stops are usually around levels, especially gaps, round numbers, small areas of congestion...it depends on the time frame that these people are trading too. Sometimes the last push higher or lower has a good cluster of stops....

Here's an old FTSE chart with as an example of the POCs...
 

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