A question for market profile traders

Discussion in 'Technical Analysis' started by Runningbear, Oct 26, 2005.

  1. I have a very specific question for all the market profile traders out there. I'm looking for ideas on how to best enter trades at the daily POC.

    My problem is this.

    Often the market will be in a uptrend and price will pullback onto the daily POC. The trade is highly likely to rally from this point but on the other hand it may break down through the POC and enter a fast downtrend. So I'm looking to enter long but I need to be aware that if the price breaks down below the POC I have to get out fast and possibly reverse my position.

    Sometimes in this situation, price will rally a few ticks above the POC then break below the POC and make a 3 or four tick move below it. Usually just enough to stop you out. If price stays around the POC for several hours, you can get stopped out several times and give back significant profits.

    Im looking for ideas to time entry in this situation. My only idea so far is to place limit buy orders one or two tick below the POC and hope that the market will reverse upwards in the likely direction. This allows me to limit my stops to a few ticks if I'm wrong. The problem with this is that you can't always rely on it if the market bounces quickly off the POC.

    I can also wait for the market to trade four or five tickes above the POC but there is a good chance I may end up buying the top of false breakout.

    I'd be glad to hear any suggestions, techiques or ideas for dealing with this particlular situation.

    Thanks in advance,

  2. Don't diddle in the middle. 50/50 is not a good MP trade. you explain why in your 2nd pgh.

    But if you must. Play for a quick bounce the first time price hits POC. You are right to play tight stops. Quick scalps can work in congestion but be prepared for the inevitable breakout in either direction.