Market Profile Software

Discussion in 'Trading Software' started by steve46, Nov 2, 2003.

  1. To all Posters:
    I am interested in Market Profile Software. I've read the available posts but I didn't see much elaboration on the subject. I believe Ensign, Aspen, ESignal and CQG have studies integrated into their packages, and my review of internet sources reveals that Steidlemeyer has his own website, and other 2nd party vendors exist. I would like to hear from users of standalone products if they exist, and from anyone who has experience with this product. All opinions welcome. Thanks Steve46
  2. OK, While I'm waiting to hear comments, I'm going to put out a little more info hoping that someone with a bit of a math background will take a second look. Based on a quick review of the concept, I see that the display is basically modelled after a bell curve, only this one is set on its side. The price action is displayed in one hour pieces and over a period of time, one sees how traders decide on what constitutes acceptable value. For those with a math background, I add the following: A bell curve is representative of a normal or lognormal distribution, however there are quite a few alternative distributions (I can think of 6 to 8 right off the bat). With serial time series data like stock or futures prices, if you wait long enough you will ultimately get back to the old bell curve shape (my opinion). If that is true, looking at the shape of the distribution gives a knowledgeable trader a general idea of where price is likely to move on an intraday and daily basis. Any comments?
  3. Cheese


    "If that is true, looking at the shape of the distribution gives a knowledgeable trader a general idea of where price is likely to move on an intraday and daily basis."

    Daily basis .. that would be nice. Reveal a little more to the non-maths audience at Elite Trader.
  4. Sure...If it is true that sooner or later the distribution is going to look like a bell curve, then looking at the current shape, you have an idea of where price is going. In the basic literature, the top and bottom of the distribution are called "buying tails" and "selling tails" for instance. Also, if I understand correctly, Mr. Steidlemeyer claims that the value area (price is accepted by traders) can change during the day. If this is correct, it means that Market Profile has an advantage over using standard floor pivots......
  5. Cheese


    Presumably we are talking about statistical analysis; you don't have a quick-fix link to elucidate the "bell curve .. the current shape (where) you have an idea of where price is going", do you?

  6. mBear


    Any software that I am aware of may give you a graphical representation of the market profile, including the evolving market profile as is exists for the market at the moment. This is usually a price-time profile made of time-price opportunities or tpo's. Alternately. some software can plot a price volume profile, which generally looks very similar.

    However, the use of market profile in daytrading involves much more than simply viewing the present value area. BTW the value are is the 1st standard deviation of the bell curve, rounded to 70%, but does not include single tpos in the calculation (the afore mentioned buying and selling tails).

    A good mp day trader uses the evolving market profile for the day to give insight as to the type of day, which can include non-trend, normal, normal variation, neutral, neutral-extreme, trend and multiple distribution trend. Once the day type is identified (with a high degree of probability) then high probability trades can be entered. No software tells you all these things.

    Of course it take time for the profile to evolve, so many mp day traders do not consider trading until at least the 1st hour has passed. These two first half-hour periods together form the initial balance.

    In short, using mp to daytrade involves much more than yesterday's value area (the limit of what most traders use it for) or even today's value area.
  7. Chuck_T

    Chuck_T eSignal

  8. Thanks for your comments Cheese and Mbear. Chuck, my review of past ET posts disclosed at least one opinion that the Esignal verson was not useful. It is possible that this new version may have corrected past deficits, so I will look into it. It would help it you could elaborate on the improvements. Thanks, Steve46
  9. OK, The following is copied directly from the Esignal link that Chuck provided. I post it for the benefit of readers who may be using it now and want to offer an opinion as to its value. I would like to know for instance it this description is accurate, and if this new version is useful in real-time trading and/or swing trading? As always, I appreciate any comments from knowledgeable traders.

    "ith the emergence of electronic trading, marketprofileSM may replace the trading floor as a tool for "listening" to markets. It forms a three-dimensional graphic of developing supply and demand.

    The newest version of marketprofile was created for futures traders and includes Volume Profiles, TPO Counts and Splits and features such as chart auto-scale tick increment customization.

    The graphical representation takes the form of a distribution curve or histogram. Thus, marketprofile organizes market activity as it unfolds. The key to successful use lies in correctly reading this information and interpreting the distribution shifts that are constantly occurring."
  10. mBear


    From the link above, "The key to successful use lies in correctly reading this information and interpreting the distribution shifts that are constantly occurring."

    Software doesn't tell you how to do this. In fact, since most mp traders are using 30 min bars, it is relatively easy to just visualize the day's market profile from a 30 min bar chart. Besides the approximate value area, you can easily determine the present poc, and even more importantly, the present rotation factor.

    Sorry, the answer isn't in the software. Nothing against good software. If I were already using esignal, I would pay the extra $7 per month. Alas, like any other method of understanding the markets, the answer is in learning the intricacies of the system, then learning to trade, which involves the range of trader technical and psychological skills.

    BTW, even if you don't trade mp, but day trade, you may want to start paying attention to the support and resistance of the 30 min bars. You can be looking at 1, 3, 5 or 10 minute charts, and not see support and resistance and why the market turned - but there it is on a 30 min bar chart. Why? MP traded with SIZE in your market.
    #10     Nov 2, 2003