Market Profile -- who needs it?

Discussion in 'Technical Analysis' started by tortoise, Oct 20, 2006.

  1. tortoise


    I mean, really.

    Don't get me wrong: I think it's interesting. And, certainly, the "it" methodology. But, having spent the better part of the past month monitoring the goings-on at a well-regarded market profile chatroom, I see these traders so enmeshed in deliberations over whether the market is rotating or in-balance, that, well, they seem to forget to just take the damn trades as they come. I'm an idiot, for heavens sake, and I'm pulling more points than the moderator.

    Here's my theory, fwiw. In trading, a mindset is a dangerous thing and, in the hands of many traders, market profile becomes a vehicle through which one forms an opinion about which way the market is likely to go. Once such an opinion has been formed, the natural tendancy is to llok for cues to reenforce one's predisposition. And that's when Mr. Market hands it to ya.

    No Market Profile for me, thanks. I prefer to KISS.
  2. I don't use it but have watched Bolter use it and he isn't the least bit confused about his actions. He's either right or he stops out.

    Personally I think that most traders are doomed to long periods of failure and possibly perpetual failure. Whether they achieve it with MP or something else is almost entirely irrelevant although I do concede that to me there seem to be easier ways to find your trades.

    Perhaps not as satisfying. There is a lot of satisfaction in reading the market with Market Profile and such ... satisfaction missing from my own approach.
  3. Enthios does
  4. mokwit


    It is for decision support. Allows you to look under the hood. e.g can show you where real S & R levels are better than charts.
  5. tortoise


    Oh, I agree. Market Profile is elegant, aesthetically pleasing. But, the way I look at it, if I want to be aesthetically pleased, I'll go to an art museum (or something.)

    IMHO, whatever "edge" a retail trader is likely to gain from the application of MP to his/her trading approach is largely, if not completely, negated by its complexity and the distractions such complexity implies.

    The hardest thing about trading is not making it hard. As a practical matter, Market Profile reenforces the self-sabotaging tendancy of so many retail traders to obscure that which ought to be self-evident, and to over-complicate that which is, demonstrably, simple.
  6. 4re


    I have not personally used it but I do use S/R primarily. It was interesting to use my S/R levels and then 5Pillars would show his market delta and together it made for some very clear cut trading.
  7. I haven't read some of the popular books on the topic, but from what I've gathered from the web and some threads here, it seems that people who can convey the principles of MP in a clear and helpful way are hard to find. Practitioners tend to be nebulous in their descriptions although it is obvious that there are knowingly or unknowingly following a certain logic to enter trades.

    For ex, there was a question from someone on a popular thread here about the author's approach, this fellow wanted a summary of techniques, such as if open above such and such, buy/sell at such and such etc. The response was, hey it's not that simple and I feel that the author was saying there's too much discretionary input here for me to reduce it to a formula.

    My concern is that if something isn't straightforward it can't be practiced enough to develop real mastery. Now I know some will say, hey if you don't want to think, don't trade. I argue the opposite. You're not supposed to be thinking, all your 'thinking' and work should be completed before the market opens, once it does, you should be executing.

    I'm sure that the majority of players using MP use the S/R levels coupled with a few heuristics/hints from the shape of the price distribution of the previous sessions and current session. Those who over indulge into MP as theology strike me as infatuated with analysis and not particularly convincing. (see cisco futures website as an example of this)
  8. I think you are doing yourself a disservice by passing over Market Profile because new traders in a chatroom couldn't make it work. Let's face it, few successful traders actually hang out in chatrooms. Anyway, I do agree that it takes time to really learn Market Profile, but anything worth learning will not come easy. My trading strategy is based on trading market development and market structure using Market Profile. The fact that my strategy is based on a sound theory with substance (i.e., auction market theory) gives me great confidence when pulling the trigger to enter high probability trades. I've noticed that the psychology aspects of trading become less important when you have a solid trading strategy (although I still think it's important).

    Market Profile is elegant. It allows me to capture the major swings of the day, most of the time, as opposed to scalping. With it, I trade 2-4 times a day, but it also keeps me out of marginal trades or gets me out of bad trades as soon as the market invalidates my reason for being in a trade. You mentioned that you prefer to keep it simple, well once you learn Market Profile and incorporate it into your trading, I think you'll be able to do just that. You'll be able to remove lagging indcators from your charts, if you use them, and steer away from "gimmicky" trades. BTW, Market Profile is not about predicting market direction, but you'll know how the market ought to behave if it's trending or range bound. Determining market condition is critical for all traders, so that the proper trading strategy can be employed. As you know, there is no "holy grail", but Market Profile comes close as a trading tool. Stick with Market Profile and you'll be glad you did, I'm sure, it will give you a substantial edge in your trading.

    P.S. I didn't mean to ramble for so long, but I thought I'd give my perspective on Market Profile.
  9. See the previous post as a good example of the above. Although I'm sure Hispatrader only means well by his comments.
  10. Maverick, I don't know what you were expecting from a post on this forum. I could be very specific about my trading methodology, but that wasn't the point. Checkout some of my posts at
    #10     Oct 21, 2006