MP is as simple or complicated as you choose to make it. Try this exercise for 1 week: Set aside all the books and web-pages and other stuff your reading about MP. At this point there is so much conflicting information being pushed out on the subject, it will just confuse you. Set up 5 charts on your screen, $INDU, YM, ES, NQ, ER2 Use 5 minute bars, Regular Trading Hours, with no indicators = NONE = blank charts with bars. Each evening, go to the daily notes page and get the MP numbers posted there, make sure they are for the trading session that just ended (at the top of the table it says Date For --> today's date, also you can confirm the OHLC is for the day that just ended). Plot the MP numbers as horizontal lines on each price chart, make the lines red for VAH, Blue for POC, and Green for VAL. The next day, sit and watch in real-time how price reacts with respect to the lines on the chart. Note the relationship between the markets and their lines. Note where price opens with respect to the lines, and where does price trade to. In doing this, you will see directly and in real-time how the profile is used by market participants. Your goal starting out is to understand how the profile affects trader expectations and behavior as these price levels are encountered in real-time. If you can reach this level of understanding and acceptance of MP, then you will be ahead of at least half of the traders using MP today. From this level of understanding, you should be able to write out a couple of basic trading strategies that you can test out, if you so choose. Saying this another way, reading a book and then sitting and watching the profile histogram develop during the trading session will be of little if any value to you in a practical sense. The next level of your education in MP, will need to incorporate practical things like identifying the day type early in the trading session, trading off the IB, and trading off developing value. Hope this helps you, and best of luck in your research and future trading.
I have never used MP, though have observed some others using it. IMO it is of more value to daytraders, as if one is using longer holding periods and works with daily charts upwards, it is pretty easy to see where major support/resistance levels are. Price & Oscillators provide direction/patterns, so for swing/positional trading so called KISS is sufficient and MP is not necessary.
Perhaps those who employ the KISS method have already applied their intellectual resources and taken occam's razor to that hairy problem
If you were to look at an intraday chart alongside a weekly one, then S/R would be seen much more clearly on the weekly one, hence my opinion that it is not essential for longer term traders. I don't know why some people are so defensive when somebody voices individual opinion on a method used. Don't forget that I could have also said, that it is odd that people relying on MP miss the basics in chart reading. You use it, I don't. It doesn't matter unless you are a vendor. Merry Xmas!
It happens not too often to read posts like these. Thank you guys. I have used MP the same way for just one year as a kind of supplement (use bar charts and p&f too). And I think it is very heplful to plot your own MP chart down during the trading session. I read "Mind over Market" two times, not because I am a fan of this book, but because the concept was not so easy to grasp for me. Follow the advices of TrendPro and bumblebuzzard and you can gain a lot of insight in MP and in your trading.
I'm trying to follow the discussion but am not sure if I understand your first statement. As the previous poster said, the MP display can show activity for a daily or hourly timeframe per TPO. Hence, when you make a composite that makes up a weekly chart, then your value area would be much different than the S/R as represented on a bar/candle chart. I look at composites and use them along with other MP methods of viewing information. The key to understanding MP is to realize that it is just a tool to help you see where the market participants saw value for that session. It also helps you better visualize where the longer-term participant (other timeframe participant) is entering the market. Given this information, you can then have more conviction in your trades and a clearer understand of the "story" the market is trying to carry out. This means that you can now take the candlestick formations, indicator crosses or whatever you want to use for your triggers and take the trade with more confidence or to filter out the signals that are contrary to your MP assessment. You can do this on any time frame and in any market because the principles of auction markets are acting there too. Heck... this applies to the price eggnog at your local supermarket. When people see that it is priced below accepted value, then they would come in and buy more of it. MP is just a way to figure out what the accepted value area might be. Nobody really "needs" MP. I don't use any indicators, averages or whatever on any of my charts. I find it takes me away from reading what price and volume is telling me in real time. Hence, I don't "need" indicators, but someone else might rely on them for triggers, etc and they might "need" them. These are all just tools and it is just a question of what you are comfortable with and what information appeals to you. Period. It doesn't go any deeper than that really. Best wishes on a prosperous new year for all of you.
As a proponent of Volume Spread Analysis, It is nice to see you only look at price and volume. You did not mention spread (range of bar), so I am not sure if you use VSA in your trading. There are really two key elements to reading the market (a chart): 1. An understanding of what the Professional, or Smart, money is doing and when. This is what VSA attempts, very successfully I might add, to track. 2. An understand of support and resistance. Market Profile does this better than most other techniques. Support and Resistance lines (areas) in MP are actual rather than inferred. That is, MP assumes that certain levels will be support or resistance because those levels were support or resistance. Traders tend to remember these levels , either consciously or subconsciously, and hence they are important. Floor "pivots" are inferred support or resistance. They are based on a simple equation using H-L-C (typically). In other words , these levels are not based on where the market did find support or resistance. True, they do work very well at times as there is the self fulfilling element at play, but they start out as inferred and only after the market finds support/resistance at those levels do they become actual. My point, MP allows the trader to have actual levels or price action/reaction, or support/resistance and this an essential element in analyzing the chart. Every trader needs to have some understanding of support and resistance. Market Profile is one of the best, if not the best, way of understanding support and resistance. By the transitive property, every trader needs Market Profile.
Please do not use market profile. It is the worst way to track support and resistance. Please do not study about auction market theory, it will not allow you to exploit the inefficiency of the "efficient" market. It will not help you to understand everything else better. All the terms and bathroom concepts will only overcomplicate the simple market. You cannot extract sensible trading methodology from the mess. It will not help you filter out trades as FT71 suggested since he doesn't know what he is talking about. Please stay the hell away. Thank you. :eek: