Martys, post a candle weekly chart of something and I'll attempt to seek out all or most major S/R without referencing MP.
romik, I know what you are saying and on a smaller time scale, say you saw a range of 2 ES point (price rotates and balanced within), eyeballing is sufficient and if not better for the purpose. But what the market profile can do is organizing non-continuous S/R levels. I will give you an oversimplified example: price opened at $36 to $34 and rotate back and forth forming a balance volume cluster in early morning. then it moves into imbalance quickly dropped to $30 - $32 during lunch time. Then it moves back up and fill in the cave $32- $34 in the afternoon. You might found three distinct S/R ranges with your eyes and rightly so but at the end of the day, the market profile bell-curve might organize the price actions into a single cluster of $30.50 - $33.50 (low volume area) and POC at $32.25 (high volume point). So they are not quite the same, although "in spirit" they are the same. It becomes even more so when multiple days are involved but I am not doing those myself.
You are still showing me an example which is based on intraday price action. OK, I'll give you my example since it's Xmas, in early 2005 price's hit an all time high of 150, later same year it went down to 100, then up to 140 and back to 100 and up to 150 breaking it and... I can see most major S/R there, there are opportunities every single day to trade them as there are 1000s of FIs. Intraday I have no arguments - MP can be a needed addition, but not so much on longer time frames. I both agree and disagree with you
hi romik, Sorry, I am using MP for intraday trading so I really don't know how it applies to longer term. Jim Dalton had a long chapter on it but I have trouble even getting thru the first 100 pages on day-trading timeframe for that chapter without falling asleep. Good trading. Regards, William
Thanks for the props I agree with bumble as well... Dalton's "Mind over Markets" is an excellent orientation reference to formalize your understanding of the basic theory and language. MP is such a foreign concept to the traditional canned charting package offerings. The run of the mill candle charts with the same plethora of derived indicators, it is hard to set all that aside and see the market from a new perspective. MP itself is relatively simplistic, getting your mind completely free of past training, indicator dependence and bias is the hardest part of using MP. The problem with traditional canned indicators is they are all math derivations of one or more orders away from the underlying price time series. This is what introduces lag and distortion into all these indicators. A pretty strong argument in favor of MP is that it introduces no lag or distortion, since it is a direct unfiltered view of price and time. Is an MP chart better than a traditional price and volume bar/candle chart ? We each must answer that question for ourselves. If you are trading profitably using a traditional bar/candle chart, then you know your answer. If on the other hand, your drifting from indicator to indicator, time frame to time frame, and pattern to pattern, and still not able to produce a consistent profit, perhaps MP is a new and much more stable alternative to consider.
Very interesting, indeed - the problem is your 4000++ posts. With other words: where did you be a bit more specific - if at all? Charly
Well, since i am weaning self from forums i will just say a few words and drop off the planet for this thread. MP is just repackaged support and resistance/support. Anyone ever hear of the BELL CURVE? Sure you guys have. What is support and resistance anyway? From eyeballing the ES 5 minute chart and all the previous price movements you can see the days decisions plotted before you. OK, now the mkt consolidates and your main objective is to avoid whipsaws and visualize the next intraday trend probability. (range traders are excluded in this discussion, i go for breakouts and avoid trading what i consider indecisive noise). Ok, the bell curve excluded, HOW can you visualize the next intraday trend move? Well, the range breakout will be your first clue, someone, something has forced price to extend beyond the range border, which side is immaterial. You now are faced with this: is this clue a valid start of a new leg or just STOP gunning? So you want to see some breakout followthrough or else the brk out will fall back to the brk out point or back into the range...... you just took a small loss if you entered. Ok, forgetting the bell curve again, hahaha, price moves away again from the range and this time you are long and looks good, you have slapped in a non-loss trail stop bit still close to being hit, AGAIN you need follow through. What are you looking for? You are looking where the previous up move stalled and reversed, resistance. You are looking where the mkt got nosebleed last time and reversed. That spot represents FEAR from the previous traders, forget reasons why, all you know is last time it scared the longs and also must have brought in shorts bailing out at that point. OK, cool, now you have clear sailing from the range brk out to THAT point. That is your objective. If and when it gets to the last FEAR point you watch mkt action and see how there trade reacts. MP is just something rehashed to sell software, books etc. Understand FEAR and you have can move up a drawer or a few to get higher. KISS is not a slogan, it is condensing all the garbage into something tradable and easy to spot. Remember when you were a teen-ager and went to a dance, you knew who you were looking for, you had the objective in mind. You took the fastest moves to get to the objective, no fooling around with dancing with the dogs first, you went for the gusto befire someother guy beat you to the prise. Trade the same way, see what you want, forget the fancy lines (she heard em all before). Good trading, MP is nothing new. same ole, same ole.
That is correct. From the dawn of markets there has been support, resistance and Value. Markets have been balanced (non-trending) or unbalanced (trending) from their inception. The market is a duel auction process, always has been. Always will be. So you are correct, Market Profile, a statistical/methodological way of understanding and defining various aspects of the duel auction process is not new. It is older, purer and better than most things that have come after it. To be fair, we have not always had computers. But Time is older than the markets. By definition, price would be as old as the markets. Hence value, which is Price + Time , must be at least as old as the markets. And on the very first day of the very first market, there was price that was hit (probably grunted) once and then rejected. Creating a line in the sand, which we call support/resistance. We just didn't always have the ability to quantify it. You, however, are correct: Market Profile is nothing new. It just speaks to the essence of all markets.
That's true of most contributions to TA these days. Few original contributions have been made to TA since Dow, Rhea, Hamilton, Wyckoff, etc. in the early 1900s. MP provides a nice graphic for looking at support/resistance and understanding auction market theory. Does anyone need it? No, many have traded successfully without it and understand how markets work. As a tool, does it add value? I think so. It provides more value than most technical indicators, IMO.