Hi, I am learning about reading and analyzing Market Profile charts. All the videos and references that I am seeing all explain how market profile is used for trading futures, specifically the S&P mini futures. Why are traders not using this methodology to trade regular stocks like low-float or blue chip stocks? Is there something that I'm missing?
It is used in the bond futures as they mean revert intraday sometimes several times. Range is too big in stock futures for it to be of use.
%% ITS offered in some charting services; but ever since I noticed a big error on it\i'll stick with regular volume with a moving aVerage on it............................................................It [error]was some thing like UPRO made a key reversal red month topping tail + my market profile showed nice green only market profile volume bar\LOL BUT it did accidently show some S& R levels/LOL. Can be a good thing if many hate it/like a 200dma.
One reason is that futures volume is centralized. However, there are some belated block and/or matched trades. But with stocks... you have dark pools, off-tape, alt-exchanges, etc. Real-time volume reporting for stock is incomplete at best. And forex, volume does not exist beyond your brokers input. Volume comprises about 75% of my main strategies. I do not use MP per-se, but I do use Point of Control, which is a component of MP.
True. Futures volume is centralized. However, in a product like index futures with program trading/arbitrage across different correlated markets (ES, MES, SPY and the cash index SPX) I wonder what volume really can tell you as a sell order in one market may be offset by a buy market in another related market. Add to that the effect from the option market where players in that market may hedge their positions in the futures markets. In light of this I'm struggling to grasp what volume or at least raw volume really can tell you in such markets and if the information is consistently reliable. But I don't hold a strong opinion here. Just my concerns trying to make sense of this.
>> a product like index futures with program trading/arbitrage across different correlated markets (ES, MES, SPY and the cash index SPX) I wonder what volume really can tell you as a sell order in one market may be offset by a buy market in another related market. Volume in one product is volume in THAT product. The "reason" for volume is not a consideration unless you are developing or reverse engineering a strategy with dependency or correlation with/to input in addition to volume. The centralization of futures volume allows complete and accurate stand-alone volume analysis in real-time, with understanding of the possible belated, but not hidden, reporting situations. I use a time-based OHLC-bar chart, volume, and a line tool. That is MY GRAIL. From what I know, most of ET does not use volume at all.
IMHO, all this is just self-fulfilling prophecy. Market Profile came out of futures pits, so it’s more popular for futures. Also, I think microstructure-wise, it’s best suited to futures. But here’s equities trader using one (skip to min 22 if you not interested in the rest):
Thank you, will definitely check it out! I watch the SMB videos all the time, they offer some really good insights.