Volume Profile and Market Profile a new wave of market picture Important Posts POST 1
Let us dive into the importance of time in trading! I believe time is important i mportant because of the following reasons: 1) Time is money 2) Time will affect a trader’s psychology 3) The odds of a winning trade decrease if a trade takes too long to develop 4) The chart is a time/price relationship along with volume Welcome to Market profile study!!! Gurus of this method or this new way of looking markets are J. Peter Steidlmayer, a trader at the Chicago Board of Trade (CBOT), in was introduced to public in 1985 ,later james dalton added many things A trend trader can trade sideways market as good as a trending market with MP as he knows its time to fade the moves - Jim Dalton Market profile don't give any targets nor it is a separate system,it is can act as best filter for trade setups..don't jump to conclusion that it is a new system it is a another voice of market ,just listen it if you can
i'm going to move from simple level to advanced level (i f people are willing) and also welcome experienced traders to contribute there work POST 2
In Technical Analysis maximum stress will be on price and least i s on volume and time , where as market profile deals with Price and Time with least weight on volume and in case of volume profile time is given least weight,which we will see later ,so core components of trading are PRICE ,VOLUME AND TIME Market profile chart it is represented with distribution of time and price and volume in bell shape curve to reveal value and pattern
At start we will see some of the components of market profile 1.Value Area 2.Point Of Control 3.Initial Range 4.Initial Balance 5.Range expansion 5.Poor high and Poor low 6.Excess
1. Value area - price range in which approximately 70% of the market vol ume took place. and upper high of value area is called value area high and lower is called value area low 2. Point of control:It control:It is the price where most of the trade for the day happens, which we generally denote that in short words (POC) 3. Initial Range :First :First 10 min range of the day
4. Initial Balance: First Balance: First hour trade activity which we denote with IB 5. Range expansion:Range expansion:Range expansion or extension is price action move beyond IB 5. Poor high and Poor low: A low: A market reaction forming a high which i s against trend then fizzling out same with poor l ow a market reaction forming low but it will be covered in market due course 6. Excess:when Excess:when low and high are formed with strong pull back with in short time it is called excess. POST 3
Just presenting today's Nifty Fut 30 mins chart with some of t he terms discussed in post #10 marked on the chart As the Range has expanded beyond 1st hour so range extension can also be seen today i'e market passed the high of first hour high (9.15 to 10.15)
Main factor which separates market profile from other classical TA is the time factor and MP charts are usually constructed on TIME AND PRICE,Lets see what is price and time with relation to market , When market opens @ 9.15, with in first 30 mins we see and move there after a pause and at last a surge or plunge at flag end of the day (or) ( or) We have a second scenario where market moves in the opening section and whole day it remains in that range… range … This time factor is main for short term pl ayers (intraday) (intraday) and not much important for longer time frame traders (now on words Other time frame traders(OTF) - swing and positional traders) why ?? since there position is more depended on pri ce where as day traders are dependent on both TIME as well as PRICE As this time factor advantage is there for large player they are the deciding factor and day traders has to follow them for gains Market profile terminology calls this time and price as TPO (TIME PRICE OPPORTUNITY)
TPO – TPO or Time Price Opportunity is Opportunity is the basic building block of Market Profile. Each and every letter in the chart represents a TPO. Which i n turn represents a point of time where the market touches a price. Each consecutive letter denotes a 30min period of Market Activity. In our example as shown below the letter ‘A’ represents how the price traded for the first 30min. Letter ‘B’ represents next 30min of activity. And Letter ‘C’ and ‘D’ represents subsequent market activity details and so on.
Developing Point of Control(DPOC): It is the Point Of Control which is forming for the current day of trading i.e POC forming in the current section of 5th AUG is DPOC and 4th Aug is POC POST 4 Below is the Small setup for f or Intraday trading based on DP concept of POC Step 1 : Note down the POC of Previous day (in 30min HTF) Step 2 : Note down the High and Low of Previous day Step 3 :Mark them on the current chart as DP (Decision points) and trade them with simple price action
Just posting the image of simple setup discussed in post #25 4th Aug NF FUT basing on POC,PDH,PDL of 3rd Aug
Morning candle Opened between the previous day high and l ow and pierced the POC basing on this conclusion: PDL and PDH will act as support and resistance and POC can be used as trade anchor for the day Hope i have made members understand the basic concepts ,please do post your queries if any.. i'm not good in teaching
just presenting my understanding in best possible way
POST 5 TPCOUNT Market profile is a market's price activity recorded in relation to time in a statistical bell curve and TPO's are opportunity created by the market at a certain price at a certain time Number at the edge of the Profile chart 33 and 50 represent TPO count !!! TPO count of 33/50 means 33 above the POC and 50 below the POC. This indicates buyer dominance or buying control. The TPO count above the POC represents sellers willing to short above value while a TPO count below the POC represents buyers willing to buy below value. Buyers below POC view the markets as undervalued while sellers above the POC view the markets as overvalued.
POST 6 POOR HIGH/LOW and EXCESS Just showing a candlestick pattern to explain in details PoorHigh/Low and excess.. Let us discuss to candle stick patterns which you all know hammer/hanging man except on basics of close there is nothing special for us i n classical TA ,but profile user sees this on basics of time Bullish hammer (with respect to the recovering from LOW) if it is done is swift manner within very short time then it is Excess and profile users give more importance to this one. On basics of time POOR HIGH/LOW AND EXCESS are very vital for profile traders
If that hammer is formed near any support with in uptrend which almost makes it double bottom or a revisting area (demand) and time taken to recover is much longer then it is called “POOR LOW” If that hanging man is formed near any resistance in downtrend( rally in downtrend) which is also a revisting resistance and time taken to crack form that high longer then it i s “POOR HIGH”
In uptrend we will have poor low’s i.e; market moves away from trend and resuming previous trend after spending some time in opposite direction (poor low ) if the time spent is very less then it is excess low Below chart of Nifty Spot and demand and supply zones marked Just classify date marked into Poor high/low and excess and post charts watching intra day charts ..on basics of this I can move further
Note:Manual drawn lines not from any AFL
POST 7 Few more important terms of reference to be used... Initiative Buying – Buying above the value area. Initi ative buying would imply that you expect the current uptrend to continue as you are willing to buy at a higher price than you could have bought during the previous day. With i nitiative buying you are looking to capitalize on a fast moving market that is making new hi ghs. Initiative Selling – Selling below the value area. Initiative selling would imply that you expect the current downtrend to continue as you are willing to sell at a lower price than you could have sold during the previous day. With initiative selling you are looking to capitalize on a fast moving market that is making new lows. Responsive Buying – Buying below the value area. Responsive buying would imply that you expect the market to return to the mean (the center). Buying responsively in an uptrend is a strong play. Responsive Selling – Selling above the value area. Responsive selling would imply that you expect the market to return to the mean (the center) Selling responsively in a downtrend is a strong play.
Initiative Buying/selling is almost Break out version of classical TA Responsive activity is something which comes at important support or resistance. For example: Previous day high/low, morning range high/low, congestion zone high or low criteria
POST 8
Rotation Factor (RF) – A calculation that shows the strength of the current market trend. It is calculated by assigning a value from -2 to +2 to each TPO. A value of -1 is assigned to the low of the current TPO if its low is lower than the low of the previous TPO, a value of 0 is assigned to the low of the current TPO if its low is the same as the low of the previous TPO, and a value of +1 is assigned to the low of the current TPO if its low is higher than the low of the previous TPO. The same applies to the highs. A value of -1 is assigned to the high of the current TPO if its high is lower than the high of the previous TPO, a value of 0 is assigned to the high of the current TPO if its high is the same as the high of the previous TPO, and a value of +1 is assigned to the high of the current TPO if its high is higher than the high of the previous TPO. All of the values are then added together to get the rotation factor for the current day.
POST 9 80 % rule if market opens above VA or below VA and coming into VA and remaining there for 1 hour i,e., 2 consecutive candles of 30 min then there is 80 % probability that it (va) will be filled However if price opens above/below previous days value area and haven’t return back then it is a sign of one sided directional move
POST 10 :DISTRIBUTION DAYS AND TYPES
Market Profile : Different Types of Profile Days Welcome to Market Profile Series. In the l ast tutorial, we saw the different types of markets (Balanced and Imbalanced). In this tutorial, we will be discussing about the different types of Market Profile Days. By analyzing the shape of profil e, one can easily identify
who is in control in the market.
whether other timeframe players are present for the day.
What the market is trying to do. Which direction market is attempting to move
Which are the key levels market is attempting to test or re-visit
Non Trend Day
Non Trend day is a balanced market profile which occurs before an major economic event, news, earning result outcome to happen resulting in lack of participants and a typical dull boring day. Range (high-low) for the day is very compressed and the risk-rewarding nature for
an intraday trader is very less. Market likes to auction both the sides centered to the point of control. Only scalping the market favors an intraday trader on these non trend days.
Non Trend Days are mostly inside day where the current day’s range is within the previous day’s high-low range and the price rejection (at high or low) happens near to the previous days
high volume node. There is no range extension on either sides which shows lack of other timeframe traders and the price rotates within Initial Balance. Market shows very low volatility and the Initial Balance is very small. Watch Live Market Profile Charts Normal Day
Normal day is a balanced market profile but with a wider Initial Balance. It occurs generally when there is a news release post previous days market hours or due to global market sentiment(too negative or too positive). This action is followed by range extension on the direction of the sentiment and the long term traders or investors are responsible for the such action (driving the price outside (which can be identified with single prints) the range
extension). But, due to lack of conviction among the participants, the one sided directional move comes to an end and the price reverses back to test the other side of range extension.
Price generally rotates near center of the profile and the maximum participation happens at the center of the profile with higher volumes at the POC (point of control). Single prints(Buying tails and Selling tails) on both the sides indicates lack of conviction among both the other timeframe buyers and sellers. Profile shape looks like a perfect bell curved shape.
No one is control of this market type and the risk reward ratio is higher for a day trader at the extremes. More wider the initial range, more risk-rewarding for the day trader. However, the profile is low risk rewarding for new shorter term traders or long term pl ayers (who holds the position for more than a day) as the market closing is very close to the center of the profile.
A Profile day with wider initial balance with no range extension is also considered as normal day.
Normal Variation Day
Normal Variation Day is typically an imbalanced profile and the day is dominated by large timeframe players (Buyers or Sellers). Long time-frame players are waiting for the market to settle down where they consider the price to be fair and then they take control who drives the market aggressively post 11.00a.m or 12.00p.m with the range extension outside the initial range. The range extension is more than 2 times the Initial Range And the Initi al Balance is typically smaller than the normal day but higher than the trend day.
The above picture shows a typical normal variation up day where the range extension happens in the ‘G’ period and the length of range extension is 2x Initi al Balance.
Trend Day
Trend day is an imbalance profile where the day i s controlled by the long timeframe participants and the conviction is very strong among the long ti meframe players right from the beginning of the market. A Perfect Trend Day looks like low of letter A > B > C > D in a uptrending market and the high of letter A > B > C > D in a down trending market. However price overlap in A,B,C,D may occur.
Profile shape is vertical, elongated and very few price rotation and clear sign of one sided trend right from the beginning. And the Value Area is typically very large on a trend day. Risk-Reward Ratio is typically higher for a day trader during Trend Days.
Double Distribution Day
Double Distribution is an imbalance profile where Initial Balance is small and the first price rotation (1st Balance Region) happens at Initial Balance. Then, the larger timeframe traders take control and drive the price in one direction. In the later session, another price rotation happens at the other side of the edge(2nd Balance Region). Both the price rotation regions should be separated by single prints. Risk-Reward Ratio is typically higher for a day trader during Double Distribution Days.
Neutral Day
Neutral Day is a balanced profile where initial range is smaller than Normal day. Both the Other timeframe buyers and other timeframe sellers are Present. They don’t trade directly each other but the intraday trader will act li ke a mediator between both the larger time frame buyer and seller.
Range Extension happens on both the sides however, it will be a failed Range extension which brings the price back into the Initi al Balance range and the price rotation happens there. Range extension tails will be very minimal and such range extension confuses a trader to assume as normal day or normal variation day during the development of profile but the failed range extension pushes the price to the other side of the edge and trade back and forth. Such profile days occur generally when the VIX is hi gher.
If the price closes at the center, then it is called Neutral Profile Center and if the price closes at the extreme edge of the profile it is called at Neutral Day Extreme.
P Profile Shape
P Profile days are short covering days and the letter A or B forms the bottom with single prints in the Initial Range and market opens at the bottom of the profile. The price rotation happens at the top of the profile (i.e at the range extension area).
b Profile Shape
b Profile days are long exit days and the letter A or B forms the top with single prints in the Initial Range and market opens at the top of the profile. The price rotation happens at the bottom of the profile (i.e at the range extension area).
Risk Reward ratio
lower in Non Trend Day, Normal Day.
neutral in normal variation day and Neutral Day
higher in Trend Days and Double Distribution Day
Initial Balance Range
Non Trend Day – Narrow IB
Normal Day – Wider IB
Normal Variation Day – less than Normal Day IB
Trend Day – Narrow IB
Double Distribution Day – Narrow IB
POST 11
How to Prepare a basic report with MP !!! First one will be weekly :This are values for entire week ,(this i s my way )
Values :VAH: 8745 POC 8679 VAL 8610
Basing on this if NF don’t close above 8745 then it will move towards 8679 if not returned from this then it can move towards 8610 levels for this week
Today action: Today nifty rested above 8745 and retured towards lower areas forming Poor High there and touched 8679 Today MP values for tomorrow trading in Daily
VAH :8721 POC :8697 VAL :8673 With respective to daily if NF not crossed 8721 With in IB then 8697 and 8673 , 8610 but if moved Above 8745 then NF will resume its upwards trend Upon on this I will plan my intraday for tomorrow For all this study use 30min charts mp daily for intraday, weekly( for broader out look for entire week)
POST 12 Naked POC: It is a POC from a previous days that price has not returned to on any of the following days. Since POC is point were price has retured max ti mes ,it will act as magnet and any untouched POC (Naked/virgin) will pull the price to that l evel Just final picture with All zones of D and S and MP ... Deception zone :zone where there is no support of va's or poc's
Note : Zones are manually drawn POST 13 NPOC :Naked Point Of Control I think some confusion is there in understanding NPOC & as requested by members i’m once again explaining this concept in details Naked POC: a POC from previous days trading range that price has not returned to on any following days. So in any given day if market was traded above or below the POC with out touching it …then for next day it will be a naked POC … If we see daily profile in 30 mins we get poc of daily and if that was not touched it will be come daily NPOC and Weekly NPOC and as per MP theory they act like magnets and price drifts to there location
Just see Day 1 DPOC of will be next day POC on that day 2 market action never touched POC 1 so that makes it Naked POC , in same way day 2 POC was not touched on day 3 and day 4 poc was untouched on Day 5 these NPOC's acts as magnets and price pulls to then as pe r profiler language Hope this clears all the doubts now !!!
POST 14
One concept of Market Profile which is i use most is differentiating ,balanced market, and one t hat is imbalanced. Balance simply means an equal amount of buyers and sellers around a particular price ar ea. That also means what? A range-bound market. I also learned that the more time price spends at a particular level, the more significant that level is. Usually you will find the “point of control” or price level where the most time was spent. When price moves away from this area, and happens to revisit it, this area becomes a very important potential turning point. So I can adjust my expectations appropriately and better anticipate the market.
POST 15
The market profile is constructed on Basis of "TIME" which is vital for intraday player and also for 2 to 4 days swing traders ,but for positional trader it is not much of use as "TIME" limitation is not a major factor to them. Just studying price and getting exposed to over night risk basing only on that is not a good idea so we study volume why ?? to locate areas of big volume players so that exposer risk can be reduced -------------------------------
What is volume profile---------------------------------
A Volume Profile is similar to a Market Profile in as much as they both show a profile (a bell curve) against the Y-axis of the chart to represent the most traded area(s) of the ti me period that they have been constructed against. The major difference, a significant one, is that a Volume Profile is constructed using the volume traded at each price while Market Profile i s constructed based on time brackets traded that the market traded at each price called TPOs.
Volume Point of Control The most traded price (the one with most volume) is defined as VPOC, or Volume Point of Control.And High volume node and Low volume node are more i mportant in this
Post 16 VPA Bearish example
Bullish example
Confused and Failure story
Post 17 Other patterns of VA's 6 candle count whenever there is a range extention on a day where pVA i s overlapping we will count six 5min candles (i.e. one TPO) before placing a trade i n the direction of that range extension. Spike: Last closing hour rally in the market is call ed a spike and we can see that time from 2.30 for nse.. Opening of tomorrow basing on this spike of previous day is above VA without any over lap of Pva's it can be seen as continuation. if we found it overlaps or with in va then it will be failure breakout in majority cases
Half back reference Half back reference is nothing but {{Previous day High + Previous day low}/2} mid point of previous day..as per profiler language if stop loss what ever may be your system i s at mid point of this reference then it will be eaten out soon Post 18 The key to understanding and effectively utilizing the Market Profile lies in correctly reading and interpreting its evolving information graphic. Through study and experience, traders can learn to identify the market's underlying dynamics and structure and then initi ate, manage, and exit trades accordingly. If people are interested ,We can di scuss days chart in the evening after market hours. POST 19 Weekly MP is overlapping with previous week which is not good for swing trading particularly for people like me !!! VAH 8739 @ POC @8676 VAL @ 8613
Daily VAH @ 8688 POC@ 8676 VAL @ 8664
POST 20 Today trade in NF First opened in VA so 80 % rule and have to respect IB done after breaking of the VAL just booked after hitting the TSL @ Weekly VAL
IMP POST HAPPY POST 21 Friday's BNF price action is a good example of double distribution day. . .
Although the AFL shows just one PoC and a very wide zone for Value Area On this kind of days we can safely redraw it to have 2 PoCs and 2 narrow zones of Value. The AFL uses pure maths to do its work, but as traders we have more insight and can see the PA more vividly . . . If you check today's PA on BNF, you can clearly see a short trade setup from higher zone to lower zone and then a potential long trade back to hi gher zone (remember PoC's also act as price magnets)
POST 22 Double distribution is explained by Happy singh, there are patterns that offer the significant potential to trade: A capital “P” pattern indicates a retest of resistance and/or higher prices. A lower case “b” pattern shows a retest of support and/or lower prices.
POST 23 16 th AUG DOUBLE DISTRIBUTION Yesterday Double distribution so any BO should be above yesterday high with cap to weekly level of 8745 Once BOF is noted...shorted to Half way refer as tsl then moved to above POC.. Same thing applies for P and b distributions !!! first is bullish and later is bearish
The 80% Rule: DETAIL
The 80% rule is easy to understand. This is when the market gets (or opens) above or below the Value Area, and then gets in the Value Area for two consecutive h alf hour periods. The market then has an 80% chance of filling the Value Area. Many traders familiar with the Value Area and the techniques that go along with it use it to help them decide what trades to do each day. You will find (once you get used to it) that using the Value Area each day will be very valuable in your trading. With that in mind, a good strategy is to try and ride the market as it fills the value area. There are two scenarios to watch for: * If the market opens above the value area and then gets in the value area for two consecutive brackets, there is an 80% chance of the market filling the value area. * If the market opens below the value area and then gets in the value area for two consecutive brackets, there is an 80% chance of the market filling the value area. Two Consecutive Brackets: When looking at a 30 minute bar chart, if the market is in the value area for one bar, and when the next bar opens, if the market is still in the value area, the market has then been in the value area for two consecutive brackets. This is the time to watch for the 80% rule. Important Exception to the 80% Rule:
The market does not have to open above or below the value area to have the 80% rule come into play. Here's why: 1) If the market opens in the value area, and then gets either above or below the value area, you can still have an 80% rule. 2) Once the market has moved above or below the value area, and then gets back into the value area (for two consecutive brackets or 30 minute bars,) you then get the 80% rule. When this happens, it's as if the market had opened above or below the value area. The market now has an 80% chance of filling the entire value area (even though the market didn't open above or below the value area.)
Some Important Things To Remember About the 80% Rule when the market has opened above the value area and then gets in the value area:
When the market gets into and stays in the value area for two consecutive brackets, that is the time to look to get short (looking for the market to move lower and fill the value area.) You need to try and get short as close to the top of the value area as possible because your protective buy stop should be above the value area. Here is why that's important: 1) you want to take as little risk as possible, so the closer you can enter your short position to the top of the value area, the better.
2) You don't want to get short too close to the bottom of the value area because your objective (exit point) is the bottom of the value area. It certainly wouldn't be smart to try and get short very close to your objective, because the risk to reward ratio is not very good. 3) In this scenario, the market will often give you a chance to get short at the top of the value area. If you miss your chance to get short near the top of the value area, you will usually not attempt this trade. Remember, the further away you get short from the top of the value area, the more risk you must take because the correct place for your buy stop should be above the value area. When the market has opened below the value area and then gets in the value area:
When the market gets into and stays in the value area for two consecutive brackets, that is the time you will look to get long (looking for the market to move higher and fill the value area.) Here, again, you need to try and get long as close to the bottom of the value area as possible because your protective sell stop should be below the value area. Here is why that's important: 1) You want to take as little risk as possible; so the closer you can enter a long position to the bottom of the value area, the better.
2) You don’t want to get long too close to the top of the value area because your objective (exit point) is the top of the value area. It certainly wouldn't be smart to try and get long very close to your objective, because the risk to reward ratio is not very good. 3) In this scenario, the market will often give you a chance to get long at the bottom of the value area. If you miss your chance to get long near the bottom of the value area, you should probably not attempt this trade. Remember, the further away you get long from the bottom of the value area, the more risk you must take because the correct place for your sell stop should be below the value area.
Excellent Support and Resistance Numbers! It is a good idea to use the top and bottom of the value area as support and resistance numbers. For instance, if you were long above the value area, you could put a sell stop just below the top of the value area because if the market got into the value area, it would cancel out the bullish signal. And, if you were short just below the value area, you could put a buy stop just above the bottom of the value area. If the market gets back into the value area, it cancels out the bearish signal. The reason to put your stops just inside the value area:
Most futures markets (especially electronically traded markets) are very volatile. You've got to think of support and resistance numbers as an area and not just a single price. If you place your sell stop at the very top of the value area (if you're long) and at the very bottom of the value area (if you're short) then you run the risk of getting stopped out of the market if it only touches the bottom of the value area instead of actually trading back into the value area. You need to see if that particular level will hold, not necessarily, just that one price. Conclusion
The value area is something to watch every day. It's an excellent gauge of market direction, and you should always be aware of it. The 80% rule can be very profitable once you get used to it. (But remember, 80% means it will work 8 out of 10 times, not 10 out of 10. So make sure you always have your protective stop in place to protect yourself.) The other thing that is important is about Initiating Activity. If the market opens above the value area and can't get inside the value area, this is when you get initiating buying. This does not mean that the market will go down! The market can go an y way at any time. (If there are more sell orders, it will go down, it's that simple.) But when the market opens above the value area (and you can't get in) there is a better chance that it will go up. So, looking to buy breaks and get long will be your best chance for success. And the opposite is true. If the market ope ns below the value area (and you can't get in) the market can still go up if there are more buy orders. But in this case, looking to sell rallies to get short will be your best chance for success.
POST 24 GAP in market profile
Market Profile theory suggests that there are essentially 2 types of traders tha t make up the market. Day time traders; these are opportunistic traders looking to make daily profits are not concerned about larger trends. And ‘Other Time Frame’(OTF) traders; those who trade for any period longer that a single day. We like to refer to these as institutions… the bigger money Now we must evaluate a gap in the context of market profile, and ask the question ” was this gap caused by day traders (small money) or the institutions (big money). The answer to that question will tell us whether the gap is an imbalance gap or a professional gap. A professional gap as the term implies was created by professional traders or institutions. The imbalance gap… well you guessed it by the smaller day traders. Imbalance gaps tend to reverse and fill within the 1st 30-60 minutes of trading professional gap? That is an entirely different story. The rule here becomes d on’t trade against the big money. If the institutions were responsible for creating the professional gap then we must respect the impact they have in the market, and trade with and not against them. That means to take trade in the direction of the gap. Go long if we gapped up, and go short if we gapped down The final part in this equation is how to tell the difference between a professional and an imbalance gap. To do this you must be a student of Market Profile Theory and understand the difference between markets that are building v ersus losing value. POST 25 I think there is some confusion in between Market Profile and Volume Profile among readers of this thread ,Market profile gives more importance to ti me and price and less stress on volume,where as in Volume Profile, Price and Volume are more important and it ignores time.
POST 26 TRAP or FAILED AUCTION
Every body know the concept of Bull trap and Bear trap any ways just below is the image of that which we use mostly in price action trading
In the same way there is concept called failed auction in market profile ,Ray Barros has brought back this into play for trading , only difference between price action and MP is ,with MP we can estimate the period in which this Failure pattern can occur ,which they term them as failed auction Failed Auction is often a successful trading pattern in market profile. It occurs when the Initial Balance (first 60min high – low) is taken out and later within 30mins, price pullback happens followed by the price action towards the other side of the Initial Balance as shown below. Failure to hold the Initial Balance(IB) break zone for more than 3 0min is said to be failed auction. next days initial price reaction is likely in the opposite direction of the failed auction zone and later Failed auction Zone is expected to be revisited within 5 days (as per Ray Barros). Thus provides tremendo us trading opportunity for traders to play this pattern towards the failed auction zone.
TRIPLE DISTRIBUTION
Post 27 Details on Failed auction with in NSE timing prospective.. If prices move higher then we say that buyers are in control and if they go down then sellers appear to be controlling.In Market Profile "Open" is life depending on this IB ,80 % rule,Open drive etc comes into play
Most of the times, the first 60 minutes appear to b e the time when the market is establishing value for the day and is referred to as the Initial Balance. This is especially the case in markets like ours which do not confirm to 24 hour futures trading and hence knowing the first 60 minutes of activity becomes v ery important for a trader in the day time frame.But once it open out side the va's it is much more similar to Breakout failure pattern of classic charts once its fails
As markets do not always stay within the first 60 minu tes of activity the whole day, the movements outside the initial balance often produ ce some amazing trading opportunities for all traders. Market Profiler named Ray Barros is the person who bought this idea of Failed Auction.
Failed Auction Theory : A failure to stay outside the initial balance for more than 30 minutes (on one side), followed by a revisit inside the initial balance and an opposite move on the other side of the Initial balance, but with in this if the first candle of 30 mins is out side the va's (gap),then it may be open drive or a failure ,will lead to downside..so for our market as per the core rule of the concept this amount to failed auction as per my understanding !!!
Since we are traders and have to assemble whole concepts in a flow without conflict, so trade like this for F and o... but this does not apply for 24 market !!! After a failed auction, the initial move is in the direction opposite to the one that failed, but the beauty of the theory as pointed by Ray Barros is that the market will revisit the failed auction zone in about 5-6 days in over 75 % of the cases.
Post 28 Check list of MP which i follow
INTRA
1.Open/close with in VA then remember 80 % rule unless it comes out of VA 2. Open outside VA check for OD SWING
1.Based of weekly VA entry 2.FA will be for target booking ,if there is no such thing just ride the trend 3.if daily va is with in weekly then just do intra for the week POSITIONAL
D&S along with RF Post 29 Well , i have covered all the parts of trading, including swing in this thread !!! just a recap, RF will be used on daily charts for positional and divergence as entry mode ,just watch some charts with RF on daily you will understand
Swing will be based on D&S along validation with MP !!! post 12 in pdf !!!
Post 30 Swing trading is will be done on basis of weekly profile... at rare case it can reach monthly profile high and lows in case of strong trend...and my entry time is 15 min and profile reading time is 30 min which i mentioned in the start of the thread: Rules:1. Use weekly profile as DP for Profit booking and entry 2. Above VAH highly bullish and VAL bearish !!!! 3. POC will be one of the entry DP 4. Price action is the key AFL for this is already shared in the thread
Post31 SWING: Today NF opened with gap almost near the vi cinity of Monthly VAH ,which offered no g ood R:R entry for swing !!!
INTRADAY: Intraday trade was quite simple taken trade after finishing of IB, since there is no good low risk setup..
Post 32
Price cycle completed its course by reaching Monthly profile high, so we will not consider any trade under swing ,fresh trade will be from Monday (9th Jan -17) for intra trading 8298/8283/8265 --VAH/POC/VAL...with 8205 as NPOC Range extension: A price probe outside of the established range that indicates that more aggressive participants have entered the auction Below is the best example ....hope i'm able to make people understand !!! put your query in case of any doubt
Swing chart: no trade chart is self explanatory
Post 33 Intra: Just two scratch trades (my daily limit is just 2 trade per day)
Swing :
Intra
Post 34 Today there is no fresh swing trade and intra ended i n minor loss !!!
Post 35 Just posting why yesterday was NTD in intra and swing Intra: Intra registered a poor high ,and reaction will below 15 min candle low but target was VAH !!! not a best RR so not traded, then market got into a range in general term and non trending day in profile terminology
Swing: Self explanatory
Post 36 Swing DP's and intra Dp's
Swing: No trade !!! Intra : Just two trades 1st after IB and second above VAH
Swing NTD
Intra: Only one trade which ended in loss
Swing: NTD Intra :Two trades one is BE and another hit target
Swing: NTD !!! since last day of the week !!!
Intra:Two trades in total, first trade hit SL but ,second was good
Post 37 Swing DP' from 23 rd Jan
Basing on the development Dp's of weekly and watching feb series for entry is the move i do Intra: DP's for 23 rd Jan 8433/8421/8370-VAH/POC/VAL
Post 38
Volume profile for intraday Lot was discussed on MP..but just presenting a volume profile POC setup for intraday trading !!! i think it was old thread i could not dig that out ,but afl for this is from net source...all credit goes to the author for this it got great use in stock trading and index fut..there is no complex NPOC/FA/80% rule etc...
SETUP: DP's needed PDH,PDL,Previous day volume POC Flow: cont... Mark this lines for previous day( Blue li ne is PDH and Dark red line PDL and VPOC is black )and trade as per above setup !!!
cont... Mark this lines for previous day( Blue li ne is PDH and Dark red line PDL and VPOC is black )and trade as per above setup !!!
Post:39 Final check list of MP
[B]INTRA[/B]
1.Open/close with in VA then remember 80 % rule unless it comes out of VA
2. Open outside VA check for OD
[B]SWING[/B]
1.Based of weekly VA entry
2.FA will be for target booking ,if there is no such thing just ride the trend
