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Market Profile Trading Basics

The document provides an overview of Market Profile (MP) concepts and how it can help traders. It discusses how MP organizes trading data based on price and time. MP identifies three core concepts - price as an advertising mechanism, time as a regulator, and volume measuring auction success. It outlines different day types based on balance/imbalance and acceptance/rejection. Examples are given on structural elements like the point of control and how to assess position risk by analyzing profile structure and market behavior over time. The presentation aims to cover MP basics, identify patterns using structure, and demonstrate evaluating risk through continuous market development analysis and longer-term profiles.

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Varun Vasurendran
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19 views26 pages

Market Profile Trading Basics

The document provides an overview of Market Profile (MP) concepts and how it can help traders. It discusses how MP organizes trading data based on price and time. MP identifies three core concepts - price as an advertising mechanism, time as a regulator, and volume measuring auction success. It outlines different day types based on balance/imbalance and acceptance/rejection. Examples are given on structural elements like the point of control and how to assess position risk by analyzing profile structure and market behavior over time. The presentation aims to cover MP basics, identify patterns using structure, and demonstrate evaluating risk through continuous market development analysis and longer-term profiles.

Uploaded by

Varun Vasurendran
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Presentation – II

MARKET PROFILE - CONTEXT BEHIND THE CONTEST


Practical Trading Strategies

By Dean
www.getthattradingedge.com
Disclaimer
• Information shared here is not a trading recommendation, and we are
not a business of providing any.
• All information shared here is strictly for educational purposes only.
• Please use your discretion while acting on the information shared
here.
• We will not be responsible for any resulting profits or losses.
• Please consult your registered financial advisor before you make any
trading and investment decision.
Note
• In case of technical problems the webinar will be rescheduled at a
later date.
• Please post your questions in the chat window, I would cover them at
the end of the presentation if time permits, else they will be covered
in a separate QnA sessions for all the Slack Group Members.
• This webinar is being recorded and will be available to BellTPO
customers for free for a limited period of time.
• Those who missed last webinar will get link to join the Slack Group at
the end of this presentation.
Objective
• Cover some of the essential basics of Market Profile (MP).
• See how to spot the 3 core concepts of MP using profile structure.
• Cover examples showing how to “assess the risk” of a position.
• Using longer term profiles to get context.
What is MP
• It is a way of organizing data.
• Conceptualized by Peter Steidlmayer at Chicago Board of Trade.
• Further developed by James Dalton in his book Mind Over Markets.
• Market Profile (MP) was designed to understand the trading activities
of the floor traders at CBOT.
• But MP is now used to gauge the composite activities of all market
participants.
What do the letters mean?
How is data organized in MP?
How MP uses the traditional Bell Curve?
MP Core Concepts
• Price is an Advertising Mechanism.
• Time is the Regulator.
• Volume measures Degree of Success of an auction.
• 3 Basic Principles
• Balance vs Imbalance
• Acceptance vs Rejection
• Change vs Continuation
Day Types – Bal vs Imb / Acc vs Rej / Cont vs Chng
Non Trend Neutral Double Neutral
Day Center Day Distribution Extreme Day
Trend Day
Structural Nuances
• Prominent Point of Control
• Spikes
• Anomalies
• Poor Highs / Poor Lows
Prominent Point of Control
Spikes
Anomalies
Poor Highs / Lows
How does MP helps in trading?
• Helps in providing context for current market development.
• Adds a dimension to bar charts.
• Helps in identifying advantageous trade locations for better risk
management.
• Reduces the stress in trading.
Lets Dive Into Some Examples
We have to answer 2 important questions.....

Where is the market trying to go?


Is it doing a good job of getting there?

Objective is to…..

Assess the Risk of Holding a Long or Short Position


Important Factors To Consider
• EOD Analysis,
• Current Balance or Trend if any.
• Inventory Positions of different Time Frames.
• Trade Facilitation,
• Profile Shape
• Associated Volume
• Effort vs Results
• On Trading Day,
• Pre Open
• Opening – Confidence
• Expected Behavior
Objectives - Revisited
• Cover some of the essential basics of Market Profile (MP) – Day
Types, Structure.
• See how to spot the 3 core concepts of MP using profile structure –
Day Types, Structure.
• Cover examples showing how to “assess the risk” of a position –
Continuous Market Development on NF.
• Using longer term profiles to get context – NF Long Term Profile
Example.
Thank You

The next webinar in this series will be conducted on - 27/01/2017


From 10:00 to 12:00 in the Morning

ORDERFLOW – GETTING THE TIMING RIGHT

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