Understanding the market with Market Profile- A discretionary approach

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orderflow13

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#1
Before starting about Market Profile it is important to add why and what is discretionary approach, so that there wont be further confusion among visitors If you are discretionary trader and want to understand market in better context like i want then this thread is for you, this thread is not about 'show me the money honey', if your understanding of market is sound successful trades comes along with it, if u focus on money ur vision get clouded ... well there is need to explain in detail and this is the thing which was keeping me away from making a new thread one b'cuz out of laziness, two b'cuz it may sound controversial and i dnt want to engage in those things...anyhow manage to add some inputs ...
before proceed go through this one single page, borrowing words of Dalton

Discretionary trading, which is to say we're not "systematic" traders, offering tactical, rules-based trading information & traders who want to understand how markets function, and who appreciate how important their individual role is to their financial success.
Consider this simple metaphor to illuminate the rigors of the learning process…to acquire a new language, you must first memorize words and verb tenses and parts of speech - which is itself a challenging prospect. Then it takes years of study to become conversational. But then it takes a quantum leap of intuition and deep knowledge to think in a new language. One of the indicators of fluency, in fact, is when you begin to actually dream in a second tongue.
In short, you must be able to view any given rule contextually, or else the rule has no value.Rules that are not understood and applied contextually may even serve to accomplish the opposite of their original intent; it is the lack of a "contextual rule" that casts doubt on most trading systems.
The appeal of a systematic approach is obvious: reduced emotional stress, sure profits, lack of personal responsibility, and im-mediate results - without years of building expertise. And if the rules don’t make money for you, then the blame can be placed on the rules, and not you. At the same time, you can accept credit for all profits since, after all, you selected the system.
Dictionary.com defines a rule as “a basic generalization that is accepted as true and that can be used as a basis for reasoning….” Nothing is said about the rule being tested for validity, or how the rule was derived. We are asked to accept it and move on.We all have rules-ingrained patterns of thinking that we mistake for truth and that when rule “ruts” form, all conflicting ideas are ignored .Rules stunt innovative thinking because they seem so right. They hide the numerous superior situations that exist, but are outside our rules,our experiences, mistaken assumptions, half-truths, misplaced generalities, and habits keep us from finding reliable solutions.
There is a bewildering range of variables that affect any commodity, futures contract, or stock. And there are nearly limitless combination and permutations of these variables. If a purely rules-based system were to be truly effective, it would have to offer a rule for each possible arrangement - an impossibility. Discretionary trading is about building a solid foundation, upon which one can make reasoned judgments based upon constantly changing conditions and a highly developed fluid intelligence. ( “fluid intelligence,” which is wholly dependent upon mental flexibility EXACT OPPOSITE OF crystal intelligence which work on previous memory)
Rules-based systems do not account for contextual market conditions, and are not adaptive to constantly evolving market conditions. On the other hand, discretionary traders can quickly alter the way they view and interpret shifting market data. The discretionary trader needs to understand how markets perform under an extraordinarily wide set of circumstances. Rules-based, or mechanical systems, can be implemented immediately, whereas discretionary traders must spend considerable time learning and acquiring the necessary knowledge to trade.Rules-based approaches, providing they are followed religiously, are not faced with the psychological short-comings, biases, or lack of discipline that often effect discretionary traders. Discretionary traders are constantly performing their own market analysis, and are required to spend considerably more time and effort both before and during market hours. This time requirement also limits the number of markets or securities discretionary traders can successfully follow. Therefore i limit our study for nifty futures.
Now about Market Profile in next post ... :)

Edit/Add - For the convenience of members, Posting the link of page 4 post 31 ( To do list for profilers before market opens )
http://www.traderji.com/technical-a...-market-profile-discretionary-approach-4.html
Added link of CBOT study guide on Market Profile

http://www.trading-naked.com/MarketProfile.htm]Common terminology on MP
 
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orderflow13

Well-Known Member
#4
Thanks for the support..
Market gives information every second,every minute,when its closed when its open..and market participants act on it and prices moves, now its our job to look at this information - market generated information- and try to avoid involving our 'SELF' in to the market generated information, means always listen what market saying whether you feel this way or that way , to do so Market Profile helps us it gives the structure and detail in the form of shape which our brain can instantly read ( brain remembers and understand logical pattern more clearly than random, disarray data ) ....
Basic theme of market profile is which time frame is in control, if u ask that qs and look at the chart then whichever image come in ur mind is Market Profile, which time frame controlling the price and which time frame controlling the volume and you get the point of control, market profile gives the hint when longer time frame ( investors )is coming in to the picture, MP gives hint when market is in the hand of short term traders, when we get that valuable information we can credit the prices accordingly ( short time frame moves prices to limited extent, long time frames moves prices to unlimited extent )and when each and every time frame work in sync, MP warns us market will go in to rally... here is the example and also explaining how to draw Market Profile chart manually, if u manually do so the ghost of market profile being a complex subject will be gone .




suppose we want to see 30 min time frame then name one alphabet to one time frame here we gave first time frame alphabet y, next 30 min tf z, A ,B,...next plot time frames which are on one particular price ..and here becomes this Market Profile graph



you can see the structure of market, its a balance structure, all day prices remain at the middle range ..
now there r various shapes market can produce, and each shape has its logical meaning..there r links provided by segul in his thread which r enough to cover basics.here i demonstrated it because i felt this way market profile may not look complicated ans when one manage to draw it manually then it makes complete sense..market profile is not techno mumbo jumbo its art of market reading and dedication ... to prove ur mantle here is the market profile calculator, put the price and it draws the profile ..as i said extreme hard work is involved in market profile ( u can still see the pit traders standing at CBOT taking pen and pencil drawing the market profile graph,sorry couldnt find the video link..its somewhere on the net )
mp calculator http://www.mypivots.com/calculators/market-profile-calculator.aspx
 
#7
thank u for starting this thread me also interested to learn market profile
and all the best :)
 

orderflow13

Well-Known Member
#8
thanks friends for support, also plz dont mind i might not cover the basics of market profile here ( i shd do but i believe in depth knowledge of basics is never a substitute for the hypocrisy of the knowledge ).. and basic information is easily available on google so i thought against cramping the space ..only cover the part to clear the intention of the thread and concept behind opening it.cheers
Alex
 

orderflow13

Well-Known Member
#10
Looking fwd to this new thread,Alex.......wishing you all the best!

Saint
Thanks saint sir, .. i must add, this thread is not an attempt to go away from your teachings but infact your posts and understanding of market with its structure always made me in awe & curious..what is that you see but others cant? and why is that when you share your observation other instantaneously see this thing which they never saw before ?.. my approach would be different but my objective is he same ' to understand the market framework ' and see the things contextually ....
Others may say experience but even if some one has that i dnt see the picture wd be different ( there is an old gentlemen of my fathers age who knows the market since ipo of relience, but he still jumps when market moves in his favor and never forget to ask me where the market will be heading? :D )
hope to see your inputs here
Alex
 
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