Trading Methods For Market Profile

Discussion in 'Technical Analysis' started by sahil79, May 1, 2010.

  1. sahil79

    sahil79 Active Member

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    Hi Friends, I am a small trader and I just do trading for a fun and not for the purpose of earning money as I know, It is a hard nut to crack earning money in stock unless U follow and trust a good system. Earlier, I used to wander here and there seeking a good system for Intraday but I honestly say it's just useless, better to strict to a system. Anyhow earlier, I came to know a system in this forum, known as MARKET PROFILE, but I did not know how to use it effectively. I requested to one of my friends and he gave me a good response setting up and trading MARKET PROFILE. Here I would like to share the things with u all.
     
    Last edited: May 1, 2010
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  2. sahil79

    sahil79 Active Member

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    *METHOD ONE*

    Only trade in the direction of the trend (Trend is determined by a rising or falling Point Of Control)

    terms used:

    VAL = Value Area Low VAH = Value Area High LOD = Low of Day POC = Point of Control

    HOD = High of Day DBY= Day before Yesterday IB = Initial Balance



    Trading Methods For Market Profile - (Category 1)

    Trade setup #1a: In a down trending market, when the current session opens below the VAL enter a short trade at the VAL and again at the POC. Place a protective stop for both trades 1.5 points above the VAH.

    Trade setup #1b: In an up trending market, when the current session opens above the VAH enter a long trade at the VAH and again at the POC. Place a protective stop for both trades 1.5 points below the VAL.

    Trade setup #2a: In a down trending market, when the current session opens within the VA and at least 2 points below the VAH enter a short trade at the VAH. Place a stop 1.5 points above the DBY POC.

    Trade setup #2b: In an up trending market, when the current session opens within the VA and at least 2 points above the VAL enter a long trade at the VAL placing a stop 1.5 points below the DBY POC.

    Trade setup #3a: In a down trending market, when the current session opens above the UVA and below the DBY VAL enter a short trade at the DBY VAL and again at the DBY VAH. Place a stop for both trades 1.5 points above the DBY VAH. If stopped out on this setup and price remains above the stop level, change directional bias for all category 2 trade setups for the remainder of the day.

    Trade setup #3b: In an up trending market, when the current session opens below VAL and above the DBY VAH enter a long trade at the DBY VAH and again at the DBY VAH. Place a stop for both trades 1.5 points below the DBY VAL. If stopped out on this setup and price remains below the stop level, change directional bias for all category 2 trade setups for the remainder of the day.

    Trade setup #4a: In a down trending market, when the current session opens above the DBY VAL and below the DBY POC enter a short trade at the DBY POC and again at the DBY VAH placing a stop 1.5 points above the DBY HOD. If stopped out on this setup and price remains above the stop level, change directional bias for all category 2 trade setups for the remainder of the day.

    Trade setup #4b: In an up trending market, when the current session opens below the DBY VAH and above the DBY POC enter a long trade at the DBY POC and again at the DBY VAL. Place a stop 1.5 points below the DBY= LOD. If stopped out on this setup and price remains below the stop level, change directional bias for all category 2 trade setups for the remainder of the day.

    Profit targets for all trades should be in consideration of the risk of each respective trade and should be placed in consideration of the previous days POC, VAL or VAH
     
  3. sahil79

    sahil79 Active Member

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    METHOD : TWO



    Only trade in the direction of the trend (Trend is determined by a rising or falling Point Of Control)

    terms used:

    VAL = Value Area Low VAH = Value Area High LOD = Low of Day POC = Point of Control

    HOD = High of Day DBY= Day before Yesterday IB = Initial Balance



    Trading Methods For Market Profile - (Category 1)

    Trade setup #1a: In a down trending market, when the current session opens below the VAL enter a short trade at the VAL and again at the POC. Place a protective stop for both trades 1.5 points above the VAH.

    Trade setup #1b: In an up trending market, when the current session opens above the VAH enter a long trade at the VAH and again at the POC. Place a protective stop for both trades 1.5 points below the VAL.

    Trade setup #2a: In a down trending market, when the current session opens within the VA and at least 2 points below the VAH enter a short trade at the VAH. Place a stop 1.5 points above the DBY POC.

    Trade setup #2b: In an up trending market, when the current session opens within the VA and at least 2 points above the VAL enter a long trade at the VAL placing a stop 1.5 points below the DBY POC.

    Trade setup #3a: In a down trending market, when the current session opens above the UVA and below the DBY VAL enter a short trade at the DBY VAL and again at the DBY VAH. Place a stop for both trades 1.5 points above the DBY VAH. If stopped out on this setup and price remains above the stop level, change directional bias for all category 2 trade setups for the remainder of the day.

    Trade setup #3b: In an up trending market, when the current session opens below VAL and above the DBY VAH enter a long trade at the DBY VAH and again at the DBY VAH. Place a stop for both trades 1.5 points below the DBY VAL. If stopped out on this setup and price remains below the stop level, change directional bias for all category 2 trade setups for the remainder of the day.

    Trade setup #4a: In a down trending market, when the current session opens above the DBY VAL and below the DBY POC enter a short trade at the DBY POC and again at the DBY VAH placing a stop 1.5 points above the DBY HOD. If stopped out on this setup and price remains above the stop level, change directional bias for all category 2 trade setups for the remainder of the day.

    Trade setup #4b: In an up trending market, when the current session opens below the DBY VAH and above the DBY POC enter a long trade at the DBY POC and again at the DBY VAL. Place a stop 1.5 points below the DBY= LOD. If stopped out on this setup and price remains below the stop level, change directional bias for all category 2 trade setups for the remainder of the day.

    Profit targets for all trades should be in consideration of the risk of each respective trade and should be placed in consideration of the previous days POC, VAL or VAH

    Trading Methods For Market Profile - (Category 2)

    terms used: DVAH = current session Value Area High DVAL = current session Value Area Low DPOC = current session POC

    Category 2 trades are based off the current sessions DVAL, DVAH and DPOC with profit targets of approximately 2 points (they will generally setup after steps 1 and 2 have occurred in the market profile�s development)

    When a Category 2 trade�s entrance level matches up with a VAH It is referred to as a Category 2+ trade (category 2+ trades are generally good for 3 or more points)

    Step 1 ...being vertical movement of price. Step 1 will generally take place during the Initial Balance period of the day (the first 60 minutes)


    Step 2 ...being the capping of step 1. Step 2 often occurs during the IB period as well


    Step 3 ...is when the market begins to move more in a horizontal direction than vertical direction and the bell curve begins to take shape


    Step 4 ...is when the bell curve is becoming fully developed and its DPOC tries to drift towards the center of the IB, if it is not already in the center (occasionally steps 3 or 4 do not fully develop and the market enters step 1 again, this is known as minus development)
    Minus development is very helpful in showing the direction of the market.
     
  4. rpc

    rpc Active Member

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    thanks Santoshv2k for starting this thread.
    Pls explain your system with charts.Also explain what is market profile and where can we get this afl.
     
  5. sahil79

    sahil79 Active Member

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    Dear rpc, im really sorry to explain more as i am a little busy with my job Anyhow, U can get the afl for amibroker from software-amibroker section for the same.
    regards
     
    Last edited: May 8, 2010
  6. rpc

    rpc Active Member

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    hi santoshv2k
    Great to know we have a BLACK CAT COMMANDO amongst us.We salute you people for protecting our country.I know how demanding your career is,One of my relatives is also a commando.
    with best wishes
     

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