Does Market Profile work in Spot FX

[halfstep]

Hi, I have just been introduced to the methodology of Market Profile. one of the core component of market profile is volume, which is not used well in spot currency market.

the question is, does market profile work well in spot forex market?
any experience anyone?

 

[Splitlink]

Hi, I have just been introduced to the methodology of Market Profile. one of the core component of market profile is volume, which is not used well in spot currency market.

the question is, does market profile work well in spot forex market?
any experience anyone?

I have looked into MP without buying any books, just reading what I can find for free, so my opinion is up for debate by anyone who knows more than me ( and that's almost everyone).

It should work with Forex because volume, as such, is not needed in MP. It's a factor that "finds itself", if it can be expressed that way. Fair value is found by developing the bell shape diagram. That, in turn, shows where the most activity is.

I gave it up because it did not tell me what I did not know by looking at charts. Fair value can be found by finding the horizontal line with most bars cutting it.

Have you looked at TRO's (The Rumpled One) threads? I have spotted the above in his trading plan but, beware, I can't understand much of him, apart from that. You may be able to.

Market Profile does not interest many here. I've tried!

 

[jrplimited]

Hi, I have just been introduced to the methodology of Market Profile. one of the core component of market profile is volume, which is not used well in spot currency market.

the question is, does market profile work well in spot forex market?
any experience anyone?

Hi halfstep,

I saw a great looking indy over at forex factory which depicted MP on far right side of any chart (MT4 based app) some while ago, but can remember it was pc resource hungry. If you use MT4 then you can always experiment with creating your own MP via the API app into MS Excel, ie collect yesterday's bar array data and have Excel map this out into a bell curve to show frequent price points etc.

Regards,
Simon.

 

[tenbobtrader]

"Market Profile does not interest many here"

worth looking into then

http://www.cmegroup.com/education/index.html#

select most popular - bit of info in there / interview or 2 & other stuff

+ general read stuff with links

http://www.cisco-futures.com/beginning_trading.html

http://www.cisco-futures.com/

http://www.cisco-futures.com/Auction_Market_Theory.html

 

[Splitlink]

Where does it deal with MP? I haven't been able to find it.

 

[tenbobtrader]

easy read version

 

[halfstep]

thanks guys for the replies .
I am also reading another book, which has great reviews on MP.

MInd over Market, by James F Dalton. you can find the PDF version easily if you google it.

 

[halfstep]

another question, does market profile only work for day trading? i realize that by representing every half hour as a letter, the market profile was originally intended for future floor trader with only 5 hours. does it work for the "other time framers"?

 

[Splitlink]

another question, does market profile only work for day trading? i realize that by representing every half hour as a letter, the market profile was originally intended for future floor trader with only 5 hours. does it work for the "other time framers"?

That was my problem. I found that if I charted each day's diagrams on Excel, using 30M bars, it gave a daily trend ok, but so does a bar chart do all that.

As an intraday trader, I could not relate the "alphabetical" chart with what was actually happening. The bell developed too late and I missed trades that I would have taken with a bar.

Andy sent a link, yesterday, which explained that volume does have to be compared with MP for a more correct interpretation but I understood that Steidlmeyer developed MP because, although the EOD volume was correct, during the day there was no way that the volume could be related to the exact timing of the price.

Anyway, as I said before, I only brushed the surface of MP. There has to be a lot more studying of the subject to become an expert at it, I'm sure.

I did post a week's work on Excel last month on one of the member's forums. I'll put it on again, if you think it would help.

Tucker said that there was no advantage in using lower time frames but I find that when using a bar chart in associating horizontal lines with the number of bars that cross them, some TFs work better than others.

 

[halfstep]

That was my problem. I found that if I charted each day's diagrams on Excel, using 30M bars, it gave a daily trend ok, but so does a bar chart do all that.

As an intraday trader, I could not relate the "alphabetical" chart with what was actually happening. The bell developed too late and I missed trades that I would have taken with a bar.

Andy sent a link, yesterday, which explained that volume does have to be compared with MP for a more correct interpretation but I understood that Steidlmeyer developed MP because, although the EOD volume was correct, during the day there was no way that the volume could be related to the exact timing of the price.

Anyway, as I said before, I only brushed the surface of MP. There has to be a lot more studying of the subject to become an expert at it, I'm sure.

I did post a week's work on Excel last month on one of the member's forums. I'll put it on again, if you think it would help.

Tucker said that there was no advantage in using lower time frames but I find that when using a bar chart in associating horizontal lines with the number of bars that cross them, some TFs work better than others.

thank you for sharing, but from what you hav learned so far, is MP workable on for swing traders? would we be using each letter to represent half a day etc.?

 

[Splitlink]

thank you for sharing, but from what you hav learned so far, is MP workable on for swing traders? would we be using each letter to represent half a day etc.?

I think that a half day per letter would be too blunt. The halfhour is what I show. Maybe you could use 60 minutes.

This is FT100, which I did on Excel. If you use it over a week you will see how it shows trend direction but forcasting it? That's another story. To be sure, there is something there that I am not getting. I can't see how the bell shape indicates any probabilities of trend direction any better than a bar chart.

It's not difficult to do, providing you only do one instrument. Otherwise it gets a bit tedious. Maybe, that is where the purchase of the software comes in.

I have the previous week to this but can't get it over toT2W for some reason so this is only four days. Anyway, you're welcome to the little that I have done. I'm back to bars!

Oh, almost forgot. I only did the exchange hours i.e. 0800-1630.

 

[arabianights]

I was introduced to market profile by GeoffHill, and since then I have often wanted to mount his leg like an over excited puppy. If you apply it - or the ideas behind it (I don't apply it directly myself) with sense in the right market in the right way it's magnificent. I think automate it and you would get raped, and that wouldn't be a leg and it would be a rottweiler or perhaps a bull.

But I can't imagine it working in FX for the reasons already given... Quotes too misleading in my view.

 

[Splitlink]

I was introduced to market profile by GeoffHill, and since then I have often wanted to mount his leg like an over excited puppy. If you apply it - or the ideas behind it (I don't apply it directly myself) with sense in the right market in the right way it's magnificent. I think automate it and you would get raped, and that wouldn't be a leg and it would be a rottweiler or perhaps a bull.

But I can't imagine it working in FX for the reasons already given... Quotes too misleading in my view.

Is it better than pins, though? If you know (or think you know) the trend direction, then pins on the contrary side on a bar chart should make good entry points. Why mp diagrams? I think that you are nearer the mark when you say "the ideas behind it" because TRO puts forward an idea ( amongst a lot of complicated stuff that I don't get, either )about the number of times that a horizontal line is cut by price bars. That idea is common to the mp idea and I have found that useful.

 

[traderunner1]

I was introduced to market profile by GeoffHill, and since then I have often wanted to mount his leg like an over excited puppy. If you apply it - or the ideas behind it (I don't apply it directly myself) with sense in the right market in the right way it's magnificent. I think automate it and you would get raped, and that wouldn't be a leg and it would be a rottweiler or perhaps a bull.

But I can't imagine it working in FX for the reasons already given... Quotes too misleading in my view.

Çan't disagree more. I have been trading for a living since 2006, and have been involved in daytrading DAX, Eurostoxx futures, German Bund etc. I have been familiar with market profile since end of 2006 and integrated it in my trading system. I have shifted towards eurodollar FX on CME globex and found that i easily could transplant my equity and bund system to this instrument, that has more range per day and gives me more opportunities.
Again, market profile is the key navigator here. I have about 20 trading opportunities per day during the european time zone, and use MP to navigate like said.

Simply stated: look for longs above the point of control (POC) and look for shorts if price is below POC.
Shorts above POC are only alowed if two timeframes are in sync trend wise, or if substantial sub volume is being build to allow a firm platform for reversal, and vice versa.
Furthermore, low volume areas function as support./resistance and can be used to fade or to take partly profits off the table.

It works perfectly for equity futures, it works for bund/bond and it works for forex.

However you need true market profile volume based, not just TPO's
I have a tool that gives me value area based on tick#, but also on tick volume, and it shows me the VOLUME based "middle" of the volume based value area. (POC)

Someone mentioned that he could draw a line and see the point of control by how many times a standard bar crosses that line...just partly true, it ignores volume, which drives any market, including forex.

Hope not too many of you get enthousiastic about MP!:innocent: