For our weekend notes on Market profile, I dug up an article written by Doug Tucker from his blog : http://tuckerreport.com/articles/market-profile-a-primer/.
Mr Tucker begins of by admonishing believers of Gann, Elliot, Fibonacci, Moons and tides who have turned away from the market to "find a correlation between price action and unrelated causes" in his words.
I do not count Elliot and fibonacci in the same league as the other three, simply because they are very good systems to measure the symmetry (or lack of) of the markets.
His views on indicators/ oscillators resonate with ours.
Anyways, I felt the clarification was necessary as my focus is to bring the article and his summary of Market Profile which is very good and covers all that we have discussed in the Profile Classroom.You can ignore the starting print if you like..
Catch Tucker as he talks about price & volume, the auction process, different day types, value area and tails.
The article can be accessed from here: market-profile-a-primer/
Friday, June 25, 2010
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13 comments:
i had gone through Tucker's articles sometime back and most of the things resonated with me. I also am in agreement with him that Fibs are not of much use except may be 50%(which itself is not a fib no.) which is the simplest way to arrive at a price(like in a typical bargaining situation..na aapka na mera..chalo 150 de do ( 100 and 200 being bid and ask) )
about the Elliot I have mixed opinions..psychologically it appears sound...in hindsight it is good which generally means useless...however it might be possible to use some of its components to trade in real time...for example lets say you identify a wave which is fast and furious..assume it is third wave..to confirm check if accumulation or distribution volumes are okay in the supposed 1st wave..then just enter a trade in a pullback(assume 4th wave) and ride for a fifth wave..etc..etc..
other such setups can thought of..
at other times (in correctives)it might be better to stay away from using it because the number of possibilities become too large to even plan a decent strategy and further you may be trapped in a particular Elliot view and the market may do its own thing thus wasting your time and money.
Your comment "I do not count Elliot and fibonacci in the same league as the other three, simply because they are very good systems to measure the symmetry (or lack of) of the markets." intrigued me and could you elaborate more on
a) what is symmetry(or lack of) of markets?
b) how do you use Elliot and Fib to measure it?
Dangi,
I used the words "symmetry of markets" more as a measure of the geometrical transformations the market undergoes as it moves from balance to imbalance.
In market profile if you study shapes of profile, you will see this symmetry at work.The 'p' shape gives a balance next day, so does the 'b'.
I do not use Elliot and fibs in my trading, but know of them as good systems to measure balance also, through corrective waves and retracements etc.
But to put gannn dates, moon dates, planetary positions etc etc along with such systems is not appropriate.
Defenders of Gann and moon will point out that a market changed on xyz date, because of an abc planetary position, but for which timeframe player??.
Even a trendline holds back price at least 4 times and a broken clock shows the correct time 2 times!!
not sure if I got it right..anyways I am going to keep a note of what you said and let it mature in my mind for a Eureka moment..
In the book "Inside the house of money" there is one hedge fund guy who has admitted to keeping track of full moon days
because he thinks (and says there is a statistical co-relation) the markets are likely to turn around on those days..not that we should do the same.
On an interesting note,I once had this idea of moon-phase approach not in trading but in finding the best time to approach a girl(or girls if you want to statistically be on right side) coz there is a periodicity relationship between moon cycle and their cycles(during ovulation they might be more receptive so it is likely receptivity has a periodicity).However I never got interested enough to test this one.
There was a time I seriously looked at moon cycles as an indicator ( not a system) to enhance my trading edge.
So I entered all the new moon and the full moon days on my mobile calendar to give me reminders. This was I think from November to April, that's about 12 dates.
To be honest, I am still confused whether the full moon or the new moon marks the low of the daily cycle, but in combination with my trading system it did serve as a "lookout".
It needs more research and background testing for it be be advocated. Even then, I would not be putting the kind of money behind the trade as I would put from a message coming out of market profile.
Hi Shai,
Thanks for your earlier answer about spx future... also i would be very very thankful if you could please tell me in which software do u make the price and volume charts as the one u show...and from which site i can get the software...thanks again
Arvinder,
I use Amibroker.
http://www.amibroker.com/
The racket is making news again.
Long Saina
Short Sania.
:) .
GM Shai. Excellent inputs. Pls. confirm the link to download Call/Put options data with IVs to do similar analysis as you have put up to resolve expiry blues. Thanks in advance.
GM All.
I'm just sorting some issues with my data-feed.
will be up with an update shortly.
Dear Shai,
What is the data feed u use? how expensive will it be for amibroker?.
Dear Shai,
what is ur email id...? want to send one implied volatility calculator for u to check whether the same is right. depending on ur response, i can work on option greeks...
regards
sri
Sriganesh,
It is vtrender@gmail.com.
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Sathya,
I use esignal and have investbulls as a back-up.
500/- pm. for investbulls.
----
New post done.
Last Week's Observation:Buy BPCL @ 635 T1=645 T2=650 both targets achieved within 3-5 days.SL given for last friday not touched though it is activated on monday...could have reentered @ 635 again....working on better SL policy.
Today Bought RNRL @ 42 SPOT as per POWERGRADE'S observations for 10-15 days.SL & Targets not calculated yet.
Shai.....waiting for.....Part 222222222222222.
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