If you have been tearing your hair off in this sideways market, I would not blame you.
The market has been listless, moving randomly without a sense of direction.We have put in a 100 point range for a month now.
I want to call on all those people who tell you that "A trend is your friend". What happens when we do not have a trend? Fact is that 70% of the time the markets do not trend.In market profile we call this a bracket.
In any timeframe you see, the market this year has been in a bracket. Brackets are the easiest markets to trade if you know clearly your entries and exits.
As Shai says often, these markets are not boring, they are predictable.
Let's look at what the Volume profile chart says for yesterday's and today's action:
We saw the 80 % rule at play yesterday. It fetched us an easy 22 points per lot.
Today, in the morning the market was in no mood to get over Value area high. See the three red arrows on the right side of the chart.Once the market broke through Vwap, the short was confirmed to hit value area low for a 16 point trade.
In 2 days, bread and butter value area set-ups were good to fetch you 38 points per lot in a market which moved 54 points in two days.
In both the above setups the risk was a meager 5 points, if it had refused to move above value low yesterday and went above value high today and the reward was more that 1:3, actually 1:4 yesterday and 1:3 today.
Market profile throws at least one good set-up everyday around value areas.Besides value areas, high volume nodes also give you low risk/ high reward entry points. I plan my trade around value areas generally and Shai does it around high volume nodes.
Rules like the 80% rule in Market profile have a 2 in 10 chance of failing, or in other words they are right 8 out of 10 times.
There are many more set-ups in Market Profile and we will bring all of them to you in Vtrender 2.
We are starting Vtrender 2 from tomorrow. The details are here : http://vtrender.blogspot.com/2010/07/vtrender-2.html.
We want to enable all of you to locate these set-ups all by yourselves.For too long you have depended on subscriptions, forums, blogs and blog masters etc for your trading ideas.
Vtrender 2 will set you free. If you have to visit these places again, you will visit not to take direction, but to confirm it.
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6 comments:
Excellent post Viren. Thanks!
Hope you will continue to post for "Aam aadmi".
:)
Dear Viren /Shai,
I can not spare much time during my office hours. I appreciate all your efforts to educate novices like me. It will be helpful if you can post late in the evening in the regular block for the benefit of people like me who can understand and take positional trade.
Hope you will continue your updates in regular block.Once again I appreciate your efforts.
Regards,
Veer
The Fed is on watch today and the announcement is due at 11.45 pm IST.
There are strong rumors about another round of stimulus to offset the disappointing data releases of the past few weeks.Bernamke is capable of everything and anything.
Chart wise, the tight range of 1112-1127 should break today. If it goes down 1083-1090 is support. Auction above 1129 calls for 1159.
11.40 pm.
The fed has been a non event last few months.
But am surprised to see the futures down as much before the announcement.
Not seen it in 2 years I think.
http://www.marketwatch.com/story/fed-takes-small-easing-step-on-weaker-outlook-2010-08-10
Shai,
ES Futures went vertical
and so did EURO, GBP, AUD!
Go GS trading desk!
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