We seem to be having an enthusiastic bunch of readers who want to know more about Market Profile. I am all for enthusiasm and never the one to put down will.So without further ado, let's add to the classroom these notes on the different day types.These are important for you to understand if you are a serious day trader.
Normal Day
The first and most basic day structure is the Normal Day. It is characterized by a wide ranging initial balance, or first two time periods of the day. On a normal day the bell curve will develop generally within the range of the initial balance, with little outside influence to tip the market much beyond the initial balance. On a normal day there is often limited range extension that is the market may extend beyond the initial balance by a small amount, and then return
back into the value area. Some days will show little or no range extension. A wide range in the first hour of the day session still seems to imply a normal day.
Normal variation day.
This day structure is characterized by a still wide, but somewhat smaller initial balance. In this case the initial balance represent closer to half the finished profile, with range extension early enough in the day to create a fairly normal bell curve. When watching this day structure develop, it is not known that the day will result in a normal variation day until it is well into development. But there are some clues... opening 30 min ( A ) period is well above/below the value area of the previous day and prices quickly rejected those prices. The range of the A period and subsequent next 30 min ( B )period is fairly wide, however there is little rotation and development, as prices are quick to reject the previous prices and prices start to build value in a new area. The rejection of the previous prices and the building of value higher in the day structure and (slightly) higher than the previous day value area has implications for continuation higher the next day. Again, not a prediction of higher prices, but a reason to be watching for continuation.
Neutral day
This appears similar, at first glance, to the normal day structure. However, there are differences that make this a neutral day. The main difference is that the initial balance is somewhat smaller, similar to the normal-variation day. However, the range extension does not extend far enough to allow development of the bell curve above or below the initial balance. Instead, prices return into the initial balance, and most often will try a range extension on the opposite end of the developing structure. Again prices will fail to extend far enough to allow rotation to change the developing value area. Thus, a normal shaped bell curve begins to develop in the middle of the range, with only moderate range extension on either side. This example is quite symmetrical. No two profiles are the same, so there will always be some variations and possibly overlap with other types of day structures. Another characteristic of the neutral day is the close proximity of the open and the close. A candlestick chart would often show a doji, perhaps with similar implications depending on where the doji occurred within the price trend. However the market profile graphic contain much more useful information than the candlestick. One more important characteristic of the neutral-day is that quite often the value area will overlap with the previous day. As the name would suggest, there is little forward price implication from the neutral day.
Non trend day
This is characterized by a narrow range day with a fat profile. There seems to be random rotation with little price movement on either side of the profile, thus developing a short and fat profile. These days can occur prior to important announcements, long weekends or holidays, or at market exhaustion points. Most traders will simply complain that the market is choppy and untradable on these days. They will often look for excuses to leave the market alone and focus on something else. This is often a big mistake. On non-trend days the Market Profile trader, in other words, the aware and astute trader, should be on the lookout for clues and ready for a breakout. It is when the market is making a narrow range that a large range, and possibly trend day, will occur in the next day or two. If you study enough charts it will become evident that small range days often precede large range days, sometimes with major trends following. And conversely, large range days often exhaust the buying or selling power,and smaller range days are seen the next day. Often the direction of the breakout of the non-trend day is difficult to anticipate. However, since a range expansion is likely, it is best to be ready with a plan for when the breakout occurs, which is often the very next day.
Trend day
A trend day will usually begin with a small initial balance, much the same in appearance to the non-trend day. However, early in the day structure range extension occurs. This range extension does not allow a value area to develop in the initial balance, and the range extension continues throughout the day. There are often periods of single prints on the profile. Most important, there is very little rotation from time period to time period. In other words, each half-hour segment drive prices further in the direction of the trend. Sometimes one of the time segments will have a bit of rotation in the opposite direction, but price usually will resume the trend. The range of a trend day is wide and the profile absent, rotation is thin. Obviously the open will occur at one end of the trend day, and the close will be near the opposite end.
Double distribution trend day
A variation on the trend day is the double distribution trend day. This day starts off much like a trend day, however there begins to be rotation with a bell curve beginning to develop during much of the day. It appears that more of a normal variation day will result. But then new information enters the market and range extension occurs and drives prices to a new area. At some point the move is shut off, usually overshooting, and then another bell curve begins to develop. The resulting profile will have two areas of price rotation, which are usually separated by an area of single prints. These days can often occur on surprise announce or event occurs. The market goes from balance, to imbalance as the news drives the market to a new level, and then back to some sort of balance as the news is digested.
---
So which day did we see today???
Monday, May 31, 2010
Estimates for 31st May
Hope everyone had a good weekend.
Returning back, the markets will continue where they left off on friday with no news to alter sentiment as such.
Those who had taken long/ short trades over the weekend will not have much to show by way of profits, because the market profile gave us a neutral day on friday.
So the buyer keeps his advantage because he kept prices over value on friday, but he will be severely tested at 5045-5065.
The seller has shown that he is waiting to sell at the above mentioned prices.He will have control a bit, when prices break 4990.
Let's see how it resolves.
----------------------
Trade Alert
Description : Sell Nifty Future
Cost : Below 5030
Sl : 5046
Target : 5005.
----------------------
It seems like another quite day of trading today.
Notice the open of the future today and the close on friday. This shows that there is no major change of sentiment from friday and buyers/ sellers have more or less agreed on value.
So expect tight movements and a narrow range.
The resolution will happen only when we see some aggressive intermediate term selling/ buying happening during the course of the day.
---------------------
13.11
Stop hit in Nifty sell below call.
Make an exit.
Loss = 16 points.
-----------------------------------------
15.50.
Markets moved between value area low and the major MP pivot of 5065 NF.
We lost out on a trade, but there were enough set-ups for the studious profiler, including a profitable shorting opportunity at 5050 levels
In the end it was a neutral extreme day, with a close on one side of the profile, though most of the moves were in the last 30 mins ( monthly window dressing again ?? )
Let's see what the open shows up tomorrow.We will know for sure at the open, whether the move was a real one.
Returning back, the markets will continue where they left off on friday with no news to alter sentiment as such.
Those who had taken long/ short trades over the weekend will not have much to show by way of profits, because the market profile gave us a neutral day on friday.
So the buyer keeps his advantage because he kept prices over value on friday, but he will be severely tested at 5045-5065.
The seller has shown that he is waiting to sell at the above mentioned prices.He will have control a bit, when prices break 4990.
Let's see how it resolves.
----------------------
Trade Alert
Description : Sell Nifty Future
Cost : Below 5030
Sl : 5046
Target : 5005.
----------------------
It seems like another quite day of trading today.
Notice the open of the future today and the close on friday. This shows that there is no major change of sentiment from friday and buyers/ sellers have more or less agreed on value.
So expect tight movements and a narrow range.
The resolution will happen only when we see some aggressive intermediate term selling/ buying happening during the course of the day.
---------------------
13.11
Stop hit in Nifty sell below call.
Make an exit.
Loss = 16 points.
-----------------------------------------
15.50.
Markets moved between value area low and the major MP pivot of 5065 NF.
We lost out on a trade, but there were enough set-ups for the studious profiler, including a profitable shorting opportunity at 5050 levels
In the end it was a neutral extreme day, with a close on one side of the profile, though most of the moves were in the last 30 mins ( monthly window dressing again ?? )
Let's see what the open shows up tomorrow.We will know for sure at the open, whether the move was a real one.
Saturday, May 29, 2010
Market Profile Terminology
The market profile way of looking at the markets asks us to incorporate some new reference words and meanings. Going forward we would be using the profile language in all of our references to market profile. So I ask of you to get familiar with the following terminology. A copy of this post will be available for future reference in forum.
Timeframes : The market profile recognizes five distinct types of individuals who operate in the markets. These are a) Scalper, b) Day trader, c) Short term player, d) Intermediate term player, e) Long term player. Each of these individuals have a perception which they bring to the market and this perception helps move the markets. The scalper and the day trader are responsible for maintaining the liquidity of the markets.
Value : The perception which all of the above mentioned players bring to the markets after the bid-ask process helps build what we call "value". Value is different for each of the mentioned players and they will move price up or down depending on this perception. For example if the intermediate term seller thinks that the market is overpriced he will jump in to move price down.On a daily timeframe, the period where 70 % of the volume action takes place is defined as the value area.Similarly we have a weekly and a monthly value area.
Buyers : Individuals of any timeframe who feel that the present market is underpriced and therefore less in value. These individuals will move price up.
Sellers : Same role as the above except they think that the market is overpriced and will move price down.
Auction : The activities of buyers and sellers recorded through the bid-ask process is called auction.The auction represents in the formation of the value area which the buyers and the sellers agree as the fairest value for the day. As the auction moves away from the value area, buyers and sellers change their definition of value. If higher prices are agreed in the auction, value is supposed to move higher and consequently the market moves up.
Selling tail : The failure of the auction at higher levels to attract new buyers results in the sellers swiftly moving in forming what is called a selling tail. The selling tail is a failed auction.
Buying tail : The same activity as above, but in the opposite direction.
Close : The final auction of the day
Open : The first auction of the day.If there is a large difference in the open and the close then again the perception of value in the market has changed.
Initial balance : The first 60 Minutes of a trading day are called the initial balance. As the name suggests, the IB tries to set up the day's balance or define value for the day.
Range extension : The movement away from the initial balance is called the range extension.Success or failure of the range extension gives us an indication of the type of day unfolding.
Initiative activity : Control by the buyer or seller in the first few minutes of the trading day is called initiative activity.As the name suggests, the action determines conviction on the part of the players to move the market.The strength of the initiative activity is useful to determine which party will have a role to play in the day
Responsive activity : This is a response to Initiative activity, the strength of which can determine changes to the trend of the timeframe.
Initiative activity : Control by the buyer or seller in the first few minutes of the trading day is called initiative activity.As the name suggests, the action determines conviction on the part of the players to move the market.The strength of the initiative activity is useful to determine which party will have a role to play in the day
Responsive activity : This is a response to Initiative activity, the strength of which can determine changes to the trend of the timeframe.
We will take a deeper look at the importance of all of the above through real-time charts and analysis in the coming weeks. I will add some more terms to this post as we move along. So please keep checking under forums.
-----------------------
Housekeeping :
a)I have had many requests for real-time updation of the trading calls. I will make a conscious effort to post updates to all my posts on twitter.Please understand that I am projecting my view of the markets and not recommending a buy or sell. Please do your own diligence for all the trading calls.You are following my views at your own risk. My views posted on the blog would be followed to their logical conclusion which is a stop-loss or target.
I suggest that you get yourselves a free twitter account and subscribe to 'join the conversation' in the twitter widget on the right side of the blog.I use tweetdeck, and I suggest you do the same to get tweets in real time. The process is documented here: http://www.tweetdeck.com/.
b) Yesterday during market hours, we had a blogmate who wanted some help in setting up his platform. Except for Mok, nobody else stepped forward to help him out.I would be happier if all of us come together and help out to solve our difficulties. As a community we can become each other's eyes and ears. How much more we can receive only if we learn to give!
c) Often I receive requests for buy/ sells. Please identify which of the timeframes you belong to.A 30 point trade is great news for a scalper and even a day trader, but peanuts for an intermediate term player.The first step to trading success is identifying your trading timeframe.
I suggest that you get yourselves a free twitter account and subscribe to 'join the conversation' in the twitter widget on the right side of the blog.I use tweetdeck, and I suggest you do the same to get tweets in real time. The process is documented here: http://www.tweetdeck.com/.
b) Yesterday during market hours, we had a blogmate who wanted some help in setting up his platform. Except for Mok, nobody else stepped forward to help him out.I would be happier if all of us come together and help out to solve our difficulties. As a community we can become each other's eyes and ears. How much more we can receive only if we learn to give!
c) Often I receive requests for buy/ sells. Please identify which of the timeframes you belong to.A 30 point trade is great news for a scalper and even a day trader, but peanuts for an intermediate term player.The first step to trading success is identifying your trading timeframe.
Friday, May 28, 2010
Estimates for 28th May
5065 was the level we had mentioned one week back where the intermediate seller had showed up and managed to take the market all the way to 4785 levels.This was the action on May the 19th and documented here.
The gap down from this level, will be matched up with a gap up.
But need to see this level resolve for further direction.
5065 is on watch. We will see rotation at this level today.
-----------------------------------------------------
10.13
Description : short Nifty June
Price : 5032
Sl : 5065
Target : 4990.
---------------------
10.28
@ All,
I have modified the comment settings to include your ID when you post comments. Please comment with a user name. I don't want to be talking to several anons, without knowing one from the other.
Please oblige for the mutual benefit of all.
----------------------------------
10.42
Take some profits off the table here at 4999.
keep Sl for remaining at 5020.
--------------------------
10.47
We were targeting 4990, we have got 4996 so far.
The seller has shown his hand from the morning and his inclination to defend his territory near 5065. It's now upto the buyers to stand up.
5020 and 5035/45 are some short term reference points for the bulls.Need to climb above them.
This will be a volatile 60 point range and a battle zone. so trade quickly and keep booking profits when you see them.
-----------------------------------------------------------
11.05
Posting an intra chart of Nifty spot 30 mins. The shaded blue is the value areas.
The shaded blue areas are the value areas.
Price above value infers that buyers are in control. However on a longer term chart, you can see the seller's footsteps, with the succession of value being driven lower.
The buyers have gotten stronger recently. Three value areas showing up move.
-------------------------------
11.28.
Trailing stop at 5020 taken. make an exit.
---------------------
12.12.
Interesting action so far.
Sellers ( or bears in your terminology ) have tried their hand at a lower range extension and failed.
Now Buyers will make an attempt.
5035/ 5045 will be short term reference lines above which is the crucial 5065.
Above that there may be a slight pause at 5092, beyond which we will get 5172 easily.
On the downside 4990 is first and then yesterday's 4967/ 4952 which should provide support for the market.
Trade accordingly.
-------------------------------
1.11
No resolution yet in the day time-frame.
Buyers have not managed to take the initiative.
Markets trading between 5005 and 5025. We'll wait.
-----------------------------------
3.10
I know it's been a tiring day of trade today, with no clear indications of short-term direction.
Sometimes the market goes through these kind of days digesting information.
We just have to wait and see it resolve and base our decisions on the message the market gives us.
Let's not be compulsive traders and trade just because the market is open.We will have plenty of good set-ups in the coming days on both sides with risk-reward ratios favoring our style of trading.
Today's session has been a neutral day with range extension on either side which failed.
Bias is divided and the market will give us fresh inputs on Monday.
We have our levels and we will react accordingly.
--------------------------------------------------------------------------------
The gap down from this level, will be matched up with a gap up.
But need to see this level resolve for further direction.
5065 is on watch. We will see rotation at this level today.
-----------------------------------------------------
10.13
Description : short Nifty June
Price : 5032
Sl : 5065
Target : 4990.
---------------------
10.28
@ All,
I have modified the comment settings to include your ID when you post comments. Please comment with a user name. I don't want to be talking to several anons, without knowing one from the other.
Please oblige for the mutual benefit of all.
----------------------------------
10.42
Take some profits off the table here at 4999.
keep Sl for remaining at 5020.
--------------------------
10.47
We were targeting 4990, we have got 4996 so far.
The seller has shown his hand from the morning and his inclination to defend his territory near 5065. It's now upto the buyers to stand up.
5020 and 5035/45 are some short term reference points for the bulls.Need to climb above them.
This will be a volatile 60 point range and a battle zone. so trade quickly and keep booking profits when you see them.
-----------------------------------------------------------
11.05
Posting an intra chart of Nifty spot 30 mins. The shaded blue is the value areas.
The shaded blue areas are the value areas.
Price above value infers that buyers are in control. However on a longer term chart, you can see the seller's footsteps, with the succession of value being driven lower.
The buyers have gotten stronger recently. Three value areas showing up move.
-------------------------------
11.28.
Trailing stop at 5020 taken. make an exit.
---------------------
12.12.
Interesting action so far.
Sellers ( or bears in your terminology ) have tried their hand at a lower range extension and failed.
Now Buyers will make an attempt.
5035/ 5045 will be short term reference lines above which is the crucial 5065.
Above that there may be a slight pause at 5092, beyond which we will get 5172 easily.
On the downside 4990 is first and then yesterday's 4967/ 4952 which should provide support for the market.
Trade accordingly.
-------------------------------
1.11
No resolution yet in the day time-frame.
Buyers have not managed to take the initiative.
Markets trading between 5005 and 5025. We'll wait.
-----------------------------------
3.10
I know it's been a tiring day of trade today, with no clear indications of short-term direction.
Sometimes the market goes through these kind of days digesting information.
We just have to wait and see it resolve and base our decisions on the message the market gives us.
Let's not be compulsive traders and trade just because the market is open.We will have plenty of good set-ups in the coming days on both sides with risk-reward ratios favoring our style of trading.
Today's session has been a neutral day with range extension on either side which failed.
Bias is divided and the market will give us fresh inputs on Monday.
We have our levels and we will react accordingly.
--------------------------------------------------------------------------------
Thoughts
Traders trade in the "Now". Use Market generated information to decide your next move.
The past is a place for reference, not for residence.
The past is a place for reference, not for residence.
Thursday, May 27, 2010
Estimates for 27th may
Some interesting feedback on the Expiry calculations done here yesterday.
But allow me to gently tell you, that now that the market is open, we trade on the information available. As traders we live in the "Now".
So though we are tar-getting 4985-4995, let's remember the order flow coming to our screens today should communicate to us our yesterday's targets.
Supports are at 4887 NF and 4862 and resistances at 4935 and 4968 NF of May.
Trade well.
----------------------------------------------------------------
10.00.
First resistance at 4935 playing out.
I have edited the second resistance to 4968 NF ( May ). Please note.
-------------------------------
10.32
Early signs of a trend day developing.If this is true then the market should not come below 4930 NF (may) today.
--------------------------------------------------------------------
12.42
Markets are playing out at 4970 levels.
I suggest partial booking of longs here.
We may still get to 4995 levels.Those who want to hold can hold with a SL below 4950 Nifty spot levels and I suggest to move to June Future here.
---------------------------------------------------
13.43
Deepak asks,
Dear Shai as per your old post i was checking the close this expiry - the range comes to 4828 to 5006 - since the OI in 4900 puts and 5000 calls is very high - based on your analysis the closing should be close to 5006 - can we assume closing to be at 4990 levels - best regards Deepak
I made the post yesterday: http://vtrender.blogspot.com/2010/05/nifty-expiry.html.
Based on Open Interest the projected high was to be 4991 NF. We made it to 4972 so far. I had also pointed out that 4968 was to be a resistance area and I put in a post to book some longs there.
Why didn't I wait for my target of 4991 ?
It's only two words. Risk : Reward.
At resistance or supports you evaluate whether you are still getting a good deal out of your position.The lower support was 4951 twenty points away and the target was also 20 points away. So I suggested we take some profits.
The actual support is 4930 NF but the risk reward did not suggest giving the market back 40 points to get a gain of 20 points.Not good business in my opinion.
-----------------------------------------------------------------------
But allow me to gently tell you, that now that the market is open, we trade on the information available. As traders we live in the "Now".
So though we are tar-getting 4985-4995, let's remember the order flow coming to our screens today should communicate to us our yesterday's targets.
Supports are at 4887 NF and 4862 and resistances at 4935 and 4968 NF of May.
Trade well.
----------------------------------------------------------------
10.00.
First resistance at 4935 playing out.
I have edited the second resistance to 4968 NF ( May ). Please note.
-------------------------------
10.32
Early signs of a trend day developing.If this is true then the market should not come below 4930 NF (may) today.
--------------------------------------------------------------------
12.42
Markets are playing out at 4970 levels.
I suggest partial booking of longs here.
We may still get to 4995 levels.Those who want to hold can hold with a SL below 4950 Nifty spot levels and I suggest to move to June Future here.
---------------------------------------------------
13.43
Deepak asks,
Dear Shai as per your old post i was checking the close this expiry - the range comes to 4828 to 5006 - since the OI in 4900 puts and 5000 calls is very high - based on your analysis the closing should be close to 5006 - can we assume closing to be at 4990 levels - best regards Deepak
I made the post yesterday: http://vtrender.blogspot.com/2010/05/nifty-expiry.html.
Based on Open Interest the projected high was to be 4991 NF. We made it to 4972 so far. I had also pointed out that 4968 was to be a resistance area and I put in a post to book some longs there.
Why didn't I wait for my target of 4991 ?
It's only two words. Risk : Reward.
At resistance or supports you evaluate whether you are still getting a good deal out of your position.The lower support was 4951 twenty points away and the target was also 20 points away. So I suggested we take some profits.
The actual support is 4930 NF but the risk reward did not suggest giving the market back 40 points to get a gain of 20 points.Not good business in my opinion.
-----------------------------------------------------------------------
Wednesday, May 26, 2010
Nifty Expiry
Regular readers of this blog may be familiar with a calculation I make on Nifty expiry, every expiry day. If you are not familiar then I suggest you read this post right here before going further.
Well Manu had requested for a projection as to how nifty would end up tomorrow.
Based on the excel calculations in the post above the range works out to 4991 on the higher side and 4825 on the lower side.
Now for the open interest tables :
It's self expanatory you can see a clear movement in the smart money towards the 5000 strike.
I have also put up the open Interst for the month of June just to back up the claim.
So are we looking at an expiry closer towards 5000 in the range 4880-4995.
Well that's what the charts above seem to tell. They have been right for the past three months, off by only 5-15 points.
So an expiry at 4980-4995 is predicted.
Just when I thought I'll close the post, I got a hunch about checking the above data through market profile.
So here goes :
The blue lines represent the value area of the month.
The chart is a 60 min profile chart of the Nifty Future for the May Expiry starting from the friday of last month up upto today.
As you can see the largest volume has occured at 5004 for this expiry.
I'm going to shut right here and be back tomorrow with the same chart.
Something very interesting just happened.
All the best for tomorrow.
Shai.
Update
The markets have moved between 4855 and 4887, two of the pivots we identified yesterday.Refer to this.
The move which we were waiting for yesterday, has materialized today.Never mind.
I was clear that a break of 4824 did not present a good risk-reward opportunity for a short in the short term.
I'll post some short term charts shortly.
-----------------------------------------------------
11.44.
Trade Alert : Nifty
Description : Buy Nifty
Price : Above 4891
Sl : 4870
Target : 4922
--------------------------------------------------------------
12.00
On the downside 4844 needs to be protected today by the bulls.
----------------------
12.03
The market is not efficient; however, the mechanism
for establishing the current trade-able price—the auction process—is
the most effective mechanism for allocating securities to be traded among
those submitting bids and offers. Once the auction is underway, rather than
attempting to predict future prices, we instead observe as the market discovers
future prices. We continually assess the force and health of this
auction process in order to identify asymmetrical opportunities that can
provide optimal trade location—trade location with less risk.
Excerpt taken from " Markets in Profile " by Dalton.
Response is to a dear friend who says that I am siding with Bulls.
As stated earlier on the blog- We are neither bulls nor bears and we are not emotionally attached to either. Never let emotion come in the way of prices.
-----------------------------------------------------------
2.26.
Nifty at 4895.Nifty is facing resistance at 4899. Needs to be taken out on this move up.Bring Sl to 4885. I'm not willing to risk more than 6 points on this trade, which has not gone to plan.
-------------
2.52
Kiran wrote in the comments:
Appreciate your foresight and clarity of vision. Some of the other blogs which were shouting 4600 have fallen silent and so are the bears who called for 4400 and what not?
My question to you is keeping in mind that you didn't take a fresh short at the break of your 4824 level, is would the markets be still 80 points up today, if the dow had not reacted like that yesterday.
Good question Kiran.let me make an attempt to answer :
The Nifty gapped up to 4855, up 50 points and not 80. Please give a little credit to nifty as it managed the remainder on it's own. :) .
We live in a closely knit financial jungle, where money flows through the globe and players play regardless of boundaries or countries.Hence sentiment in one part can affect the whole and vice-versa.We are a strong financial market amongst the most liquid in the world, hence not immune to global currents.
Did I see a gap up. The honest answer is No.
But as an honest profiler, I would have gone back and noted the reactions between 4824 and 4855 and the day low and the day close.There was a story in all of that.
But in market profile we learn to look at the close and the open as exclusive events and see what results it gives us in relation to each other
This morning the market gapped up to 4855 and sustained above that for the most period unlike yesterday.The other reference was that of 4889, and I issued a trade alert above that.
It was very easy and based on yesterday's action. Two trades :
1) Long at 4855, target 4887
2) Long above 4891.
Hope this answers.
---------------------------------------------------------------
15.10
Nifty on target of 4922.
----------------------------------------------
The move which we were waiting for yesterday, has materialized today.Never mind.
I was clear that a break of 4824 did not present a good risk-reward opportunity for a short in the short term.
I'll post some short term charts shortly.
-----------------------------------------------------
11.44.
Trade Alert : Nifty
Description : Buy Nifty
Price : Above 4891
Sl : 4870
Target : 4922
--------------------------------------------------------------
12.00
On the downside 4844 needs to be protected today by the bulls.
----------------------
12.03
The market is not efficient; however, the mechanism
for establishing the current trade-able price—the auction process—is
the most effective mechanism for allocating securities to be traded among
those submitting bids and offers. Once the auction is underway, rather than
attempting to predict future prices, we instead observe as the market discovers
future prices. We continually assess the force and health of this
auction process in order to identify asymmetrical opportunities that can
provide optimal trade location—trade location with less risk.
Excerpt taken from " Markets in Profile " by Dalton.
Response is to a dear friend who says that I am siding with Bulls.
As stated earlier on the blog- We are neither bulls nor bears and we are not emotionally attached to either. Never let emotion come in the way of prices.
-----------------------------------------------------------
2.26.
Nifty at 4895.Nifty is facing resistance at 4899. Needs to be taken out on this move up.Bring Sl to 4885. I'm not willing to risk more than 6 points on this trade, which has not gone to plan.
-------------
2.52
Kiran wrote in the comments:
Appreciate your foresight and clarity of vision. Some of the other blogs which were shouting 4600 have fallen silent and so are the bears who called for 4400 and what not?
My question to you is keeping in mind that you didn't take a fresh short at the break of your 4824 level, is would the markets be still 80 points up today, if the dow had not reacted like that yesterday.
Good question Kiran.let me make an attempt to answer :
The Nifty gapped up to 4855, up 50 points and not 80. Please give a little credit to nifty as it managed the remainder on it's own. :) .
We live in a closely knit financial jungle, where money flows through the globe and players play regardless of boundaries or countries.Hence sentiment in one part can affect the whole and vice-versa.We are a strong financial market amongst the most liquid in the world, hence not immune to global currents.
Did I see a gap up. The honest answer is No.
But as an honest profiler, I would have gone back and noted the reactions between 4824 and 4855 and the day low and the day close.There was a story in all of that.
But in market profile we learn to look at the close and the open as exclusive events and see what results it gives us in relation to each other
This morning the market gapped up to 4855 and sustained above that for the most period unlike yesterday.The other reference was that of 4889, and I issued a trade alert above that.
It was very easy and based on yesterday's action. Two trades :
1) Long at 4855, target 4887
2) Long above 4891.
Hope this answers.
---------------------------------------------------------------
15.10
Nifty on target of 4922.
----------------------------------------------
Tuesday, May 25, 2010
Estimates for today
4851 Nifty spot was the point where buyers came in force last week.
4824 Nifty Future is our Mp pivot which we have been speaking about for the past few days.
Hence 4824-4851 represents a good buy zone and should be watched for signs of buying.
On the other side lies 4882 Nifty spot and 4889 Nifty Future.
Look for the market to trade between these points.4824-4889 Nifty Future.
--------------------------------------------
11.20.
watching this reaction off 4831, reasonably close to our 4824. can it get above 4855? Bank Nifty to stay above 8910.
-----------------------
11.40
resisted twice at 4855 so far.
-----
1.35
It's been 2 hours since the last attempt at 4855.
Inability to take out this level will put the pivot at 4824 in danger, which can point to lower prices ahead.
----------------
2.05
NF is playing a game of touch with 4855.Touching & retreating, touching & retreating..5 attempts now from 11.00 am.
---------------------------------------------------
2.20
Risk-reward does not favor a new short entry here.
If you are willing to take risk, stop is 4855.
4824 Nifty Future is our Mp pivot which we have been speaking about for the past few days.
Hence 4824-4851 represents a good buy zone and should be watched for signs of buying.
On the other side lies 4882 Nifty spot and 4889 Nifty Future.
Look for the market to trade between these points.4824-4889 Nifty Future.
--------------------------------------------
11.20.
watching this reaction off 4831, reasonably close to our 4824. can it get above 4855? Bank Nifty to stay above 8910.
-----------------------
11.40
resisted twice at 4855 so far.
-----
1.35
It's been 2 hours since the last attempt at 4855.
Inability to take out this level will put the pivot at 4824 in danger, which can point to lower prices ahead.
----------------
2.05
NF is playing a game of touch with 4855.Touching & retreating, touching & retreating..5 attempts now from 11.00 am.
---------------------------------------------------
2.20
Risk-reward does not favor a new short entry here.
If you are willing to take risk, stop is 4855.
Monday, May 24, 2010
Market profile Classroom
I am introducing a new link for the study material and the questions you may have.
This link you will find on the Right hand side under the twitter and "subscribe to" option.
Please send your questions directly under this header:
Sending across a power-point presentation on Market profile.
I am not the original author of this file, but it has been with me for such a long time that I have forgotten the person who had sent it to me.It's now yours and the first step to understand the role of profile in charting.
This presentation covers most of the theory behind implementing the system and a solid understanding of this would help you in getting a foothold in this system of trading.
There has been suggestions that we provide another platform for the questions related to this topic. We already have a great platform at the blog and you are welcome to ask your questions over there in the comments section.Those with further doubts can correspond through email as well.
During the course of the next few weeks we will examine all the material in detail together with real time charts of our very own Nifty.
The link : http://www.4shared.com/document/hAZuo2CF/marketprofile.html
-------------------------------------------------------------------------------------
This is an amibroker afl for Market Profile.
http://www.4shared.com/file/QxbFKZc0/MP_online.html
-----------------------------------------------------
This link you will find on the Right hand side under the twitter and "subscribe to" option.
Please send your questions directly under this header:
Sending across a power-point presentation on Market profile.
I am not the original author of this file, but it has been with me for such a long time that I have forgotten the person who had sent it to me.It's now yours and the first step to understand the role of profile in charting.
This presentation covers most of the theory behind implementing the system and a solid understanding of this would help you in getting a foothold in this system of trading.
There has been suggestions that we provide another platform for the questions related to this topic. We already have a great platform at the blog and you are welcome to ask your questions over there in the comments section.Those with further doubts can correspond through email as well.
During the course of the next few weeks we will examine all the material in detail together with real time charts of our very own Nifty.
The link : http://www.4shared.com/document/hAZuo2CF/marketprofile.html
-------------------------------------------------------------------------------------
This is an amibroker afl for Market Profile.
http://www.4shared.com/file/QxbFKZc0/MP_online.html
-----------------------------------------------------
Estimates for today
Those who followed out positive bias call from Friday afternoon should be a happy lot, by this morning.
We are at 5000 Nifty spot levels at the time of this post.
I see a possibility of a move down to 4954 Nifty spot, from where buying should re-emerge back to these levels and more.
Alternatively if we drift here for a few more hours, without going down, then we can see 5066 Nifty spot by tomorrow itself.So 4954-5003-5066 are my pivots ( all Nifty spot).
-----------------------------------------------------------------------------------------------
There is a problem with the mail delivery system due to which some mails have failed.We are working on it.
Appreciate your patience.
------------------------------------------
Sending across a power-point presentation on Market profile.
I am not the original author of this file, but it has been with me for such a long time that I have forgotten the person who had sent it to me.It's now yours and the first step to understand the role of profile in charting.
This presentation covers most of the theory behind implementing the system and a solid understanding of this would help you in getting a foothold in this system of trading.
There has been suggestions that we provide another platform for the questions related to this topic. We already have a great platform at the blog and you are welcome to ask your questions over there in the comments section.Those with further doubts can correspond through email as well.
During the course of the next few weeks we will examine all the material in detail together with real time charts of our very own Nifty.
5026 NF is temporary halt and place for booking some longs from lower levels. At the moment, this upmove is safe above 4998 NF.
If it continues towards 5066 Nifty spot levels, then it presents an excellent opportunity to buy into some shorts with good risk : reward ratio.
------------------------------------
Break of 4972 NF to be watched.Should bring 4945 NF or our 4954 spot from morning.
------
Aggresive trade :
Buy Bank Nifty at current levels ( 9125-9135)
Sl 9090
Target : will update
----------------------------------
Bank Nifty aggressive trade stop hit.
Make an exit.
Saw 9170 after my entry at 9126
We are at 5000 Nifty spot levels at the time of this post.
I see a possibility of a move down to 4954 Nifty spot, from where buying should re-emerge back to these levels and more.
Alternatively if we drift here for a few more hours, without going down, then we can see 5066 Nifty spot by tomorrow itself.So 4954-5003-5066 are my pivots ( all Nifty spot).
-----------------------------------------------------------------------------------------------
There is a problem with the mail delivery system due to which some mails have failed.We are working on it.
Appreciate your patience.
------------------------------------------
Here is the email which was sent out last night. The link is to 4shared.
Sending across a power-point presentation on Market profile.
I am not the original author of this file, but it has been with me for such a long time that I have forgotten the person who had sent it to me.It's now yours and the first step to understand the role of profile in charting.
This presentation covers most of the theory behind implementing the system and a solid understanding of this would help you in getting a foothold in this system of trading.
There has been suggestions that we provide another platform for the questions related to this topic. We already have a great platform at the blog and you are welcome to ask your questions over there in the comments section.Those with further doubts can correspond through email as well.
During the course of the next few weeks we will examine all the material in detail together with real time charts of our very own Nifty.
The link : http://www.4shared.com/document/hAZuo2CF/marketprofile.html
---------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
5026 NF is temporary halt and place for booking some longs from lower levels. At the moment, this upmove is safe above 4998 NF.
If it continues towards 5066 Nifty spot levels, then it presents an excellent opportunity to buy into some shorts with good risk : reward ratio.
------------------------------------
Break of 4972 NF to be watched.Should bring 4945 NF or our 4954 spot from morning.
------
Aggresive trade :
Buy Bank Nifty at current levels ( 9125-9135)
Sl 9090
Target : will update
----------------------------------
Bank Nifty aggressive trade stop hit.
Make an exit.
Saw 9170 after my entry at 9126
Sunday, May 23, 2010
Housekeeping/ Next week Nifty
I am just returning to my inbox after a two day hiatus from the markets and am overwhelmed with the volume of mail I have received for the newsletter and the market profile study material.
To those who have written to me about their views, I will respond to each and every query of yours.
This blog is always been about you. Infact you will not find a profile of me or Viren or what we have done.It's not important as we are more about the difference we can do to you rather than what we are or were in the past!
I knew that we had a silent majority of observers out there. I too was a silent observer when I was learning the ropes, silently going through blogs, never once appearing in the comments section and hoping that somebody else would ask that question for me.The blog would always be a means of communication and a real-time network between all of us, but the emails would be for you to step out, ask questions and seek answers.
We decided against the open link, as a one-time download will not help you understand the subject ( which is huge) or have doubts. Instead we will look at one aspect every week, give you the opportunity to ask questions and move along as a group searching for real time situations of the study during the week.We are ready to roll-out the first study tonight.
About the newsletter, Viren is just finishing with a training program and would be free shortly to start work on that.Look forward to that one.
Last week if you had followed our views in this post here, you would be a happy man today.
For the week ahead, let's look at the same chart updated :
This recent downmove began when the intermediate seller showed up at 5060 levels Hence 5060 has to be taken out by the bulls for a reversal to happen. Above 5060 you can get a quick move to 5162-5172 levels where a pause and a rethink are in order.Before we get to these levels though, the first hurdle is at 4955-69 followed by 5010-5015.
On the downside, 4887-4870 are important supports followed by 4824.A close below 4824 you can expect 4660 levels immediately.
Hull moving average :
Viren has suggested that those using sma's and ema's in their charts move to HMA or Hull moving average.The Hull Moving Average eliminates lag and makes the average more responsive to current price activity whilst maintaining the curve smoothness. I will post charts about the advantage of HMA v/s EMA and SMA in my next post. Till then..
To those who have written to me about their views, I will respond to each and every query of yours.
This blog is always been about you. Infact you will not find a profile of me or Viren or what we have done.It's not important as we are more about the difference we can do to you rather than what we are or were in the past!
I knew that we had a silent majority of observers out there. I too was a silent observer when I was learning the ropes, silently going through blogs, never once appearing in the comments section and hoping that somebody else would ask that question for me.The blog would always be a means of communication and a real-time network between all of us, but the emails would be for you to step out, ask questions and seek answers.
We decided against the open link, as a one-time download will not help you understand the subject ( which is huge) or have doubts. Instead we will look at one aspect every week, give you the opportunity to ask questions and move along as a group searching for real time situations of the study during the week.We are ready to roll-out the first study tonight.
About the newsletter, Viren is just finishing with a training program and would be free shortly to start work on that.Look forward to that one.
Last week if you had followed our views in this post here, you would be a happy man today.
For the week ahead, let's look at the same chart updated :
This recent downmove began when the intermediate seller showed up at 5060 levels Hence 5060 has to be taken out by the bulls for a reversal to happen. Above 5060 you can get a quick move to 5162-5172 levels where a pause and a rethink are in order.Before we get to these levels though, the first hurdle is at 4955-69 followed by 5010-5015.
On the downside, 4887-4870 are important supports followed by 4824.A close below 4824 you can expect 4660 levels immediately.
Hull moving average :
Viren has suggested that those using sma's and ema's in their charts move to HMA or Hull moving average.The Hull Moving Average eliminates lag and makes the average more responsive to current price activity whilst maintaining the curve smoothness. I will post charts about the advantage of HMA v/s EMA and SMA in my next post. Till then..
Friday, May 21, 2010
Estimates for 21st may
Our reference level of 4887 will come into play and be a decider for moves in the Nifty.
Trend is 4825-4887 for the day. However a cross over above 4887 can bring 4925-4955.
Trade accordingly.
--------------------------------------------------------------------------------------------
10.32
4887 is the pivot around which most of the action has occurred in the past one hour.It's tricky call for a short term ( intra-day ) direction at these levels as we can clearly see two- time frame activity in the markets today.
So we'll watch. No point trading when you are not clear.
I have a meeting lined up in the afternoon, so I will be away for the afternoon session.
Viren and myself are compiling some educational material on Market Profile.We have decided against putting up an open link for the material, but will be happy to offer it to interested people on request. Those interested can send me a mail on vtrender@gmail.com with 'Market Profile' in the subject line.
Also Viren has suggested that he will author a weekly newsletter on Market profile strategies for Nifty futures and options ranging one week to a month. Those interested in receiving a copy from him can send a mail at the same ID as above with 'newsletter' in the subject line.
---------------------------------------------------------------------------------
12.00
Bias has turned up for the day above 4887 and with a stop below 4870.
Trend is 4825-4887 for the day. However a cross over above 4887 can bring 4925-4955.
Trade accordingly.
--------------------------------------------------------------------------------------------
10.32
4887 is the pivot around which most of the action has occurred in the past one hour.It's tricky call for a short term ( intra-day ) direction at these levels as we can clearly see two- time frame activity in the markets today.
So we'll watch. No point trading when you are not clear.
I have a meeting lined up in the afternoon, so I will be away for the afternoon session.
Viren and myself are compiling some educational material on Market Profile.We have decided against putting up an open link for the material, but will be happy to offer it to interested people on request. Those interested can send me a mail on vtrender@gmail.com with 'Market Profile' in the subject line.
Also Viren has suggested that he will author a weekly newsletter on Market profile strategies for Nifty futures and options ranging one week to a month. Those interested in receiving a copy from him can send a mail at the same ID as above with 'newsletter' in the subject line.
---------------------------------------------------------------------------------
12.00
Bias has turned up for the day above 4887 and with a stop below 4870.
Thursday, May 20, 2010
Update
I've had a delayed start to my day today...
From the comments posted, I presume that there is a problem with Blogger, so I hope all goes through well.
Anyways I'll keep posting the market action as I see it from now on.
-------------------------------------------------------------------
11.34
Description : Buy Axis bank
Cost : 1197
Sl : 1187
Target : 1211, 1233.
-----------------------------------------------------------------------
12.45
Axis bank at target 1. @ 1211 now.
Book out 50 % and bring SL of balance to cost at 1197.
--------------------------------------------------------------
12.56.
24 points above my buy point in Axis bank, my broker is asking me to look at Axis bank,now at 1220 for a buy spot.
I told him to check Vtrender. We called it at 11.34. LOL.
--------------------------------------------------------------------------------------
13.27
Axis bank @ 1227 and running into resistance a little before our 1233 level.
I suggest booking these 30 odd points we have made here as the larger market is also at resistance.Those who want to hold can do so with SL below 1210.
--------------------------------------------------------------------------------------------------------
14.31
Nifty spot struggling at VAL 4957 for past several mins.
Odds of a move down increasing. Watch on at 4926 NF for a confirmation.
---------------------------------------------------------------------------------------
15.29
A very noisy last 30 mins of trade.More often than not it is designed to take out a few technical analyst presumptions or to ramp up volume in a dull day.
In Mp it is the least important of all the other half hour time frames.
Hope you had a good day.
--------------------------------------------------------------------------------------------------
From the comments posted, I presume that there is a problem with Blogger, so I hope all goes through well.
Anyways I'll keep posting the market action as I see it from now on.
-------------------------------------------------------------------
11.34
Description : Buy Axis bank
Cost : 1197
Sl : 1187
Target : 1211, 1233.
-----------------------------------------------------------------------
12.45
Axis bank at target 1. @ 1211 now.
Book out 50 % and bring SL of balance to cost at 1197.
--------------------------------------------------------------
12.56.
24 points above my buy point in Axis bank, my broker is asking me to look at Axis bank,now at 1220 for a buy spot.
I told him to check Vtrender. We called it at 11.34. LOL.
--------------------------------------------------------------------------------------
13.27
Axis bank @ 1227 and running into resistance a little before our 1233 level.
I suggest booking these 30 odd points we have made here as the larger market is also at resistance.Those who want to hold can do so with SL below 1210.
--------------------------------------------------------------------------------------------------------
14.31
Nifty spot struggling at VAL 4957 for past several mins.
Odds of a move down increasing. Watch on at 4926 NF for a confirmation.
---------------------------------------------------------------------------------------
15.29
A very noisy last 30 mins of trade.More often than not it is designed to take out a few technical analyst presumptions or to ramp up volume in a dull day.
In Mp it is the least important of all the other half hour time frames.
Hope you had a good day.
--------------------------------------------------------------------------------------------------
Wednesday, May 19, 2010
Are Bears in controll ?
The 200 day average is considered to be the defining average for bulls and bears. How often have you heard the saying : Bulls live above 200 dma and bears below the 200 day?
Is this right ? Maybe.
Years back I learn't that if you trade with a tool that everybody uses, there are more chances of it not to work, than work.The market has always rewarded the contrarian or somebody who has a different way to approach the markets.
So along with studies on Market profile I went along to find different indicators for bull bear zones over a longer time frame.I came across the EMA cross over indicator which has defined for me these zones much better. Take a look at the weekly chart of the Nifty Spot.
This is a longer term chart and plots the 13 ema over the 34 ema with a MACD thrown in for confirmation.At today's close the red is still over the blue and the MACD still in positive territory above the zero line.
Notice the confirmations for bears in April 2008 followed by a strong move down and the reversal in April 2009 followed by the strong move up.
So all hope is not lost for the bulls. Watch this cross-over carefully.
Is this right ? Maybe.
Years back I learn't that if you trade with a tool that everybody uses, there are more chances of it not to work, than work.The market has always rewarded the contrarian or somebody who has a different way to approach the markets.
So along with studies on Market profile I went along to find different indicators for bull bear zones over a longer time frame.I came across the EMA cross over indicator which has defined for me these zones much better. Take a look at the weekly chart of the Nifty Spot.
This is a longer term chart and plots the 13 ema over the 34 ema with a MACD thrown in for confirmation.At today's close the red is still over the blue and the MACD still in positive territory above the zero line.
Notice the confirmations for bears in April 2008 followed by a strong move down and the reversal in April 2009 followed by the strong move up.
So all hope is not lost for the bulls. Watch this cross-over carefully.
Estimates for today
The action this morning is between 4987 and 5020 levels we have discussed often from early this week.
The gap down open has come in contrast to the close yesterday, quite simply because it is outside of range and value.
This points to the presence of inter-mediate term selling activity which does not give me confidence that 4987 will be held.So Viren's level of 4882 will play out.
I'll keep you posted.
----------------------------------------------------------------------------------------
Update at 11.00 am.
The high low so far is 5019-4988 within one point each of our pivots at 4987 and 5020.
I'm on the sidelines waiting for a resolution.
Though my bias is slightly to the short side I will not hesitate to buy above 5022 for 5044 and 5067.
----------------------------------------------------------------------------
Update at 12.10.
Though 4987 has been breached, I have not put out a short alert.
Not confident with the volume action here.
Let the market prove itself .
----------------------------------------------------------------
At 12.30.
Vindicated. 5012 now.
But the market will have to do a lot more than these 25 points to give me confidence.
--------------------------------------------------------------
12.44
Long at 4987. SL 4974. target 5020-5044.
High Risk. Intra.
----------------------------------------------------------------------------------------
12.58.
5006 Now.
Still high risk. Bringing Sl to cost.
Will be comfy above 5022.
---------------------------------
1.15
Out of position at 5008
-----------------------------------------------------------
1.38.
Waited all morning for this move. Missed it.
4955 will be the first port of call.
------------------------------------
New positional shorts initiated between 4955 and 4965. Will add on bounces.
---------------------------------------------------------------
Intra shorts can book out here around 4925-32 partially.
Viren's pivot level mentioned in the post above is 4887 not 4882.We may get there today.
---------------------------------------
14.44
4905 low of day so far. 4887 is what we want. 18 points away now.
Seemed distant in the morning. Not now.
-----------------------------------------------------------
15: 16
4901 is the low of the day and 14 points away Viren's 4887.
I closed some shorts at 4910 and will look to re-initiate them at higher levels.
Hope you all had a good trading day.
The gap down open has come in contrast to the close yesterday, quite simply because it is outside of range and value.
This points to the presence of inter-mediate term selling activity which does not give me confidence that 4987 will be held.So Viren's level of 4882 will play out.
I'll keep you posted.
----------------------------------------------------------------------------------------
Update at 11.00 am.
The high low so far is 5019-4988 within one point each of our pivots at 4987 and 5020.
I'm on the sidelines waiting for a resolution.
Though my bias is slightly to the short side I will not hesitate to buy above 5022 for 5044 and 5067.
----------------------------------------------------------------------------
Update at 12.10.
Though 4987 has been breached, I have not put out a short alert.
Not confident with the volume action here.
Let the market prove itself .
----------------------------------------------------------------
At 12.30.
Vindicated. 5012 now.
But the market will have to do a lot more than these 25 points to give me confidence.
--------------------------------------------------------------
12.44
Long at 4987. SL 4974. target 5020-5044.
High Risk. Intra.
----------------------------------------------------------------------------------------
12.58.
5006 Now.
Still high risk. Bringing Sl to cost.
Will be comfy above 5022.
---------------------------------
1.15
Out of position at 5008
-----------------------------------------------------------
1.38.
Waited all morning for this move. Missed it.
4955 will be the first port of call.
------------------------------------
New positional shorts initiated between 4955 and 4965. Will add on bounces.
---------------------------------------------------------------
Intra shorts can book out here around 4925-32 partially.
Viren's pivot level mentioned in the post above is 4887 not 4882.We may get there today.
---------------------------------------
14.44
4905 low of day so far. 4887 is what we want. 18 points away now.
Seemed distant in the morning. Not now.
-----------------------------------------------------------
15: 16
4901 is the low of the day and 14 points away Viren's 4887.
I closed some shorts at 4910 and will look to re-initiate them at higher levels.
Hope you all had a good trading day.
Tuesday, May 18, 2010
Closing Comments
Another good day in the office.
The market held through the 5020-5072 range and with 3 minutes to go looks like we will close at POC in the NF.This puts the train on track for 5135 which we discussed in the morning.
Values being created today were 5088-5065-5042, though we will have some minor adjustments by the closing bell.
I'll be looking at more feedback from you, my dear readers. Please discuss your levels on the indices, on stocks you are watching, the supports and resistances, news etc and together we will look at the MP rationale behind the same.
Looks like a close at the day POC and VWAP. Open tomorrow will have a role to play ( as always)
The market held through the 5020-5072 range and with 3 minutes to go looks like we will close at POC in the NF.This puts the train on track for 5135 which we discussed in the morning.
Values being created today were 5088-5065-5042, though we will have some minor adjustments by the closing bell.
I'll be looking at more feedback from you, my dear readers. Please discuss your levels on the indices, on stocks you are watching, the supports and resistances, news etc and together we will look at the MP rationale behind the same.
Looks like a close at the day POC and VWAP. Open tomorrow will have a role to play ( as always)
Trade Update : Bank Nifty ( 9575)
At target 1 and a 100 points up in 80 minutes !
Let's keep riding it.
Bring Sl now to 9530. Trade is safe.
Let's keep riding it.
Bring Sl now to 9530. Trade is safe.
Trade Update : Bank Nifty ( 9535)
I suggest booking partial profit at 9535 levels and bringing SL of the remaining to 9495.
Reasoning : SBI and Nifty are both fighting resistance and we can happily pocket the 60 points we have got in the trade in an hour's time and play it safe.
Reasoning : SBI and Nifty are both fighting resistance and we can happily pocket the 60 points we have got in the trade in an hour's time and play it safe.
Nifty Profile Pic
Here is an intra day chart of the Nifty Spot stretching back to the 4th of may.
As you can see that the range from 5135 spot to 5020 spot represents a minus development region and the Nifty is taking the first steps today to rectify the scenario.
What do I mean by this ? Very Plainly Profile Picture is telling us that we are in the first stages of a move to 5135 levels if the above is true.This can stretch to the next few sessions quite easily.
There is a downside risk too ( as with anything else in this market ).So I am willing to go with a possibility of 4987 being touched as the downside risk to this scenario being intact.This is the importance of the 4987 level.
However an auction below 4987 should bring Viren's 48xx levels into play.
Estimates for today
Markets are moving slowly in the 5020-5072 range from yesterday.
As expected the auction is in this zone 'cos of the fast upmove from yesterday afternoon above our 5020 levels.
For today 4987 ( Nifty spot ) holds the key to the move. 4987 has to provide the support to the market for yesterday's big upmove to be justified.
As expected the auction is in this zone 'cos of the fast upmove from yesterday afternoon above our 5020 levels.
For today 4987 ( Nifty spot ) holds the key to the move. 4987 has to provide the support to the market for yesterday's big upmove to be justified.
Monday, May 17, 2010
Update : Nifty (2) at 5060
Book partial profit at 5060 levels for intra.
Bring Sl of the remaining qty to 5040.
We have had a good day, now let's play it safe.
Bring Sl of the remaining qty to 5040.
We have had a good day, now let's play it safe.
Intra Update: Nifty at 5015
The market this morning has been quick and played out to Viren's levels on Saturday published here
At 1.04 pm we are at 5015 and are seeing 5010-5020 acting as resistance to the move up from 4962 .
There are two posssiblities at play here. Here's the profile chart. This is the time value chart of the Nifty spot for the last 2 days.
5010-5020 is crucial now. Above 5022 we can safely go up to 5080-5092.
However failure to overcome will bring 4962 again later today.
I'm booking out of my longs taken at 4966 here at 5015 and will trade later as per the above possibilities.
At 1.04 pm we are at 5015 and are seeing 5010-5020 acting as resistance to the move up from 4962 .
There are two posssiblities at play here. Here's the profile chart. This is the time value chart of the Nifty spot for the last 2 days.
5010-5020 is crucial now. Above 5022 we can safely go up to 5080-5092.
However failure to overcome will bring 4962 again later today.
I'm booking out of my longs taken at 4966 here at 5015 and will trade later as per the above possibilities.
Update Nifty at 5000.
Nifty at 5000.
We are 34 points up at this stage at 5000 levels.Those who want to book 34 points can do so and bring SL of remaining to 4960. I'm also 70 points up in my Bank Nifty trade in my personal account all in 40 minutes.
MP calls it as it is.
As Viren said yesterday we are not a lagging indicator to the market.
We are 34 points up at this stage at 5000 levels.Those who want to book 34 points can do so and bring SL of remaining to 4960. I'm also 70 points up in my Bank Nifty trade in my personal account all in 40 minutes.
MP calls it as it is.
As Viren said yesterday we are not a lagging indicator to the market.
Saturday, May 15, 2010
Order Flow
Viren here.
I want to congratulate a lot of people who have taken the opportunity to learn about the revolutionary concept in trading called the 'Market Profile'. This is evident in emails, your comments and the questions you have been asking about this topic.
As you take baby steps to incorporate the methodology in your daily trading, let me assure you that a firm grasp of this subject will always put you ahead in your trading be it in the Nifty index, in stocks, in commodities or forex.The system works everywhere.
Those who have been trading for some time now would have understood the changes brought upon in the life of a trader by the fast growth of the internet as we see it today.Many of you would be trading online not having to call your broker for execution of your trading ideas.The growth we have all witnessed will become even more quicker in the years to come as internet trading attracts even more volumes to the market.Thus a bull-bear cycle which previously would average 20-30 years now happens in 4 years and would get even more quicker in the years to come.
The pace of the market has changed and will get even quicker in the years to come.As traders trade on information present in the market, you need to put yourself ahead of moves and swings of the market.Information can change within minutes and the 30 minute time frame we use in market profile will become the accepted TF for the day and short term trader.
The concepts of value and auction are not new to us.If you have ever been to an auction you would have seen the base price as the start price. The first buyer when he bids announces a price higher than the start price.Soon other bidders join in the bidding and as volume of bids increase price moves higher which means that value is established higher.After reaching a high volume point, most bidders would think that the price is expensive for the item bid and drop out of the auction. As the volume starts drying up the floor manager calls the auction off when he finds no more bidders ( no volume ).Similarly in our markets order flow which is nothing but price against volume will tell you when the auction is slowing down and when the perception of value is changing. Fortunately our markets auction both ways so you can make money bidding up or down. Only you need to know when buyers are entering/leaving or when sellers appear.
A student of the Market profile will plainly have an edge versus any trader who uses ema's,trend lines,macd's, rsi's or any other oscillator or mechanical trading system which are at best confirmatory indicators.The profile approach will allow you to foresee the developing pattern for the day and the oscillators can be used to confirm the analysis if you are not confident initially.
To illustrate my point I want to take you back not more than a week back and follow the posts on this blog which followed the market movement through the Market profile. Both Shai and myself have stopped using oscillators, moving averages, trendlines etc for our trading and instead rely only on price and volume to keep us ahead in our decision making.The market profile has already incorporated all the price movements caused by traders using all of the above and a whole lot more.I can safely say that every single price reaction from a moving average, trendline, fib ratio, oscilator divergence has been recorded with the volume on the profile chart already.
Yes it's as simple as that-only price and volume. Price pays and volume shows the way.. Don't complicate your trading with anything else.Charts which have a string of indicators in the bottom pane are a distraction and only take a trader away from the main action. Besides they are lagging and confirm only when the move is made.
For the coming week the Market Profile has given us several pivots to see price/ volume action. Keep a watch at 5010-5018, then at 4955-4964 and 4882-4842-4825.On the upside the levels are 5092-5096, 5135 and 5215.
Happy trading.
---------------------------------------------------------------
Shai here.
Just to support Viren's levels, posting a chart of Nifty ( continuous ) Future daily chart from January this year.
The levels are for the intermediate term and clearly shows two levels 4872 and 5257 as the decider levels for bears and bulls respectively.
I want to congratulate a lot of people who have taken the opportunity to learn about the revolutionary concept in trading called the 'Market Profile'. This is evident in emails, your comments and the questions you have been asking about this topic.
As you take baby steps to incorporate the methodology in your daily trading, let me assure you that a firm grasp of this subject will always put you ahead in your trading be it in the Nifty index, in stocks, in commodities or forex.The system works everywhere.
Those who have been trading for some time now would have understood the changes brought upon in the life of a trader by the fast growth of the internet as we see it today.Many of you would be trading online not having to call your broker for execution of your trading ideas.The growth we have all witnessed will become even more quicker in the years to come as internet trading attracts even more volumes to the market.Thus a bull-bear cycle which previously would average 20-30 years now happens in 4 years and would get even more quicker in the years to come.
The pace of the market has changed and will get even quicker in the years to come.As traders trade on information present in the market, you need to put yourself ahead of moves and swings of the market.Information can change within minutes and the 30 minute time frame we use in market profile will become the accepted TF for the day and short term trader.
The concepts of value and auction are not new to us.If you have ever been to an auction you would have seen the base price as the start price. The first buyer when he bids announces a price higher than the start price.Soon other bidders join in the bidding and as volume of bids increase price moves higher which means that value is established higher.After reaching a high volume point, most bidders would think that the price is expensive for the item bid and drop out of the auction. As the volume starts drying up the floor manager calls the auction off when he finds no more bidders ( no volume ).Similarly in our markets order flow which is nothing but price against volume will tell you when the auction is slowing down and when the perception of value is changing. Fortunately our markets auction both ways so you can make money bidding up or down. Only you need to know when buyers are entering/leaving or when sellers appear.
A student of the Market profile will plainly have an edge versus any trader who uses ema's,trend lines,macd's, rsi's or any other oscillator or mechanical trading system which are at best confirmatory indicators.The profile approach will allow you to foresee the developing pattern for the day and the oscillators can be used to confirm the analysis if you are not confident initially.
To illustrate my point I want to take you back not more than a week back and follow the posts on this blog which followed the market movement through the Market profile. Both Shai and myself have stopped using oscillators, moving averages, trendlines etc for our trading and instead rely only on price and volume to keep us ahead in our decision making.The market profile has already incorporated all the price movements caused by traders using all of the above and a whole lot more.I can safely say that every single price reaction from a moving average, trendline, fib ratio, oscilator divergence has been recorded with the volume on the profile chart already.
Yes it's as simple as that-only price and volume. Price pays and volume shows the way.. Don't complicate your trading with anything else.Charts which have a string of indicators in the bottom pane are a distraction and only take a trader away from the main action. Besides they are lagging and confirm only when the move is made.
For the coming week the Market Profile has given us several pivots to see price/ volume action. Keep a watch at 5010-5018, then at 4955-4964 and 4882-4842-4825.On the upside the levels are 5092-5096, 5135 and 5215.
Happy trading.
---------------------------------------------------------------
Shai here.
Just to support Viren's levels, posting a chart of Nifty ( continuous ) Future daily chart from January this year.
The levels are for the intermediate term and clearly shows two levels 4872 and 5257 as the decider levels for bears and bulls respectively.
Friday, May 14, 2010
Thoughts
Mynac posted this thought last night :
Dear Shai,
I am fully convinced that 5135 will be now big support but do you see any possibility of Nifty even trading above 5200 tomorrow? I personally don't think so because in which manner today Nifty traded in last one and half hour between 5190 to 5170 is real worry for me.At present only the good thing is that the global clues are not too bad to spoil the game totally.The 5200 PE writers will have to give the support to market because now they are in danger zone because Nifty has given a clear cut very much below 5200 close today.Let us see tomorrow.Good Night.
Dear Mynac,
You are spot on with your analysis.
In Vol profile charts 5135-5225 represented a low vol non-trade facilitation zone with the edges the high vol regions ( +/- 5 pts maybe)
On Monday we zoomed past this zone 'cos it was not intended to facilitate trade.
However what we did in 3 hours that day, we have repeated over the past two days as the low volume in the zone had to be addressed.Further more Tuesday morning there were signs of buyers drying up which meant a rotation at play and a test of 5135 again. The gap between Monday's high and tuesday's open ( again a low volume region ) was addressed in the first session today.
This auction in the morning in the gap region allowed me to think that the rotation is over and we may see higher prices.
However that is changed in the afternoon session and you are right about lower prices ahead.
Prices are operating in a bracket of 5135-5210 at the moment. There can be an excess of 35 points either side.
If you notice the open interest, smart money has sold the 5200 straddle.
Dear Shai,
I am fully convinced that 5135 will be now big support but do you see any possibility of Nifty even trading above 5200 tomorrow? I personally don't think so because in which manner today Nifty traded in last one and half hour between 5190 to 5170 is real worry for me.At present only the good thing is that the global clues are not too bad to spoil the game totally.The 5200 PE writers will have to give the support to market because now they are in danger zone because Nifty has given a clear cut very much below 5200 close today.Let us see tomorrow.Good Night.
Dear Mynac,
You are spot on with your analysis.
In Vol profile charts 5135-5225 represented a low vol non-trade facilitation zone with the edges the high vol regions ( +/- 5 pts maybe)
On Monday we zoomed past this zone 'cos it was not intended to facilitate trade.
However what we did in 3 hours that day, we have repeated over the past two days as the low volume in the zone had to be addressed.Further more Tuesday morning there were signs of buyers drying up which meant a rotation at play and a test of 5135 again. The gap between Monday's high and tuesday's open ( again a low volume region ) was addressed in the first session today.
This auction in the morning in the gap region allowed me to think that the rotation is over and we may see higher prices.
However that is changed in the afternoon session and you are right about lower prices ahead.
Prices are operating in a bracket of 5135-5210 at the moment. There can be an excess of 35 points either side.
If you notice the open interest, smart money has sold the 5200 straddle.
Thursday, May 13, 2010
Trade Update
We got stopped out of HDFC Bank yesterday itself but the move in LT has made up for all the loss and more.
I am still holding LT to see if it can get by 1997.
The broader market has accepted the gap up from last night and after all things considered this should point to a move towards 5225-5245.
5135 will now act as a big support for the market.
I am still holding LT to see if it can get by 1997.
The broader market has accepted the gap up from last night and after all things considered this should point to a move towards 5225-5245.
5135 will now act as a big support for the market.
Wednesday, May 12, 2010
Trade Alert : HDFC Bank, LT
Description : Sell HDFC Bank
Price : 1963
Sl : 1976
Target : 1933, 1890.
Description : Buy LT
Price : 1556
Sl : 1540
Target : 1580 / 1590.
Price : 1963
Sl : 1976
Target : 1933, 1890.
Description : Buy LT
Price : 1556
Sl : 1540
Target : 1580 / 1590.
Tuesday, May 11, 2010
Query
One of our regular commenter Musti, posed me this question at 2.00 pm today :
"Shai, As I also asked in morning regarding my position I have few lots long in NF average price 5171. What to do now hold it or exit from it.
Plz suggest"
I am not at all averse to answering queries on the blog, but feel that the question should also carry the questioner's time frame along with his reason for the trade.
In the marketplace there exists all kinds of traders from the scalper to the day trader to the short-term (1-5 day) player to the swing trader, the intermediate term player and the investor.
At varying times these players influence the rhythm of the market.
What is important is to understand your time frame and the influence people of your timeframe make to the market.
I as a short-term trader shorted the market today after clocking 180 points from it in two days on the upside.
However as it approached 5135 at about noon I was in doubt about the future direction and decided to follow one of my trading rules which says " When in doubt stay out ".Unfortunately market movement for the rest of the day did nothing to dispel my doubts so I will stay on the side-lines.
If you have doubts on your position, first understand your timeframe, secondly ask yourself why you got into the position and thirdly find out if the conditions in the market have changed substantially to alter your view of the trade.
Musti, as stated in the afternoon 5080-5135-5215 are the levels from here. Can go either way.
"Shai, As I also asked in morning regarding my position I have few lots long in NF average price 5171. What to do now hold it or exit from it.
Plz suggest"
I am not at all averse to answering queries on the blog, but feel that the question should also carry the questioner's time frame along with his reason for the trade.
In the marketplace there exists all kinds of traders from the scalper to the day trader to the short-term (1-5 day) player to the swing trader, the intermediate term player and the investor.
At varying times these players influence the rhythm of the market.
What is important is to understand your time frame and the influence people of your timeframe make to the market.
I as a short-term trader shorted the market today after clocking 180 points from it in two days on the upside.
However as it approached 5135 at about noon I was in doubt about the future direction and decided to follow one of my trading rules which says " When in doubt stay out ".Unfortunately market movement for the rest of the day did nothing to dispel my doubts so I will stay on the side-lines.
If you have doubts on your position, first understand your timeframe, secondly ask yourself why you got into the position and thirdly find out if the conditions in the market have changed substantially to alter your view of the trade.
Musti, as stated in the afternoon 5080-5135-5215 are the levels from here. Can go either way.
Trade Update :
Nifty Future is currently trading at 5135 and the Bank Nifty is trading at 9610, both trades have logged in gains from the morning.
The reason for this post is that there is a fair bit of ambivalence regarding the next few moves in the Nifty from purely a market profile point of view.
Those who have been following my recent posting know the importance of the 5135 level.
There are two ways it can go from here ;
1) Go straight down to 5092-5080 levels
2) Up to the levels of 5220-5225.
Both of these are short term views and should be realised by tomorrow at the latest.
I would suggest partial booking of profits at these levels and bring Sl of the remaining to cost for those holding more than 1 lot. Targets are already given.
There would be no further updates for these 2 positions.
The reason for this post is that there is a fair bit of ambivalence regarding the next few moves in the Nifty from purely a market profile point of view.
Those who have been following my recent posting know the importance of the 5135 level.
There are two ways it can go from here ;
1) Go straight down to 5092-5080 levels
2) Up to the levels of 5220-5225.
Both of these are short term views and should be realised by tomorrow at the latest.
I would suggest partial booking of profits at these levels and bring Sl of the remaining to cost for those holding more than 1 lot. Targets are already given.
There would be no further updates for these 2 positions.
Trade Alert : Nifty
Description : Short Nifty Future
Price : 5162
Sl : 5192
Target : 5135/5092/ 5082.
Price : 5162
Sl : 5192
Target : 5135/5092/ 5082.
Monday, May 10, 2010
Trading
Picked up this definition of trading as it applies to the stock markets :
We are holding longs from 4990 spot levels as per this post here:
http://vtrender.blogspot.com/2010/05/quick-update-on-mp-levels.html
We are at the 5135 levels now as in the post above.
A small pause is in order here.
Above 5135 it is going to be another swift move to 5220-5235 levels.
Trading is the anticipation, timing, and
placement of orders to capitalize on change
We are holding longs from 4990 spot levels as per this post here:
http://vtrender.blogspot.com/2010/05/quick-update-on-mp-levels.html
We are at the 5135 levels now as in the post above.
A small pause is in order here.
Above 5135 it is going to be another swift move to 5220-5235 levels.
Saturday, May 8, 2010
Weekend View
The talk from the just concluded trading week has been the fall in the US indices in the past two days and suddenly you had bear blogs which were blown to extinction pop out with comments and analysis and the proverbial " we told you so..". Never mind if the "we told you so" have been wrong over a 100 times in the past one year!
Don't get me wrong. I am not a bull or a bear, and this blog sides with neither.We trade the market both up and down without getting emotion in the way of up or down prices.
That being said, let's take a look at what lies ahead for the markets next week.
I'll want to take a look with you, at the fundamental side as well as the technical side for the short term.If you have been reading this blog long enough then you would know that I count for a perspective on the fundamental side of the economy on none other than our favorite Baltic Dry Index ( BDI ).For the technical side there is none better than the NYMO.
To see if the fundamentals have been deteriorating, let look at the BDI.You can catch my last post on this subject here
Certainly does not show any signs of pain or a deterioration. On the contrary it is nearing highs.
Now a look at the NYMO for the technical picture.
As you can see it is extended and ready to move up again.
Just in case you have forgotten here is the co-relation again :
With the Vix at levels of 40 thereabouts,there will be volatility for the next 2-3 sessions which can swing big, either ways.Such an environment is ideal for day trading and you should not miss out on the opportunity.
Also a drop in the Nifty from 5400 to 5000 constitutes a 9 % correction which is fairly normal in a bull market and well within the 7-13 % expected range.
The charts above show that the bottom is near.
Don't get me wrong. I am not a bull or a bear, and this blog sides with neither.We trade the market both up and down without getting emotion in the way of up or down prices.
That being said, let's take a look at what lies ahead for the markets next week.
I'll want to take a look with you, at the fundamental side as well as the technical side for the short term.If you have been reading this blog long enough then you would know that I count for a perspective on the fundamental side of the economy on none other than our favorite Baltic Dry Index ( BDI ).For the technical side there is none better than the NYMO.
To see if the fundamentals have been deteriorating, let look at the BDI.You can catch my last post on this subject here
Certainly does not show any signs of pain or a deterioration. On the contrary it is nearing highs.
Now a look at the NYMO for the technical picture.
Just in case you have forgotten here is the co-relation again :
With the Vix at levels of 40 thereabouts,there will be volatility for the next 2-3 sessions which can swing big, either ways.Such an environment is ideal for day trading and you should not miss out on the opportunity.
Also a drop in the Nifty from 5400 to 5000 constitutes a 9 % correction which is fairly normal in a bull market and well within the 7-13 % expected range.
The charts above show that the bottom is near.
Friday, May 7, 2010
Position update
The morning weakness took me out of my two longs in HDFC and Grasim, though I have jumped back in, in both of them in my personal account...But for the journal we will count them as stopped out.
I am planning to stay out till the dust settles a bit which will mean no more alerts today.
Those who watched the action last night in the US market would have seen a slice of history shaping up and the implications would be huge for HFT in the US.
Somebody sent me this tape of the action in the CME futures pit during the crash.Download it from here :
http://www.mediafire.com/?ntq2didlygz
Those familiar with radio commentary will agree that this guy has a big future ahead for him in cricket commentary here..
Enjoy..
I am planning to stay out till the dust settles a bit which will mean no more alerts today.
Those who watched the action last night in the US market would have seen a slice of history shaping up and the implications would be huge for HFT in the US.
Somebody sent me this tape of the action in the CME futures pit during the crash.Download it from here :
http://www.mediafire.com/?ntq2didlygz
Those familiar with radio commentary will agree that this guy has a big future ahead for him in cricket commentary here..
Enjoy..
Thursday, May 6, 2010
Re : Grasim
I'm planning to take 50 % profits of my position at 2617.
Bringing Sl of remaining qty to 2549.
Bringing Sl of remaining qty to 2549.
Trade Alert : HDFC
Buy Hdfc in cash:
Price : 2739
Sl : 2719
Target : 2788/ 2838
Reg Maruti : I am scratching out my short position at 1283. Will loook to go long at 1299. Will update.
Price : 2739
Sl : 2719
Target : 2788/ 2838
Reg Maruti : I am scratching out my short position at 1283. Will loook to go long at 1299. Will update.
Trade Alert : Maruti
Our Trade from yesterday Grasim is holding up very well despite the weakness from the morning.
Trade : Sell Maruti
Price : 1273
Stop Loss : 1286
Target : 1231
Trade : Sell Maruti
Price : 1273
Stop Loss : 1286
Target : 1231
Wednesday, May 5, 2010
MP to the test
I have been severely handicapped by Viren's absence from the blog.
His regular posting helped keep the blog alive and not just in the contribution sense.
As for me, I have been testing a new trading system over the weekend. This system involves market profile besides a few other tricks I have picked up over my trading career.
I have decided to post my experimentation live over here at Vtrender.The stocks I have decided to focus on are from a core group of 15 stocks. These are Axis bank, Bhel, Grasim, HDFC, HDFC Bank, Hero Honda, Infosys, LT, Maruti, SBI, Sun Pharma, Tata Motors and Reliance.Nifty and the Bank Nifty are the Indices which will make up the 15.
I'm starting with Grasim today.
Buy at 2576, target 2668, Sl 2530.
His regular posting helped keep the blog alive and not just in the contribution sense.
As for me, I have been testing a new trading system over the weekend. This system involves market profile besides a few other tricks I have picked up over my trading career.
I have decided to post my experimentation live over here at Vtrender.The stocks I have decided to focus on are from a core group of 15 stocks. These are Axis bank, Bhel, Grasim, HDFC, HDFC Bank, Hero Honda, Infosys, LT, Maruti, SBI, Sun Pharma, Tata Motors and Reliance.Nifty and the Bank Nifty are the Indices which will make up the 15.
I'm starting with Grasim today.
Buy at 2576, target 2668, Sl 2530.
Quick Update on MP levels
I'm not posting charts but just wanted to update on some levels I am watching.
5292 from last week worked like a charm and did a good job to slow down market action and the other Market Profile pivot of 5060 was reached today.
Now 5110 ( Nifty currently at 5105 spot ) and 5135 should be short term reference levels for the upside.
Above 5135 we may once again see 5220.
Failure to overcome 5135 will bring 4985.
5292 from last week worked like a charm and did a good job to slow down market action and the other Market Profile pivot of 5060 was reached today.
Now 5110 ( Nifty currently at 5105 spot ) and 5135 should be short term reference levels for the upside.
Above 5135 we may once again see 5220.
Failure to overcome 5135 will bring 4985.
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