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Using Market Profile as the Basis fora Trade PlanPresented by Tom AlexanderAlexandertrading.com1
The Market Profile Based Trade Plan1.2.3.4.5.It provides a statistically valid conceptIt provides a depth and breadth of informationother methodologies cannotIt provides more consistently accurate supportand resistance information than any othermethodologyIt helps determine, in an objective manner, thepotential risk/reward of taking a trade at anygiven level during the trading dayIt is logical and is based on natural marketdevelopment2
The Market Profile Based Trade Plan1.2.3.4.5.It makes for more objective, relaxed tradingIt enables the identification of trades with thegreatest potentialIt helps cure the overtrading tendency so manytraders haveIt is robust across time frames and marketsIt is based on market generated informationand simplifies the decision making process atthe execution level.3
The Ultimate Reason to Use Market ProfileIt Works4
What is Different about a MarketProfile Chart?It is multi-dimensional:TimePriceVolume5
Critical Concept:Time Price Volume (VALUE)6
Value: Two Phases1)2)Balance HorizontalDevelopment (consolidation)Imbalance VerticalDevelopment (trend)7
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Market DevelopmentConstant process of cycling in phases fromImbalance to Balance.This creates consistent inflection points thathelp define market condition and helps toidentify and quantify trade opportunity.15
Market Profile Charts MarketDevelopmentMarket Structure gives clues to the presentstate of market developmentMarket Structure provides areas of potentialresistance and supportMarket structure enables one to objectivelyevaluate the risk/reward equation oftaking a trade16
Understanding Market DevelopmentProvides Certain Useful StatisticalTendencies of Value to a TraderMarkets spend more time consolidating(Horizontal Development) than trending(Vertical Development)The tendency of the market isoverwhelmingly statistically in favor ofrotation17
Inflection Points KeyReference Areas KRAs are based on Value (or lack thereof)in the market.Remember: Price Time Volume(VALUE)18
Composite ProfilesHelp to define Value outside the daytimeframeThis can help us make better trade decisionswhile trading the present day timeframe.Each day is merely a piece of larger marketdevelopment19
Key Reference AreasKRAs in the present day timeframe can be“lined-up” with KRAs of developing marketstructure to help define trades – locationand risk/reward.20
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Benefits of Trading MarketStructure Helps remove randomness from tradedecisionsProvides an objective means to quantifyrisk AND rewardAllows for more structured, less stressfultrading22
Benefits of Trading MarketStructure Provides important context for “entrygimmicks” at the execution levelMakes understanding short-term marketinternals even more valuable and practicaltp use – volume, TICK, breadth, intramarket divergences23
www.alexandertrading.com Free Newsletter with an emphasis oneducation and practical, tradable analysisSeminars: Atlanta, August 12-14; SanDiego, Sept. 30-Oct. 2Mentoring24
The CBOT Market Profile is a registered trademark of theChicago Board of Trade, which holds an exclusivecopyright to the Market Profile graphics. Graphicsreproduced herein under the permission of The ChicagoBoard of Trade. The views expressed in this seminar aresolely those of he author and are not to be construed asthe views of the Chicago Board of Trade in any wayresponsible for the contents hereof.Charts courtesy of CQG, INC. www.cqg.com25
Market Profile Charts Market Development Market Structure gives clues to the present state of market development Market Structure provides areas of potential resistance and support Market structure enables one to objectively evaluate the risk/reward equation of taking a trade. 17 Understanding Market Development Provides Certain Useful Statistical Tendencies of Value to a Trader Markets spend .File Size: 586KBPage Count: 25Explore furtherMarket ProfileI The concept of Market Profile stems from .www.earnforex.com(PDF) Market Profile handbook Alec L. Huang - Academia.eduwww.academia.eduTopic No. 1: The Basics of Market Profilewww.futurestrader71.comBooks – Jim Dalton Tradingjimdaltontrading.comRecommended to you based on what's popular Feedback
