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Beginners: What Really Matters: Volume Profile
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Beginners: What Really Matters: Volume Profile

  #1 (permalink)
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Beginners: What Really Matters: Volume Profile

This is what may become "The Grail" for newbies, as well as a place for heated debates.
What I envision is a sticky thread where a consensus can be formed, on "what really matters".

Example:
Volume Profile: Thread One
Market Geometry: Thread Two

For example, less talk of vendors, trade rooms, indicators and the like.
There has to be 3-5 things that really are the foundation of this "art" of trading.

Who am I: I am not a profitable trader yet, but I have done enough technical analysis of charts over years, that I see some things always are there. This thread is also a learning journey for me.

Let's keep the ideas that matter and toss the ones we agree do not matter in the end.

 
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  #3 (permalink)
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Example One: Volume Profile / Auction Theory


Having listened to or read a lot from FuturesTrader71, James Dalton and Linda Radske, I was overwhelmed with info.
It is my understanding that Market Profile has been eclipsed somewhat with Volume Profile, so what that being said...
Markets are an auction. Auctions seek to balance buyers with sellers. Balance and imbalance creates slow or sharp moves to facilitate trade.

Many years ago...in a galaxy far far away...there was a wannabe trader who plotted the "Volume By Price" indicator on his chart and said "Cool". He then quickly moved on to the next indicator. This is where our story begins.

Is there value in this indicator volume by price? Here I submit a recent 30M chart of the Down mini. Note how the Point of Control and Mid line created a level of resistance that price fell to after the recent drop. Also note how the high was at resistance from a Value Area High established days ago. Price had been in balance trading within each days range, until such time that it needed to retest that level up high. After doing so, it moved all the way back to a relevant level established well below the balance level. We should now see "some" retrace in price back towards the previous balance and VAL say 24760.

Intraday, I often see price move back to the Point Of Control of previous days. I will cover this in other chart posts.

So, is this one indicator and concept that truly matters, day in day out, year in year out? I believe so. I believe it to be important enough to want to know the levels of any instrument your trading dependent on your time frame.

Summation:
1. High volume price areas create "magnets" that facilitate future trade at those levels.
2. Low Volume Nodes can also create areas that price will retest to see if any market participants are there before moving on.

Questions:
1. When using this indicator, it appears to be best to NOT include after hours trading data. It appears to respect future price more accurately with RTH data. Agree? Disagree?
2. If you are a profitable trader and see errors in this analysis or have already been down this road and found something more important, please chime in.

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Last edited by edward40; December 30th, 2017 at 12:38 PM.
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What Really Matters: Volume Profile: IntraDay Trading

Submitted for discussion a recent 5M chart of the Dow mini. Note the price action in relation to the POC levels, both intraday and from previous days. This example is obviously working well in this non trending market action, agree?

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What Really Matters: Volume Profile: Intraday

More examples of gap plays to POC and price moving to and rejecting POC levels from previous days.

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Good stuff, I havenít check how far behind this theory you talked about occured, but I know that didnít happen last Thursday, I believe it gap up from Wednesdayís closing price (not sure, just reading from phone).

 
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rintin2x View Post
Good stuff, I haven’t check how far behind this theory you talked about occured, but I know that didn’t happen last Thursday, I believe it gap up from Wednesday’s closing price (not sure, just reading from phone).

Gap was Wednesday from previous week. When you get to a larger screen note the intraday moves to current day POC and previous day POC's.
I updated the initial chart and labeled the levels with text.


Last edited by edward40; December 30th, 2017 at 12:33 PM.
 
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Ah, my bad, missed itís actually not ES.

 
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edward40


edward40 View Post
More examples of gap plays to POC and price moving to and rejecting POC levels from previous days.

This is just what I'm looking for, but sorry right now I'm to tired to think. Ill come back when rested. looks like good info and great subject.

 
  #10 (permalink)
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Dow Mini 1.2.2018


What Really Matters - No surprises here, price moves towards a value area. Experimenting with the dValueArea indicator on Ninjatrader. Note how price opens well below the POC from the last trading day today and moves back to that area before reversing again.

I have not compared the levels to other programs, but it appears valid.

Attached Thumbnails
Beginners: What Really Matters: Volume Profile-poc.dow.1.2.2018.jpg  

Last edited by edward40; January 2nd, 2018 at 11:27 PM.
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