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Market Profile vs. Price Action
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Market Profile vs. Price Action

  #1 (permalink)
Trading Apprentice
Canada
 
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Market Profile vs. Price Action

I starting out in Forex after having traded penny stocks in high school a few years ago. I noticed very quickly that indicators=unhelpful cluttered charts. I noticed some mention of the resurgence in Market Profile and Price Action methodologies.

I wanted to get some guidance on a) which one have you found to be more helpful and b) the best way to trade with either one of both of these market theories.

I've read some of the info on the Cisco Future website, and looked into jigsaw trading and the price action system from Mack. I don't know if i'm starting out in the right direction at all and would appreciate some feedback as to whether these market theories/methodologies are worthwhile. Thanks!

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  #3 (permalink)
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How about a combination of both? Use price action to validate areas of support and resistance you see on the profile maybe?

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  #4 (permalink)
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Market profile

I agree with you in some cases about indicators cluttering up your screen, but often this is just due to them being poorly coded or just re-hashing information.

Market profile is a tool that every trader should use, in my opinion, because it delivers new data onto your chart that was previously unavailable.

I look at trading without market profile like trading without looking at the volume on a chart. Both are rel event, and separate bits of information to help with your decision.

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  #5 (permalink)
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I believe PA and MP should be able to complement each other. You will be able to see in MP exactly where most of the business was done in the day and you can use PA to time your entries. I would not say that this is effective but it makes sense.

PA basically just looks at bar/candlestick patterns and price and does not take volume information into consideration. Adding volume to PA makes it more effective. Look for topics such as Volume-Price Analysis (VPA) and it will make MORE sense to you.

"You are only as good as the decisions you make."
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  #6 (permalink)
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Have to agree with Jerbersoft here in questioning what underlying assumptions you are making to think that market profile and price action are mutually exclusive.

I recommend thinking of market profile as the sandbox you are playing with during that session or day (where the boundaries to the box are, how much sand is in what part of the box). Price action will help you read what is about to happen inside that box and if the party is about to leave that sand box.

If you'll permit me with another analogy, you might win a fist fight only using your left hook, but why handicap yourself with one first when you can use both?

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  #7 (permalink)
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The market profile is useful for getting the big picture right. However, in trading FX, I always feel that the market-profile is not really accurate. I simply don't trust the volume you get on ECNs.

Also, I find that price action is much better for setting targets that the market profile. You often see price reaching important references points in the market (Fib retracements, lows of previous trading ranges, etc). For precision, I like PA. For getting a quick global view of the market, I use the MP.

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  #8 (permalink)
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MP parameters for 6E

As for me Market Profile and Price Action are working nice in synergy.
Ussing MP for carrencies trading you should set open and close prices of regullar session.
What open and close time do you use for 6E?
Thank you.

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  #9 (permalink)
Trading for Fun
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jerbersoft View Post
I believe PA and MP should be able to complement each other. You will be able to see in MP exactly where most of the business was done in the day and you can use PA to time your entries. I would not say that this is effective but it makes sense.

PA basically just looks at bar/candlestick patterns and price and does not take volume information into consideration. Adding volume to PA makes it more effective. Look for topics such as Volume-Price Analysis (VPA) and it will make MORE sense to you.

I would agree that knowing how much of something at what price is more helpful than just price. Is there any relevant volume data that can be used in forex though? i keep reading that there is not.

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  #10 (permalink)
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MajorMagnuM View Post
I would agree that knowing how much of something at what price is more helpful than just price. Is there any relevant volume data that can be used in forex though? i keep reading that there is not.

To get a similar view, instead of using the VAP (volume at price), for Forex, you can use TAP (Time at price) market profile. This will result in a similar insight into the market. Not identical, but similar.

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