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And his You Tube channel - [yt]https://www.youtube.com/user/jdaltontrading/feed\[/yt]
All of these could keep you going for months though so I think his seven week Mastery series of "Kickstart Webinars" on the You Tube page is a very good place to start. The full series is there from three years ago.
You do not win as a trader, you just get to play again the next day. If that game doesn’t appeal to you then you should not trade. Gary Norden
Trading: The one I'm creating in the present....Index Futures mini/micro, ZF
Posts: 2,311 since Nov 2011
Thanks Given: 7,341
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We buy and sell all the time in life in general. Most selling their skill set to their employer getting paid at the end of the week or twice a month (this is moving, very slowly, faster in some industries ie Uber, towards payment everyday).
Buying a myriad of smallish “stuff” mostly food and household items. Food is a great example. We all have our favorites and we know its price well. This is key. It’s value.
Trading is no different.... with one important distinction.
Value moves around a great deal. This one simple fact adds enormous complexity.
With peanut butter I’m extremely familiar with its price and its value. Doesn’t change much and when it does (goes on sale) I act as buyer. If I don’t make a move right away I could miss the peanut better sale. This is important.
Tracking value at the grocery store is easy. It does not change very much in part because it is a one way auction and the field is competitive etc.
In trading it becomes much more difficult but the basic idea holds true. We need to understand what the current fair prices are and be patient, doing nothing, until prices become unfair. Expensive relative to before so we sell or inexpensive relative to previous and buy. This puts the probability in our favor with no guarantee.
In my view drawing a volume profile for the entire day or RTH session works just ok. Drawing them on the fly at key areas IMHO is better in addition and related to the RTH or day profile.
Talk it through to yourself what the market participants are currently doing trying to get in their head. Do this from 30,000 feet. Place orders at unfair prices relative to what you are witnessing. Don’t wait for confirmation it is equivalent to missing the sale on peanut better.
True, except that when you buy your peanut butter you're presumably planning to eat it, and not resell it. So, you might get stuck selling it lower if you just buy the first price you think is 'cheap.' A balanced approach is prudent. "Confirmation" doesn't necessarily mean getting stuck with much of a worse price. The best traders, IME, don't just put their orders in and fold their hands and pray it works. They wait to see something, and only then get in. We all have "levels" and we all may have different notions of what is cheap or rich to value, and the market doesn't care what my levels are. So, since I must rely on others for my trade to work anyway, I spot buyers (if buying) before rushing to the front lines to lead the charge with a pellet gun.
Not waiting for confirmation is the cousin of catching the falling knife, and the desire is to get in on the ground floor and be able to breathe easier sooner, if the trade happens to work. But what I have found is that the market just might disagree with me once or twice on what we consider to be cheap, and by the time I'm in the trade I want, and by the time the market moves enough to compensate for the 1-2 losses I took while trying to avoid confirmation, my breakeven point is where I would have bought, having seen evidence of enough buyers to make the trade feasible; the only difference being that I have taken some heat and had to sweat a little more in the process.
My point is, there is more than 1 way to skin a cat, and it's critical to avoid the temptation of thinking that a profile tells us more than it actually does.
This is the art and at the heart of understanding the entire notion of initiating behavior, repricing, and positioning. People have their multi-year composite profiles with usually no thought to what it means or why at that scale it's largely nonsensical.
Guys... giving away the best profile secrets.. haha
@ironyitz that's the gold there, I normally hate the "you need screen time' replies, but with Vp/Mp you need to watch it in real-time develop and pay attention to how price reacts with past volume areas, current areas, and intraday micro profiles. In themselves, no one element outweighs another, but they add to the picture of context. Even if you watch your market for a couple of weeks and keep notes on how things develop and interact with each other you will see behaviors and start to develop hypothesis that you will want to explore and over time develop a playbook.
Also, just wanted to add some thoughts towards Jim Dalton's work, I have read most of his books and watch a couple hundred hours of his videos, I thought it was well worth the time and help me generate my own way to create context.
But one thing I don't agree with him on is his take on "institutional" money vs weak hand traders, usually, this comes in the form of "you can see the buyers here are buying at a very mechanical level, they are the weakest hand traders, etc..". The reason I don't like this line of thought is it makes many assumptions about future events, if the context is good and the trade has a setup, take it, you don't know if bigger money will flow in later for or against, they might come in supporting your direction and you missed a great location because it was "mechanical". This won't make much sense until you know his material but keep an open mind about it, there is no monopoly on how to read profiles.
Edit Addition:
Today actually ended up being a great example of the above comment; a 1 tick reverse off previous high, after a balanced slow morning. This is a "mechanical" level and possibly could have been a good short off VAH looking for a new low. But the size came in shortly after and supported this bounce and turned into a very nice uptrend. If you had been afraid of the mechanical level bounce you would have missed it, or worse still been short.
No way to avoid the seesaw in trading! I always liked that picture.
I should have said in my post with the chart, I didn't take a trade long at the previous day high. I don't want that post to sound like there is any way to know that the massive uptrend would have happened, the point is no-one would have known, but if you were biased against longs *because* the trend started off the previous high (a mechanical level) then you would have never considered the long trade.
the key concepts in market profile is understanding the current market conditions . a good example is what is the day type that is forming and or what kind of opening type do you have. if you can not I.D. them in real time the key reference points in market profile are not going to help much . the POC in market profile is a key reference point from the past trading day but only if yesterday was a balanced or primary day . if not it does not mean any thing . if it retest that point and stops it will be more likely to reverse if it happens be for 1030 am est. and you have a opening drive or opening test drive . if you have an open action type retest after 1030 am est. the key reference point is less likely to reverse price for the rest of the trading day. the key reference points are just an out line but trading that is not so easy.
I’m really glad someone started this post. I was just about to start one.
The more I trade with MP and VP, the more I learn that MP can be used for direct entries.
There are mechanical areas such as highs and lows of the previous / overnight or POC or VAH or VAL of previous days as well.
The hard part is during the RTH, making the call on the first touch of such an area.
Sometimes they work out and you buy the high / low, other times it blows right by it.
I do use VP on real time volume clusters as the price action almost always shows the push off the VPOC prior to a bigger move. I happen to get into high R:R trades using this method.
Can anyone shed some light on how they use the MP to locate trade entries ?
