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80 percent market profile rule
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80 percent market profile rule

  #1 (permalink)
LIOR
Israel
 
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80 percent market profile rule

Hello everybody
I wonder if someone can explain the "80 percent market profile rule" and show an example

Thank you.

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  #2 (permalink)
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  #3 (permalink)
Elite Member
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Just found this PDF using a google search:
http://www.marketdelta.com/blog/wp-content/uploads/Strategy-80PercentRule.pdf

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  #4 (permalink)
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The "80% rule" is just another Market Profile myth. First, it is a very rare setup. Second, the win rate is just slighty greater than 50%.

Link to the backtest details: TL backtest 80% rule

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  #5 (permalink)
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80% rule from Cisco futures

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Mftkn View Post
The "80% rule" is just another Market Profile myth. First, it is a very rare setup. Second, the win rate is just slighty greater than 50%.

Thanks for the link to a backtest. The rules they used did not match the document posted earlier so I read further and found that a second backtest using the original setup suggested by Cisco futures showed better results.

"120 days price opened outside of value and closed the first 30 mins within it. Of those, 75 times it hit the other end of the value area. So, 12% setup rate, 62.5% success rate. Prior VPOC is hit 107 out of 120 times, or 89% of the time." Backtest using CISCO rules

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  #6 (permalink)
Trading Apprentice
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80% Rule

I backtested this awhile back and did not get anywhere close too the results you showed here. I would suggest that you do your own backtesting. This will help your either internalize the result and feel comfortable with taking the trade or debunk any previous test results.

On a farther note I use market profile for my trading and one of the first things I found out there was others were using the VAH and VAL and different rules like the 80% rule to come up with manufactured trades off those levels.

I think you will find that using MP as a trading decision maker will not bode well. Using MP to gauge the bigger picture and who you are playing with will suit you might better. Looking for excess and balance and one time framing will help you might more imho.

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  #7 (permalink)
LIOR
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dougrkyle View Post
I backtested this awhile back and did not get anywhere close too the results you showed here. I would suggest that you do your own backtesting. This will help your either internalize the result and feel comfortable with taking the trade or debunk any previous test results.

On a farther note I use market profile for my trading and one of the first things I found out there was others were using the VAH and VAL and different rules like the 80% rule to come up with manufactured trades off those levels.

I think you will find that using MP as a trading decision maker will not bode well. Using MP to gauge the bigger picture and who you are playing with will suit you might better. Looking for excess and balance and one time framing will help you might more imho.

Hello dougrkyle,

Can you give examples to rules with VA and VL that you mentioned.

Thank You

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  #8 (permalink)
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In those two half hours price could move far enough into value that taking the trade to the other side wouldn't be worth it. Also the rule remains in effect if price leaves the value area and comes back in, so placing a stop somewhere in value would be tough as well because price could bounce out hitting your stop loss before going to the other side. Everything comes with a catch.


Last edited by Itchymoku; March 4th, 2014 at 10:35 AM.
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  #9 (permalink)
Market Wizard
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Itchymoku View Post
In those two half hours price could move far enough into value that taking the trade to the other side wouldn't be worth it. Also the rule remains in effect if price leaves the value area and comes back in so placing a stop somewhere in value would be tough as well because price could bounce out hitting your stop loss before going to the other side. Everything comes with a catch.

Booooooooooom!

That's my experience too - it's a rule that does not guarantee an entry.

Now - when it does come back and give you an entry - is that likely to be one of the 80% or one of the 20%?

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  #10 (permalink)
Trading Apprentice
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Was reliable back when the markets were more rotational intraday and tight range bracketing overall.Like anything else "context".

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