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Is Volume Profile worth learning or is it an outdated concept?


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Is Volume Profile worth learning or is it an outdated concept?

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  #1 (permalink)
Berlin, Germany
 
Experience: Advanced
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Inspired by this thread: I wanted to start this one.

I've been trading for 5 years. It was hard in the beginning to differentiate what is worth learning and what is just empty promises. In the end I found price action and discretionary trading as my way to go. I haven't had a losing month for the last 1,5 years trading the ES.

As I'm always looking for ways to improve I want to find something which complements my trading. For the last few months I see more and more courses and topics about market/volume profile, order flow, dom, delta and footprint charts, etc. It seems like the "new" trend (I know it's been around for a long time).

I'm a pretty sceptical person which helped me so far in my trading journey. I see guys like futurestrader71 and prop firms like SMB offer mp/vp courses and I'm asking myself: Why are those coming up more and more over the last few years? Is it still relevant?

To sum it up: Is it worth to learn volume profile or what can you recommend to learn for a price action trader?

Thanks!

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  #2 (permalink)
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I'd also love to hear more about it. So far I am learning how to trade price action from Brooks. He says that volume/DOM can be helpful but usually it is unnecessary. Has anyone learned PA trading from Brooks and improved it by incorporating volume profile?

Edit: Also SMB seems to be all about selling their super expensive course.

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  #3 (permalink)
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The answer is "it depends". With everything in trading, there must be a "why". As in "if I buy here, why would people buy after me?".

If you don't know that - then be very suspicious.

If you are talking about long-term composite volume profiles - taking months, weeks or years of data and building a profile from it - where's the "why"? Is it that the market has some sort of 'muscle memory' and traders en-masse will do the same thing in an area that they did 6 months ago. That's the only thing approaching an explanation I've heard about this stuff. I don't get it. I mean - I can't tell you what I had for breakfast last Tuesday. I don't remember the prices of all the trades I took the a day ago. So how am I subconsciously placing trades that replicate trades I took before 'cause memory'.

If I can't see how I'm behaving like that - why would the market?

I do use intraday volume profile - but even then - if we move 20 points up from a significant VP area and then return - I figure it's no longer relevant because short-term/intraday traders (the ones who react to short term moves) are probably already out at that point.

Recent volume - where positions are - I think it's useful. The rest - not so much.

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  #4 (permalink)
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If you have a profitable trading approach as you stated, I would focus an scaling up size rather then bringing further view angles into your current decision making process. I would say volume profile can help you to define bigger targets and so you could get more ticks out of the market, but keeping what you have right know and scaling up the size will do the same without twisting your approach.

For me personal DOM/Order flow is not a dead horse. I think it's still important because peoples' decisions/fear lead to order flow, which leads to chart output/price action. If you setup your DOM with a traded volume column you have an intraday volume profile which can be followed and analyzed...

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  #5 (permalink)
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Shovez View Post
Inspired by this thread: I wanted to start this one.

I've been trading for 5 years. It was hard in the beginning to differentiate what is worth learning and what is just empty promises. In the end I found price action and discretionary trading as my way to go. I haven't had a losing month for the last 1,5 years trading the ES.

As I'm always looking for ways to improve I want to find something which complements my trading. For the last few months I see more and more courses and topics about market/volume profile, order flow, dom, delta and footprint charts, etc. It seems like the "new" trend (I know it's been around for a long time).

I'm a pretty sceptical person which helped me so far in my trading journey. I see guys like futurestrader71 and prop firms like SMB offer mp/vp courses and I'm asking myself: Why are those coming up more and more over the last few years? Is it still relevant?

To sum it up: Is it worth to learn volume profile or what can you recommend to learn for a price action trader?

Thanks!

I've always found volume profile and 'order flow' frustrating. It seems intuitive, even inevitable, that it contains information that can be exploited . . . But I've never found it myself, despite a lot of time spent looking at tick data and volume.

In terms of SMB, I believe they're mostly active in single stocks, which are a very different beast than the ES (or any futures contract) in terms of the underlying mechanics. There are things that a stock trader can do (such as stepping inside the bid-ask spread), that simply aren't possible with the ES. And there are things that a futures trader can do (such as get an order executed ahead of an investment bank because the exchange operates a strict first-in, first-out order book), that a stock trader cannot.

From what you've said about your trading experience thus far, then maybe the best answer would be: "if it ain't broke, don't fix it", although there's an equally strong argument to be made for adapting and developing.

If I were in your position, I would be looking for a way to explore and test whether volume analysis meaningfully adds to your performance, without directly impacting your real-world returns. Running a sim account simultaneously, in which you can make trades that incorporate volume profile etc, alongside your live account, might be one way to assess this while protecting your returns.

Hope that's helpful.

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  #6 (permalink)
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Shovez View Post
Inspired by this thread: I wanted to start this one.

I've been trading for 5 years. It was hard in the beginning to differentiate what is worth learning and what is just empty promises. In the end I found price action and discretionary trading as my way to go. I haven't had a losing month for the last 1,5 years trading the ES.

As I'm always looking for ways to improve I want to find something which complements my trading. For the last few months I see more and more courses and topics about market/volume profile, order flow, dom, delta and footprint charts, etc. It seems like the "new" trend (I know it's been around for a long time).

I'm a pretty sceptical person which helped me so far in my trading journey. I see guys like futurestrader71 and prop firms like SMB offer mp/vp courses and I'm asking myself: Why are those coming up more and more over the last few years? Is it still relevant?

To sum it up: Is it worth to learn volume profile or what can you recommend to learn for a price action trader?

Thanks!



Personally, i would see what's about, i would learn to trade with it but in the end you have to trade what suits you the best. If you dont feel confortable with it i would not continue. For me everybody has to look for his / her style of trading and sometimes its a long process.

just my 0.01 cent

Crossover

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  #7 (permalink)
brampton,ontario
 
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Over the past 12 years that I have been trading full time, I've noted that there is a myriad of indicators and combinations of indicators that CAN work in trading. Most all can work; some more successfully/reliably than others. I could see many of these here at Big Mike's. Many excellent indicators and approaches to trading.

After having been in many trading rooms and learning many approaches, my own thought is that the trading strategy and style has to match the personality. And the consistency with which it is applied is paramount.

Best of luck to you as you try to find that approach that makes you a small paycheck every week.

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  #8 (permalink)
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Ahhh the lure of a new approach... She wants you to change your chart... She is seducing you to give up your old ways for a newer cooler thing you don't know about. Come here and watch this webinar, I will show you a signal....

All joking aside, here's the question: If you have been trading profitably for a year and a half, why bother?

That means you've survived a pretty good mix of market conditions and have still come out with a profit so whatever you are doing works. Protect that! Don't go messing with new stuff. Put your effort into scaling size.

I know there is always this itch to learn a new approach, especially when you're a few years into it and bored. I'm guilty too. I've spent more time trying this and that than I care to admit and what I've learned is that trading is only about making money. No one gets a prize for how many different indicators you understand.

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  #9 (permalink)
london uk
 
 
Posts: 3 since Jan 2019
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I'd echo what some of the previous replies have said. You already seem to have a winning strategy so stick to it.
Although there's never anything wrong with being curious about learning new methods.

I was in a similar boat a few years back and took the time to learn what I could about MP/VP. I think for Es it has some value and may compliment your existing strategy. A few resources that I found the most useful were :

Stedlmayer's book on Market profile and then Mind Over Markets, maybe give those a read and see what you think.

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  #10 (permalink)
São Paulo São Paulo Brazil
 
 
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Hello, I am not a profitable trader, I have taken lots of courses, have watched hours and hours of live trading sessions in a super volatile market-Brazil, with people who work from inside the top broker here. Also took 5 times a trading combine at TopStepFX... what I have learned from this 5 years I have tried is that we need to go with what makes sense to us. Just that. There is free market profile information all around, it helps but it's not the only tool to consider. Of course if you think market will turn at a certain price, you want to understand the volume of orders at that price in the past. But things change, what specialist where predicting last week may change in a tweet ins't it, so why care about volume in the past? Those are questions you may want to spend time seeking, but it all comes to one operational system that reads market movements independently of fundamentals, which erase profits rapidly. I have now tested 1 year of trades on a manual spreadsheet, using market replay. I use Sam Seinden concepts to read it. Occasionally I use volume profile just to see if my stop is out of the way... nothing can substitute your own way of seeing things your own operational, they will sell you whatever comes at hand, see it but don't jump to it. Do your backtest, try to understand the fundaments of every tool, but trust your backtests. They haven't become successful trading what they are selling, because nobody sells what they valorize!! I wound't sell you my backtests, unless I where lost, without money to restart trading. When ever there is a demand, and the whole world has been coming to trade because of massive unemployment, there are going to be sellers. But the real deal, you have to find by yourself.


Shovez View Post
Inspired by this thread: I wanted to start this one.

I've been trading for 5 years. It was hard in the beginning to differentiate what is worth learning and what is just empty promises. In the end I found price action and discretionary trading as my way to go. I haven't had a losing month for the last 1,5 years trading the ES.

As I'm always looking for ways to improve I want to find something which complements my trading. For the last few months I see more and more courses and topics about market/volume profile, order flow, dom, delta and footprint charts, etc. It seems like the "new" trend (I know it's been around for a long time).

I'm a pretty sceptical person which helped me so far in my trading journey. I see guys like futurestrader71 and prop firms like SMB offer mp/vp courses and I'm asking myself: Why are those coming up more and more over the last few years? Is it still relevant?

To sum it up: Is it worth to learn volume profile or what can you recommend to learn for a price action trader?

Thanks!


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