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My Problem with Market Profile charts
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Created: by josh Attachments:0

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My Problem with Market Profile charts

  #1 (permalink)
Elite Member
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josh's Avatar
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My Problem with Market Profile charts

When I first read MoM earlier in January, I was very impressed with the perspective on the market that MP gives. I learned a lot and consider it a worthwhile read. Specifically auction theory and thinking of the market having areas of accepted and rejected values has, in my opinion, enhanced my understanding of the market and the way it moves.

What I dislike about the MP chart itself is that it's touted as a "whole new way" to see the market by some. In fact, in my view, just as much information can be obtained, and more so, from a 30 minute candle or bar chart. You can see "tails" on a candle chart. You can see much more easily on a candle or bar chart the OHLC of a time period, as opposed to a MP chart. Perhaps the MP chart in its collapsed view gives a better overall distribution of the time period, I will give it that. The areas of value, where price spent lots of time, can be found on a candle chart by drawing S/R lines and noticing where price spent most of its time, and by extension in most cases, where volume was heavy.

I know that some use MP in their trading, but I think the real value lies in the concepts behind MP, rather than the charts themselves. What do you think?

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  #2 (permalink)
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  #3 (permalink)
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I agree with the main premise of your post.

Some traders can look at price alone and see what they need to see.

Some use an indicator because they can't pick out what they need to see through all the price bars.

I get sensory overload if I stare at price bars too long.


I'm just a simple man trading a simple plan.

My daddy always said, "Every day above ground is a good day!"
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  #4 (permalink)
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Pretty much agree.
I think part of the appeal is that since it doesn't come as standard as other forms of charting that it makes users feel more advanced with using it, like they have made some progress even if it is not being shown in the bottom line.
I spent a few months on Market Delta for no other reason I know now than it made my monitors look cooler.
Not to totally slag MP as I think it was great to learn and parts are fused with my thinking but as a whole it is rather nonsensical and a gross over simplification of modern markets.

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  #5 (permalink)
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los angles
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I think that the market profile is a support view to the volume profile witch really shows the distribution of the auction proses.

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  #6 (permalink)
Market Wizard
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josh View Post

I know that some use MP in their trading, but I think the real value lies in the concepts behind MP, rather than the charts themselves. What do you think?

def a over complicated concept, it just mean price tends to gravitate to certain number, just sell above/buy below that number and you maybe right most of the time.

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  #7 (permalink)
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josh's Avatar
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Well cory, IMO that may be simplifying it a bit TOO much but recognizing the market as an auction, which is what it is, as Dalton talks about in MoM, is the key IMO. The concept of areas of value, and the market accepting or rejecting price in a value area, is valuable in my understanding of market structure. And of course, some people are VERY good with really using MP in a way beyond what it was even intended, and to those people I say kudos and congratulate them in their success.

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  #8 (permalink)
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Market profile always worked for me until it did not revert to the mean then I got killed,, seems like the same as trading the "band" indicators.. Course I never quite believed that a trade at the ask is bullish and one at the bid is bearish,, I found the old tv commercial that said u are buying ur stock from someone who is convinced its going down enlightning..... so trades are really neutral..

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  #9 (permalink)
Trading Apprentice
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market profile works well with trendlines candles fibs, just add in the tools you are familiar with and combine them imgur: the simple image sharer

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