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Auction Market Theory and Market Profile

  • #41
  • Jan 28, 2011 10:16am Jan 28, 2011 10:16am
EU is now back into Tuesday's value area and stopped right at the balance point for the LO/NY session on that day. I think we now need to watch the balance point for hte same day in the asia session and see if that gets rejected @ 3655 and that point also looks like the boundary of the US/LO value area for Tuesday. If the upper boundary is rejected we should see a test of the lower boundary around 3590.

thoughts?
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Change is the only constant
  • #42
  • Jan 28, 2011 5:47pm Jan 28, 2011 5:47pm
Quoting @mel
How do you define the demand and supply area that you mark on you chart?
Supply and demand zones are a crucial part of my trading.

When you see price falling, only to base briefly before rocketing away you can be sure that there is more demand at that area than there is supply.

In a long example the top of the demand zone would be the opens/closes of the cluster of bars, and the bottom of the zone would be the low as shown by the lowest wick.

http://www.fxstreet.com/search/contr...1-e9bf77216d2f

This is a link to Sam Seiden's webinars and he highlights these points many times again and again so you can really get to see what to look for.

The zones seem very discretionary at first but over time they become very objective. It is important to consider the underlined words. Price should have stayed briefly at a level and also must move away with lots of force.
  • #43
  • Jan 28, 2011 5:52pm Jan 28, 2011 5:52pm
Quoting tgwhbb
EU is now back into Tuesday's value area and stopped right at the balance point for the LO/NY session on that day. I think we now need to watch the balance point for hte same day in the asia session and see if that gets rejected @ 3655 and that point also looks like the boundary of the US/LO value area for Tuesday. If the upper boundary is rejected we should see a test of the lower boundary around 3590.

thoughts?
Quote
the balance point for the LO/NY session

Interesting observation dude, considering balance on a per-session basis. I like it.

I'm curious about defining trend. As I understand, the reason the trend is up is that we continue to balance and break higher without breaking south of important balance areas. I would imagine the key here is determining which BA deserve to be more important than others. Possibly we could simply look at how long price balanced at an area to determine the importance of that BA to defining trend.
  • #44
  • Jan 28, 2011 5:54pm Jan 28, 2011 5:54pm
Quoting alexm
To add VSA in is when bounce up from POC level then look for No Supply down bar and place a buy order above there.
Don't forget that when you're looking to get long off of a no supply, it's mandatory to first see strength in the form of stopping volume. It is also very nice to see a shake out before hand as well. I sometimes enter off of tests, it depends on the conditions.

For VSA I believe that malcolmb14's thread in interactive trading can't be beat. Be sure to check out hiddengap's and intel's posts they are crystal clear and full of priceless info.
  • #45
  • Jan 28, 2011 9:12pm Jan 28, 2011 9:12pm
Quoting frankkn
Interesting observation dude, considering balance on a per-session basis. I like it.

I'm curious about defining trend. As I understand, the reason the trend is up is that we continue to balance and break higher without breaking south of important balance areas. I would imagine the key here is determining which BA deserve to be more important than others. Possibly we could simply look at how long price balanced at an area to determine the importance of that BA to defining trend.
i would agree. The amount of time price balances in an area determines its importance - or put another way, the strength of support/resistance it will represent. This is apparent with overlapping value areas. I'm not sure it determines the importance of a trend though, as a large balance area essentially means little price movement and therefore a range rather than a trend.
Change is the only constant
  • #46
  • Jan 28, 2011 11:02pm Jan 28, 2011 11:02pm
From my perspective, the trend is now down. We made had an area of balance yesterday (Friday) which was actually more of the balance range put in on Thursday. This balance area was followed by an period of imbalance to the downside. From there a small balance area started to form and the market closed within this new smaller balance area.

A trend can be defined as a vertical price move that puts in successive balance areas in that direction. Therefore if the vertical move is down, then the successive balance areas would be successively lower. If the vertical price move is up, then the successive balance areas would be higher.

If price breaks out of the white balance zone to the upside, we would not be in an uptrend until price is able to close above the green balance zone. So we would be looking to sell in this area of "resistance". If price breaks out of the white balance area to the downside, we would be looking to sell any pullbacks into this balance area or area of "resistance".

This is a very short term definition of trend, although it is based on 24 hour, or daily, volume histograms.
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Without VSA, you're playing checkers while the Smart Money plays chess.
  • #47
  • Jan 29, 2011 5:57am Jan 29, 2011 5:57am
Quoting alexm
Hi Mel,
Demand come in when people start buying, supply come in when people start selling.

again this is my EUR/USD chart today. Price touch the wednesday POC and bounce up again, amazingly accurate. To add VSA in is when bounce up from POC level then look for No Supply down bar and place a buy order above there.
hello mini me,lol

can u post the vsa indis in ur chart,they look awesome

i would love to test them out in asia
cheers
  • #48
  • Jan 29, 2011 7:12am Jan 29, 2011 7:12am
heres a live pit coverage of a market crash
http://www.ustream.tv/recorded/6723227
  • #49
  • Jan 29, 2011 7:41am Jan 29, 2011 7:41am
Quoting HiddenGap
From my perspective, the trend is now down. We made had an area of balance yesterday (Friday) which was actually more of the balance range put in on Thursday. This balance area was followed by an period of imbalance to the downside. From there a small balance area started to form and the market closed within this new smaller balance area.

A trend can be defined as a vertical price move that puts in successive balance areas in that direction. Therefore if the vertical move is down, then the successive balance areas would be successively lower....
Hi HG,

you're profile chart on the left indicates a BA of 3702, which is what i have in my profile as well. On the chart on the right, your BA line is lower at around 3692. It's only 10 pips, but why the difference? it looks like the edge of the value area
Change is the only constant
  • #50
  • Jan 29, 2011 9:47am Jan 29, 2011 9:47am
Quoting HiddenGap
From my perspective, the trend is now down. We made had an area of balance yesterday (Friday) which was actually more of the balance range put in on Thursday. This balance area was followed by an period of imbalance to the downside. From there a small balance area started to form and the market closed within this new smaller balance area.

A trend can be defined as a vertical price move that puts in successive balance areas in that direction. Therefore if the vertical move is down, then the successive balance areas would be successively lower....
In the first chart we have had a bearish reaction to a major supply level. This is a 4h EU.

Next are the recent levels I've been watching. I may be able to trade during Sunday and Monday Asian session. I'll be trading during NY/London tuesday. I'll be looking for shorts at these, and other developing areas.

Quote
I'm not sure it determines the importance of a trend though

Hey tgwhbb,

Sorry for the mis-communication but I meant importance of the level, as opposed to importance of the trend.

For example, check out the second chart. Time spent a long time at the lowest highlighted balance area. We haven't broken it to the down side yet, so what does that mean to our trend analysis?
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  • #51
  • Jan 29, 2011 10:01am Jan 29, 2011 10:01am
what low liqidity does to the market

http://i.imgur.com/8Xd9f.gif
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  • #52
  • Jan 29, 2011 10:07am Jan 29, 2011 10:07am
On the left is Euro futures with higher volume than we've seen in more than 2 weeks followed by a shakeout and no selling pressure, right into a balance area. That seems strange to me because I wouldn't have expected much buying to come in until that lower BA. Or could it just be attributable to the last hours of a Friday?
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  • #53
  • Jan 29, 2011 10:08am Jan 29, 2011 10:08am
is the red colour selling,blue buying,and whats gold colour then,

?
  • #54
  • Jan 29, 2011 12:07pm Jan 29, 2011 12:07pm
Quoting tgwhbb
Hi HG,

you're profile chart on the left indicates a BA of 3702, which is what i have in my profile as well. On the chart on the right, your BA line is lower at around 3692. It's only 10 pips, but why the difference? it looks like the edge of the value area
Good eye. I don't pay attention to the value area as much as I pay attention to areas where there are "clusters" of volume. If you look at the volume histogram you can see "bulges" or curves in certain places where the volume, and therefore the price, is clustering. This is of course the underlying characteristic of a normal bell curve. I am attempting to find the area where the actual balance took place. The value area covers the area where 70% of the volume (and or price) was, but there are often pockets or clusters within the value area and elsewhere that more accurately represent where the market balanced (rotated).

Also, one of the problems with Ensign's volume histogram is that you can not merge or split days. If I could merge days I would merge part of Friday's histogram with Thursday's histogram because they overlap. In other words, the higher timeframe is in control. This is a key concept and one of the reasons I am moving to a more MP friendly software program.
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #55
  • Jan 29, 2011 12:21pm Jan 29, 2011 12:21pm
Quoting frankkn
Hey tgwhbb,

Sorry for the mis-communication but I meant importance of the level, as opposed to importance of the trend.

For example, check out the second chart. Time spent a long time at the lowest highlighted balance area. We haven't broken it to the down side yet, so what does that mean to our trend analysis?
If you look at the profile of EU on a 4H chart, you'll see that area around 3460 is the last longer term balance area. One principal of AMT (or market profile) is that once price breaks out of a balance area it will tend to come back and test that area at some point. I'm looking for this next week. The 3460 balance point and surrounding value area (3410 - 3500) have not been tested since EU broke out, so now that we've broken below the latest value area around 3700 i'm expecting price to retrace to the last value area.

Price action and VSA around 3460 area should then be able to tell us if that old value area will hold or not.
Change is the only constant
  • #56
  • Edited 12:40pm Jan 29, 2011 12:27pm | Edited 12:40pm
Quoting HiddenGap
Also, one of the problems with Ensign's volume histogram is that you can not merge or split days. If I could merge days I would merge part of Friday's histogram with Thursday's histogram because they overlap. In other words, the higher timeframe is in control. This is a key concept and one of the reasons I am moving to a more MP friendly software program.
I noticed in some videos on balancetrader.com that NinjaTrader allows you to merge days.

On MT4, the 4 hour chart does a nice job of showing "merged" days as it creates market profile for what looks like 1 week worth of market data. But indeed it would be nice to be able to merge at your on will

On that note, on MT4 i'm not able to get my market profile indy to produce a profile for TFs greater than 4H. Wondering if anyone here can post a chart of daily profiles. Im just curious what it looks like and if its very difference from the 4H profiles i'm getting in Mt4.

EDIT: i meant to ask to post a chart of profiles greater than 1 day as the profile for a day is shown on the smaller TFs.
Change is the only constant
  • #57
  • Jan 29, 2011 6:39pm Jan 29, 2011 6:39pm
Hey buddy,

Quote
you'll see that area around 3460 is the last longer term balance area

That's my point, check out the chart and level I mentioned in post #50. We've got the same level.

Quote
you'll see that area around 3460 is the last longer term balance area

I totally agree which is why exact numbers (of balance areas) don't matter to me that's what VSA is for as far as I'm concerned. I'm just looking for a general area for price to either fade or break.

How does everyone feel about volume histograms vs. TPOs ?

  • #58
  • Jan 29, 2011 6:51pm Jan 29, 2011 6:51pm
Quoting dragan53
heres a live pit coverage of a market crash
http://www.ustream.tv/recorded/6723227
The sound he makes at 3:39 is great
  • #59
  • Jan 29, 2011 7:01pm Jan 29, 2011 7:01pm
Quoting tgwhbb
EDIT: i meant to ask to post a chart of profiles greater than 1 day as the profile for a day is shown on the smaller TFs.
This is ThinkorSwim. The chart's volume profile is set for weekly
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  • #60
  • Jan 29, 2011 7:17pm Jan 29, 2011 7:17pm
Quoting frankkn
The sound he makes at 3:39 is great
its like listening to a horse race
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