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Auction Market Theory and Market Profile

  • #1,321
  • Edited 11:34am Mar 30, 2011 11:23am | Edited 11:34am
I always put myself in the shoes of the people Im trading against. Commercials.Needing to trade with the inst. & com. traders if your a small retail trader. They trade dont trade with their own money therefore they have Rules , the're buy or selling is capped. So, if you worked (be the com. trader for a minute) for some one else and your job is to buy because you think price will be higher in the future. The session opens, and because it they are going to buy (Accumulate). At the best prices. They buy, (range ext.). now, you need to buy more but its getting pricey at higher levels, so you wait, if its mostly your huge vol moving prices. Stop buying, until price settles back to the IB, because as a com. trader you have rules, you cant buy or sell any more than max 3x that sessions IB. So if its initiutive buy, a smart com trader needs to work price to get the best prices. If its a fake out they will use so much of that limited buying power. they have 3x's IB. They might move prices to DIB ( thats 2x's thier power) turn and reverse and send prices they still have 1x's IB range of range extention to use for the other side.
Markets are not efficient, rather they are effective - Jones
  • #1,322
  • Edited 11:44am Mar 30, 2011 11:32am | Edited 11:44am
Quoting tgwhbb
Now we're at todays developing VAH and there doesn't seem to be much selling here, but rather lack of demand...so i'm still wondering if I take a long for the DIBH...
thought i pressed the submit button before, but it appears i pressed the cancel...

entered long a 4098 after 15M test of the pre-NY upthrust bar's close. 5M was also showing a no supply. Both of which were at the developing VAH. Target is DIBH at 4141.

TP set to 4140 and was just hit. finally one that worked out today.

Now IMO, if price builds value here, we're starting to fill the LVN as shown in my weekly TPO chart earlier, which means value is building higher and hence we should expectation rotation up to last week's VAH around 4230. But given its NFP week, i'm taking it one step at a time
Attached Image (click to enlarge)
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Change is the only constant
  • #1,323
  • Mar 30, 2011 11:50am Mar 30, 2011 11:50am
Quoting tgwhbb
thought i pressed the submit button before, but it appears i pressed the cancel...

entered long a 4098 after 15M test of the pre-NY upthrust bar's close. 5M was also showing a no supply. Both of which were at the developing VAH. Target is DIBH at 4141.

TP set to 4140 and was just hit. finally one that worked out today.

Now IMO, if price builds value here, we're starting to fill the LVN as shown in my weekly TPO chart earlier, which means value is building higher and hence we should expectation rotation up to last week's VAH around 4230. But...
I was able to exit my bad trade gracefully!
Beautiful! exactly 1 1/2 X's IB. If its very inituitive, we still have 2x's the IB @1.41575 and 3'x @1.41896. And a poc's @1.4169
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Markets are not efficient, rather they are effective - Jones
  • #1,324
  • Mar 30, 2011 11:54am Mar 30, 2011 11:54am
Quoting mzvega
I was able to exit my bad trade gracefully!
Beautiful! exactly 1 1/2 X's IB. If its very inituitive, we still have 2x's the IB @1.41575 and 3'x @1.41896. And a poc's @1.4169
and if price hangs around here for the rest of the day, we'll have a naked POC below at 4083. That would make for a beautiful long entry on Friday when NFP is released and there is a nice shakeout ... EU has been bought at 4050 area all week, so i'm still biased long side...
Change is the only constant
  • #1,325
  • Mar 30, 2011 12:11pm Mar 30, 2011 12:11pm
Quoting tgwhbb
and if price hangs around here for the rest of the day, we'll have a naked POC below at 4083. That would make for a beautiful long entry on Friday when NFP is released and there is a nice shakeout ... EU has been bought at 4050 area all week, so i'm still biased long side...
Good Analysis!
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Markets are not efficient, rather they are effective - Jones
  • #1,326
  • Mar 30, 2011 12:15pm Mar 30, 2011 12:15pm
Quoting mzvega
Good Analysis!
thx, so the question is, of all this trickery that the big boys are playing on retail traders this week, how does that manifest itself in the profiles? Or put another way, what would negate that analisys IYO, a break below the 4050 area and value building below, or would anything sooner give warning in the profiles?

For example, yesterday and today's profile resemble the 'b' shape, indicative of long liquidations. Yet last thurs/fri resemble 'p' shape indicative of short covering...so quite a few conflicting signals all over the place
Change is the only constant
  • #1,327
  • Mar 30, 2011 12:38pm Mar 30, 2011 12:38pm
Quoting tgwhbb
thx, Or put another way, what would negate that analisys IYO, a break below the 4050 area and value building below, or would anything sooner give warning in the profiles?

For example, yesterday and today's profile resemble the 'b' shape, indicative of long liquidations. Yet last thurs/fri resemble 'p' shape indicative of short covering...so quite a few conflicting signals all over the place
yes! I have to think harder, there may be other indications, some time its takes a second to get that "AAHAAA" possibility. But in the mean time P & B profiles, Im not so strong in that analysis, I am a work in progress. But some info per Dalton:


Long liquidation break: We refer to long liquidation as “old business” because it is reversing earlier long positions. Long liquidation can actually strengthen a market because it removes potential sellers; you liquidate an existing long by selling.Similar to short covering rallies, these breaks are against the prevailing trend and can be sudden and sharp. The old trading adage is that a market may be too long to go any higher, i.e. “a market has to break before it can rally”. Long liquidation is a process that adjusts inventory that has gotten too long. Itoccurs within every timeframe; day timeframe long liquidationmay be over quickly while longer timeframe long liquidation may last for much longer periods of time.


Short covering rally: We refer to short covering as “old business” because it is reversing earlier inventory. Short covering actually weakens a market as it removes potential buying interest; you cover a short by placing a buy order. The old adage is that a market may be too short to break any farther and that it has to “rally before it can break”; another way to view short covering is an adjustment in inventory. Short covering rallies can be very violent and misleading if you don’t understand the difference between old and new business. Short covering occurs within every timeframe; day timeframe short covering may be over quickly while longer timeframe short covering may last for much longer periods of time.
Markets are not efficient, rather they are effective - Jones
  • #1,328
  • Edited 2:15pm Mar 30, 2011 12:56pm | Edited 2:15pm
Quoting tgwhbb
For example, yesterday and today's profile resemble the 'b' shape, indicative of long liquidations. Yet last thurs/fri resemble 'p' shape indicative of short covering...so quite a few conflicting signals all over the place
Not conflicting if we take time-frames into account. Those buying in the 1.4050 area are long-term folks - macro funds and central banks - and those liquidating longs are medium-term folks who are very happy to take profits on longs built since 1.29-30.

As I posted during the weekend, one plausible interpretation is that 1.4050-4175 is a long-term balancing bracket, where long-term participants agree on value.

That such a balancing bracket happens right under the high of the medium-term range created by the November highs and the January lows is an indication that a long-term upside breakout is likely.

Taking the slew of negative Euro-zone news and the rising US bond yields into account, the fact that 1.4050 has held this week speaks volumes.

The breakout, if it happens, is likely to be triggered by a news event such as NFP on Friday.
  • #1,329
  • Mar 30, 2011 1:00pm Mar 30, 2011 1:00pm
Quoting medici
Not conflicting if we take time-frames into account. Those buying in the 1.4050 area are long-term folks - macro funds and central banks - and those liquidating longs are medium-term folks who are very happy to take profits on longs built since 1.29-30.

As I posted during the weekend, one plausible interpretation is that 1.4050-4175 is a long-term balancing bracket, where long-term participants agree on value.

That such a balancing bracket happens right under the medium-term range created by the November highs and the January lows is an indication...
yes, maybe conflicting was the wrong word i guess what i'm really after here is if there's a counter argument to by long bias analysis. Always best ot know what your opponent is seeing right?

i will re-read your post you refer to, but if you could be so kind as to link to it pls. Thx for the input!
Change is the only constant
  • #1,330
  • Mar 30, 2011 1:12pm Mar 30, 2011 1:12pm
Quoting tgwhbb
yes, maybe conflicting was the wrong word i guess what i'm really after here is if there's a counter argument to by long bias analysis. Always best ot know what your opponent is seeing right?

i will re-read your post you refer to, but if you could be so kind as to link to it pls. Thx for the input!
It was post #1136, I remember, I saved that picture of the intermidate anaysis. Nice clean Chart.
Markets are not efficient, rather they are effective - Jones
  • #1,331
  • Mar 30, 2011 2:09pm Mar 30, 2011 2:09pm
Quoting tgwhbb
yes, maybe conflicting was the wrong word i guess what i'm really after here is if there's a counter argument to by long bias analysis. Always best ot know what your opponent is seeing right?
Agreed, €/$ looks very bullish in the longer term. TWT. As to opponents, unless you are trading a very large account, do you have any other opponents than yourself?

Quote
i will re-read your post you refer to, but if you could be so kind as to link to it pls. Thx for the input!

Here it is.
  • #1,332
  • Mar 30, 2011 2:17pm Mar 30, 2011 2:17pm
Quoting medici
Agreed, €/$ looks very bullish in the longer term. TWT. As to opponents, unless you are trading a very large account, do you have any other opponents than yourself?



Here it is.
right now my opponent is my emotions still working on squashing my opponent emotions kept me out of a long at 4060, and made me set a silly stop for for the long i had at 4080...

thx for the link
Change is the only constant
  • #1,333
  • Mar 30, 2011 2:57pm Mar 30, 2011 2:57pm
Quoting tgwhbb
right now my opponent is my emotions still working on squashing my opponent emotions kept me out of a long at 4060, and made me set a silly stop for for the long i had at 4080...
I have my issues too, and I suppose we all do. Apologies if this is bit off-topic, but I don't think the usual trading psychology folklore about "discipline" and "unemotional" trading is very useful or even accurate.

At the end of the day, it is your gut/emotions making the decisions. So what is lacking is not discipline or emotional control, but self-awareness. That is, are we aware enough of our psychological state so that it doesn't interfere with trading? Or, differently put, are thoughts, emotions and perceptions so aligned that there is no inner conflict?

If you don't think that your gut is making the decisions, take a look at this:

Inserted Video
  • #1,334
  • Mar 30, 2011 4:41pm Mar 30, 2011 4:41pm
Quoting medici
I have my issues too, and I suppose we all do. Apologies if this is bit off-topic, but I don't think the usual trading psychology folklore about "discipline" and "unemotional" trading is very useful or even accurate.

At the end of the day, it is your gut/emotions making the decisions. So what is lacking is not discipline or emotional control, but self-awareness. That is, are we aware enough of our psychological state so that it doesn't interfere with trading? Or, differently put, are thoughts, emotions and perceptions so aligned that there...
Love this stuff, great contribution Medici
  • #1,335
  • Mar 30, 2011 5:08pm Mar 30, 2011 5:08pm
Just a rough look at what we are currently doing in the Euro. If I could, I would merge all these profiles together to create a large profile, as we are really doing nothing but balancing right now.

The bias, based on the POCv trend is up, but in a balancing market one can sell the highs as easily as buy the lows.
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Without VSA, you're playing checkers while the Smart Money plays chess.
  • #1,336
  • Mar 30, 2011 5:29pm Mar 30, 2011 5:29pm
EURUSD in my perspective (intraday) using the last 480 hrs (M), 120 hrs (W) and 24 hrs (D) profile.

KG
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  • #1,337
  • Mar 30, 2011 5:30pm Mar 30, 2011 5:30pm
Quoting HiddenGap
Just a rough look at what we are currently doing in the Euro. If I could, I would merge all these profiles together to create a large profile, as we are really doing nothing but balancing right now.

The bias, based on the POCv trend is up, but in a balancing market one can sell the highs as easily as buy the lows.
Does this help?
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Markets are not efficient, rather they are effective - Jones
  • #1,338
  • Edited 8:00pm Mar 30, 2011 7:25pm | Edited 8:00pm
Buy at 1.4124 target around SELL ZONE range.

KG

PS: Closed +15 pips
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  • #1,339
  • Mar 30, 2011 7:33pm Mar 30, 2011 7:33pm
in my perspective for intraday GBPUSD

KG
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  • #1,340
  • Mar 30, 2011 8:44pm Mar 30, 2011 8:44pm
Quoting frankkn
Love this stuff, great contribution Medici
me too... thanks Medici
...
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