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Auction Market Theory and Market Profile

  • #2,881
  • Jun 10, 2011 10:00am Jun 10, 2011 10:00am
Quoting tgwhbb
Hi Alex, indeed very nice pics!

As per my last post, responsive sellers found around 4560 area, in fact price did not make it that high, then initiative sellers founds under 4500 in asia. indeed that naked monthly POC looks like a good target, but most likely next week IMO. For today i think more 4400-4420 area.
Tks Jamie and Kave, glad u like the pic

Now I view it as a longer term time frame trader, I remember what JD said, we will spend a great deal of our time to analyze which time frame is in control of the market.

Some time to have a flexible mind to trade both way is extremely difficult, so now I try to apply the 70% long, 30% short strategy that mention in Market in Profile to take advantage of the long liquidation break. I wonder anyone of you doing the same thing like me

My short entry was 4463, will hold it over the weekend.
  • #2,882
  • Jun 10, 2011 10:13am Jun 10, 2011 10:13am
Quoting mzvega
I still dont think you can have a "short covering rally" in an uptrend as in your picture, how do you have a rally when your aready at the top of a trend? How do you have a liquidation break at the bottom of a trend.

as per "mind of markets" page 126-127:
[left]
"Short Covering Rallies Probably one of the market's most deceptive
and misunderstood behaviors is known as short covering. Almost all rallies
start with "old business" covering their short positions, which at
least temporarily causes price to auction higher. If this rally...
I see your point the view...but
Your suggestion is that if the market have not been short, why cover? In order flow dynamics, net long does not mean zero shorts.

Anyway back to the point where i say it does not have be a initiation from below for for a proper P formation. Cause within it the response was follow by initiation..

When one read a profile one have to apply some flexibility & watch the order flow. e.g if that EJ weekly P profile in question were to start from the the 2nd day instead..then that would qualify as what u have quoted on point no.2.
Attached Image

Forex market consist of various time frame players all vying for a position to an imminent boiling point if once tip, all things happen so fast as if time have been compress...the effect of time compression too have to be understood..

Excellent post btw...
  • #2,883
  • Jun 10, 2011 10:33am Jun 10, 2011 10:33am
Quoting tgwhbb
London 1x extension on the low was my target, hit it to the pip. Closed, done for the week, not as courageous as you to take a long down at 4400 although it is low risk given daily range is exhausted and london session is nearing its close...
Yeah the 1x minimum when i was staring at the weekly i know this week is not done for yet...nice pips to end the week with..

I am now hedge so have to wait for coast to clear to cover my shorts...then I'll be long for recovery up...
  • #2,884
  • Jun 10, 2011 11:24am Jun 10, 2011 11:24am
Quoting Evak
I see your point the view...but
Your suggestion is that if the market have not been short, why cover?
No, Im sugguesting that how can you have a "short coving Ralliy" a rally caused by closing of "old business" short positions. Covering a short position, imo is not a "short covering rally" a "short covering rally" is a temporary rally in a current down trend, caused by the closing of old shorts positions, that gives you the impression the downtrend is over
when its not. That imo is a short covering rally

"A sharp rally, generally occurring on or soon after the open, follows as participants enter to cover (buy back) their short positions. The need to cover may be a result of: (1) locals simply sellingso much that their inventories become too short; (2) profit-taking after anextended down move; or (3) other timeframe participants with short positions who are forced to exit. Like a kettle that whistles when too
much steam has built up inside, a short covering rally is a short-termevent that relieves temporary market pressure."

There is no "Rally" at the open in your picture. Your picture sugguest it goes down first (the opposite of rally) if you look at how that profile was built, it started at A and went down turned into a b long liquidation break then rallied. you call it a short covering rally, when according to mind over markets it was long liquidation break.
To have a "short coveing rally" you rally first, long liquidation, you need to break (down) first.

A Profile beginning to

develop the shape of a "P" or a "b" does not infer that short covering or
long liquidation is occurring. Remember, all facts are surrounded by
other circumstances. Properly evaluating short covering or long liquidation
patterns requires that the trader make careful note of the underlying
conditions prevailing in the market and the requisite characteristics that
signify each pattern. The main considerations are: (1) the recent market
direction compared to the formation, (2) the open—near the low for a
short covering and near the high for long liquidation, (3) the subsequent non-continuation after a drive away from the open, and (4) gradually retracing auctions as the short-term buying or selling releases temporary pressure
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Markets are not efficient, rather they are effective - Jones
  • #2,885
  • Jun 10, 2011 11:51am Jun 10, 2011 11:51am
Quoting mzvega
No, Im sugguesting that how can you have a "short coving Ralliy" a rally caused by closing of "old business" short positions. Covering a short position, imo is not a "short covering rally" a "short covering rally" is a temporary rally in a current down trend, caused by the closing of old shorts positions, that gives you the impression the downtrend is over
when its not. That imo is a short covering rally

"A sharp rally, generally occurring on or soon after the open, follows as participants enter to cover (buy...

haha...okok i get your point have a nice wkend
  • #2,886
  • Edited 12:26pm Jun 10, 2011 11:55am | Edited 12:26pm
Quoting Evak
haha...okok i get your point have a nice wkend

I appreciate your patience with me, I needed a good exercise to go over info I find difficult. But actually I think I got it, now. I think it depends on "Where" the pattern is on the chart determnes if that pattern is valid or not.
Markets are not efficient, rather they are effective - Jones
  • #2,887
  • Jun 10, 2011 12:50pm Jun 10, 2011 12:50pm
Quoting alexm
Tks Jamie and Kave, glad u like the pic

Now I view it as a longer term time frame trader, I remember what JD said, we will spend a great deal of our time to analyze which time frame is in control of the market.

Some time to have a flexible mind to trade both way is extremely difficult, so now I try to apply the 70% long, 30% short strategy that mention in Market in Profile to take advantage of the long liquidation break. I wonder anyone of you doing the same thing like me

My short entry was 4463, will hold it over the weekend.
I was so pre-occupied I didnt see your pictures. Very beautiful!!! You're very talented.
70% & 30%???? I think I missed something!!!!!!!!
Ive been short since @1.46732. Im debating to close or not. (Im trying to make up for missing a few trading days last week) but I dont recall a 70% long, 30% short strategy. Could you give me a reference page? it would be much apreciated.
Attached Image (click to enlarge)
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Markets are not efficient, rather they are effective - Jones
  • #2,888
  • Jun 10, 2011 1:18pm Jun 10, 2011 1:18pm
Quoting mzvega
I was so pre-occupied I didnt see your pictures. Very beautiful!!! You're very talented.
70% & 30%???? I think I missed something!!!!!!!!
Ive been short since @1.46732. Im debating to close or not. (Im trying to make up for missing a few trading days last week) but I dont recall a 70% long, 30% short strategy. Could you give me a reference page? it would be much apreciated.
very good trade claudia, congrats. i again closed out too soon today...
Change is the only constant
  • #2,889
  • Jun 10, 2011 2:39pm Jun 10, 2011 2:39pm
Quoting tgwhbb
very good trade claudia, congrats. i again closed out too soon today...
Thanx, but if I had not already been short, and I opened a position today, I probably would have closed too. Just food for thought, I mentioned before, that statistics show that on fridays we often do the whole weeks range. I always keep that in mind and expect extened range on fridays.
Markets are not efficient, rather they are effective - Jones
  • #2,890
  • Jun 10, 2011 6:38pm Jun 10, 2011 6:38pm
On MP for the month of the June 2011, POC is now at 1.4546...and price 1.4347 is at third standard deviation...From this point market will either go up or continue down to 1.4212...
The Market pays you to be disciplined
  • #2,891
  • Edited 7:48pm Jun 10, 2011 7:32pm | Edited 7:48pm
Quoting mzvega
I was so pre-occupied I didnt see your pictures. Very beautiful!!! You're very talented.
70% & 30%???? I think I missed something!!!!!!!!
Ive been short since @1.46732. Im debating to close or not. (Im trying to make up for missing a few trading days last week) but I dont recall a 70% long, 30% short strategy. Could you give me a reference page? it would be much apreciated.
Claudia, tks for visiting d blog.

JD mention 70%long 30%short in (Market in Profile) page 194 near the ending chapter, about his conversation with State Street Global Advisors about their long term performance. Actually it is just an idea to catch both wave from a longer time frame perspective, so investor can take advantage on all the opportunity that the market offer.

I tried this idea on last month, I hedge a position by short for 2 weeks, and I buy from the low 3 weeks ago all the way back to this week high.

To change our mental flexibility to this kind of roller coaster ride is not easy, but I must break my thinking pattern to perform better in the long run. You must try this Claudia. It was fun man!

This is how the statement looks like.
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  • #2,892
  • Edited Jun 11, 2011 12:59am Jun 10, 2011 11:44pm | Edited Jun 11, 2011 12:59am
Quoting alexm
Claudia, tks for visiting d blog.

JD mention 70%long 30%short in (Market in Profile) page 194 near the ending chapter, about his conversation with State Street Global Advisors about their long term performance. Actually it is just an idea to catch both wave from a longer time frame perspective, so investor can take advantage on all the opportunity that the market offer.

I tried this idea on last month, I hedge a position by short for 2 weeks, and I buy from the low 3 weeks ago all the way back to this week high.

To change our mental flexibility...
Nice alex This is call the 70/30 long-short tactics which trades according to medium to longer trend bias & the portfolio/asset is adjust accordingly..do correct me if i am wrong.. I only use this tactic for AUDUSD & EURAUD. Seldom for EU & GU which i also trade. GU is my 1 trade a day pair. EU is my so-call target of opportunity pair, EJ too.

I agree with u on the part on that mental roller coastal ones required to manage in trading. this 70/30 rules help me to focus on the overal market direction & somehow become less fearful of trading intraday too, even during NY session which i usually avoids.

I will be off to japan next week or so....
Wish you more green pips...
  • #2,893
  • Jun 11, 2011 7:31am Jun 11, 2011 7:31am
might be usefull to some...:
http://www.investopedia.com/articles...#axzz1OyAxkjVP
The Market pays you to be disciplined
  • #2,894
  • Jun 12, 2011 5:16am Jun 12, 2011 5:16am
Just to share an article from Dr Brett Steenbarger, Ph.D.

It help us to check our state of mind, hope you enjoy digesting it.

-----------------

A Dozen Reflections on Life and Markets

Brett N. Steenbarger, Ph.D.

www.brettsteenbarger.com


I've never seen a trader succeed whose explicit or implicit goal was to not lose. The trader who
trades to not lose is like the person who lives to avoid death: both become spiritual
hypochondriacs.

No union was ever destroyed by a failure of romance. It is the loss of respect, not love, which ends a relationship.

Love, once present, never dies. It must be killed.

Sometimes we select markets--and trading styles--much as we choose romantic partners: by their ability to validate our deepest-held images of ourselves. Our choices generally succeed, for better or for worse.

Many a trader fears boredom more than loss, thereby experiencing the two in sequence.

Goodness of character is measured in loyalty to others; greatness of character is measured in loyalty to principle.

A measure of the soul: the degree to which the surpassing achievements of others evoke inspiration rather than envy.

If you listen to the words, you'll understand the brains of the speaker. If you listen to the tone, you'll understand his heart.

Show me what a man loathes, and I will show you what he cannot accept in himself.

Two traders: one increases size after a loss; the other gets smaller. Both continue to lose.

One encounters losing traders as often as one encounters losing golfers--and for much the same
reason.

The absence of self-acceptance too often masquerades as the desire for self-improvement.
  • #2,895
  • Jun 12, 2011 11:36pm Jun 12, 2011 11:36pm
does any one know how to solve my problem? in some of my chart, it only shows the current day histogram and does not show the no of days indicated in the lookbackperiod. it only happen on some of the pairs.the first chart is not ok, the second is ok.
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  • #2,896
  • Jun 13, 2011 9:42am Jun 13, 2011 9:42am
Quoting mima
On MP for the month of the June 2011, POC is now at 1.4546...and price 1.4347 is at third standard deviation...From this point market will either go up or continue down to 1.4212...
Alot of good info in one place! Thanx for sharing!!!!
Markets are not efficient, rather they are effective - Jones
  • #2,897
  • Jun 13, 2011 9:44am Jun 13, 2011 9:44am
Quoting alexm
Claudia, tks for visiting d blog.

JD mention 70%long 30%short in (Market in Profile) page 194 near the ending chapter, about his conversation with State Street Global Advisors about their long term performance. Actually it is just an idea to catch both wave from a longer time frame perspective, so investor can take advantage on all the opportunity that the market offer.

I tried this idea on last month, I hedge a position by short for 2 weeks, and I buy from the low 3 weeks ago all the way back to this week high.

To change our mental flexibility...
Very interesting…… Im going to have to do some further reasearch. Question , You mentioned the word “hedge”. Usually, I think a hedge is Long on one instument (currency pair), against another. Your statements have only one pair eur/usd. When the no hedging rules started I opened a second account one to be long trades , and one for my shorts. Since I only see one currency pair in your statements, I assume your hedging eur/usd using 2 accounts? Im not sure Im getting the idea on how to determine the 70% -30%. When your longs fall below 70% you switch positions? And same thing for when your shorts fall below 30%? Im not sure I understand the criteria for these trades. Any info would be greatly appreciated. I can somewhat understand the hedging, but the criteria for the change of positions at the moment eludes me.
Markets are not efficient, rather they are effective - Jones
  • #2,898
  • Jun 13, 2011 10:03am Jun 13, 2011 10:03am
Quoting mima
On MP for the month of the June 2011, POC is now at 1.4546...and price 1.4347 is at third standard deviation...From this point market will either go up or continue down to 1.4212...
hey mima, not sure if its due to different brokers, but I have 1.4600 as June POC...curious what others have as well. also wondering how you identified 4212. closest levels I can see are May POC 4275, April VAL 4230
Change is the only constant
  • #2,899
  • Jun 13, 2011 11:35am Jun 13, 2011 11:35am
Quoting tgwhbb
hey mima, not sure if its due to different brokers, but I have 1.4600 as June POC...curious what others have as well. also wondering how you identified 4212. closest levels I can see are May POC 4275, April VAL 4230

1.4609 or so is for June and 1.4212 is for the year...
The Market pays you to be disciplined
  • #2,900
  • Jun 13, 2011 12:35pm Jun 13, 2011 12:35pm
Quoting tgwhbb
hey mima, not sure if its due to different brokers, but I have 1.4600 as June POC...curious what others have as well. also wondering how you identified 4212. closest levels I can see are May POC 4275, April VAL 4230
Ive got @1.45992 Mpoc, @1.43372 Qpoc, @1.4231 ypoc (using 4h chart)
Markets are not efficient, rather they are effective - Jones
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