Auction Market Theory and Market Profile

Don't kick yourself just yet pemully just be grateful that you found it for some never quite

make it or get it so just to get the chance to get to it and find it means everything...when

I first found out about the auction profile theory I too was dazzled and amazed at how it

was like a world within a world or forex within forex ..... It was amazing to see a whole

different and vast way to read the markets and with all the information that it truly takes to

behold it's enigmatic message and actually get the chance to understand it enough to put

it into successful utilization is a whole other journey within a journey which does end up

being quite the marvelous ride I might add once everything is taken in and ready to be

unleashed...This is forex.....

Your enthusiasm is a breath of fresh air.........
I'm somewhat pressed for time this morning but as soon as I have more than a few minutes of time Ill take time to give you a fair opinion.......
In the mean time I wanted to repost a few resources that have been posted in various places in the thread that are very insightful

Course Videos by the Author of "Mind over Markets"
James Dalton Field of Vision videos 1-4 great videos, but the author himself suggests you read "Mind over Markets" or "Markets in Profile" as a prerequisite to watching (I think you can watch the videos online there, as well as download the files) Also contains downloads of both books
http://www.4shared.com/video/drBiXCZ7/james_d_1.html

Again, just watching the videos will not make a person proficient in the Auction Market Theory. These videos are designed for traders who have already read the book

Link to original post http://www.forexfactory.com/showthre...19#post6341019

I will give you one more breath of fresh air, mzvega.

I do use the concept of initial balance from marketdelta ( http://www.marketdelta.com/blog/2010/12/cbot-market-profile-examples/initial-balance-rotation-strategy-part-1-concept/ ) along with the VWAP (a derivative of MP) concept and find it useful. So your thread is still functional.

Thank you for the videos of James Dalton's, the coryphaeus of MP trading. I saw them and read his book of Mind over Markets. I will look at Markets in Profile indeed. Thanks, buddie.

how to think about inventories in term of fx? for example we have two central banks fed and ecb,who provide dollar and euro to dealers and they set the prices and move the inventory depending on the demand.how does this work really in currency terms?

Thanks mzvega I have bookmarked the link!! .....

I'm determined to become as adept as you one day at reading the

markets theory about the auction profile... I'm sure this mountain

of wealth and information will help me and others who study it leap

tremendous bounds over boundaries that I have previously unfathomed

and I can't wait to soak this all in you have my respect as being

renowned for revealing these sources so willingly to me and us all here

fortunate enough to witness and participate in this display of material

keep up the great work mzvega ....

Are they teaching the analysis of the data? In a previous post I mentioned “Directional performance Analysis”. It was covered in the first book, as the second not so much. But the analysis part is the “edge” & the “key” to interpreting the Auction Market Process. Without the analysis, reference points are just that, points on the chart. Imo, if you’re not tracking & analyzing the references, you’re trading the Market Profile Indicator in a pattern recognition type of way, not applying or using the “theory” behind it. It’s come to a point where one needs to chose which “Camp” or “School of thought” they belong to. So there is no “wrong way” or a “right way”. After the book “Markets In Profile” a third book was attempted but failed because of lack of communication between Right brain and Left brain thinking. This is where the “School of thought” begins to diverge.

Right Brain: images, models, pattern recognition. Left Brain: words, numbers, data. In order to get the most value out of the MP indicator you need to do some “analysis” to gain that edge. I have yet to find any online “webinars” that explain how to do this. Well, maybe one, possibly two. MarketDelta, they’re selling charting software, they have an interest in showing how to trade the “indicator” (Right Brain: images & models). Technically, you only need data to do quantitative analysis (Left Brain: words & numbers (data)). That data is available everywhere. Its excellent software, that produces great data for analysis, but the educational videos, imo don’t show you “HOW” to analyze the data. But, there is no wrong or right way. The different between MP indicator & Auction Market Theory is quantitative analysis.
Again, there is no wrong or right way. But I personally belong to the “Auction Market Value Analytics (AMVA)” “School of Thought”. Being that I am a Woman, my thinking is dominated by the Left side of my brain. By nature I have to be able to “Quantify” in order to understand. So if I unable to “quantify” something. I find it to have little value to me. That’s why Value Analytics appeals to me personally. If someone reads Mind over Markets, they should have info to know that most online webinars are condensed, watered down, out context info, that doesn’t include Analysis. If they haven’t discussed “directional performance”, they have left out the heart of the Theory, and that’s the analysis part, imo.

Here’s a cut & paste of the fundamental difference

Auction Market Value Analytics(tm)

Teaching Yourself Profile Trading

CISCO Futures Copyright 2007

Since the beginning of the CBOT Market Profile(tm) product in 1985 the promise of true value based trading has remained attractive but elusive. The major difficulty comes in recognizing market situations as they are developing, using pattern recognition. To help, the basic source of Market Profile (CBOT Market Profile, 1991) identifies four major day types or patterns. The most widely read source (Mind Over Markets) lists nine day types. Day types are made from individual reference points (TPO's, time, etc.) put together in a profile with recognizable characteristics; such as a double distribution day (two humps) or the triplet neutral, neutral-center and neutral-extreme. Since markets develop in many, many ways there can be more day types than the 30 or so reference points. A reference point is somewhat akin to the 'indicator' of technical analysis. There is a substantial difference: a reference point is closely tied to something real and observable in the market; whereas an indicator is the result of a computation--typically from a moving average related process, removed from observation.

A hard look at pattern recognition leads to the suspicion that it is not quantifiable. Each reference point carries it's own type of information. The information from reference point 1 may or may not be equatable to the information in reference point 2, although each is telling you something about the market. Some reference points are clearer than others; a tail is very clear, a day type is often not clear at all. Stirring all reference points into the pot makes it difficult to reach a measurable outcome (in a quantitative sense). Indeed, this has been the experience of most traders. Many have felt that there has to be a better way if traders are to gain the obvious benefits of market value analysis.

The better way, we feel, is to focus on each reference individually. Understand it, and then put each one in context, relative to the others. Starting at the beginning: There are 30 or so reference points. Each reference point contains unique information about the market. Value area points to value, tails at the extremes of a profile distribution indicate whether an auction has completed, day-to-day volume differentials point to increasing or decreasing participation and so on for each of the reference points. Each can tell you something about a market. If you track a reference point, e.g. volume, over the last several days you can see how it is moving, it's flow. You now have a flow variable. You not only have the latest day's volume, but also the direction it is moving. Do the same for the other reference points and in a one-page table you have captured the substance of that market. No set of patterns to memorize, no holistic grouping, just some simple flow variables that you can understand. This is Value Analytics.

Auction Market Value Analytics (AMVA) was created as an analytical, measurements based, approach that puts value trading technology within the reach of all traders. Even before AMVA beta testing was complete it had become clear that many who professed to be 'profile traders were poorly prepared on the profile side. These people use certain elements of profiles, such as value area, to help guide their trading. Many do not know that there are many situations where profile variables do not give the correct information, e.g. value area can always be computed, but there are times when it is misleading or just plain wrong, e.g. when calculated from data in a trend.

Its great to see others, with as much interest. Its sounds like you have a fairly good grasp of the Auction Market Process. You might have interest in "Value Based Power Trading". It's somewhat in depth, but its a great book. But then again it really depends on the type of trader you are. I just might not be for you. You just need to familiarize yourself with different material, and find what type of trading best suits you. Sounds like you done a lot of research, it definitely takes some work.....

I don't think too much about it. Currency is more about "price distributions". I only pay attention to inventory shifts on open & closes. Inventory shifts are more of a "Day-Local" concept. Its day traders entering & exiting. Its just being aware that its the action of "Locals", that is creating that activity. That it is not really reflective with what the larger time frame participant is doing.........

Trading with some of MP elements, I am always glad to discover new knowledge and data for myself. Thank you.
Do you mean this link (http://www.cisco-futures.com/vbpt/index.htm) is to be used?

I don't think those files were created correctly but here's a copy......................
http://www.4shared.com/office/IosZ6z...WER_PRINT.html

Thank you, mzvega. I will check it out.

I need to apologize, and make a "correction". The "Jones" who co-authored "Mind Over Markets" & "Markets In Profile" is Eric T. Jones. The author of "Value Power based Value Trading" & creator of the Cisco-Futures site is Donald Jones. He is the Father of Eric T. Jones. I apologize for the mistake........

Chart EOD (end of day) analysis
In the Day TF we BO of the long term distribution in the London session suggesting a possible beginning of a new trend in the long term tf. Tpo analysis of the day tf suggests that it was “local” activity that participated in the breakout. Short term distr. looks balanced, however a balanced profile isn’t in balance if it closes at the extreme.
High probability BO of the LTF distribution.
The longer TF distr. Tpo analysis suggests more buyers than sellers
Value analysis suggests more com like buying than selling.

The directional flow suggests is up. Everything suggests I need to get long until the market tells me different. A low risk high probability trade. I only need to risk a few pips to find out if I’m wrong. Won’t know until EOD to know if LTF participants will support the BO or respond.

Hi Mz
its been awhile how are u doing?
Appreciate your analysis, do keep them coming as i have recently been reading this thread (its been months).

I have taken similar view here with 2weeks bracketing more so the the 1st. I have an entry make after yesterdays NY session pullback..i m anticipating a break out of current Asia high though.

http://i43.tinypic.com/dcdmiu.gif

OMG!!!!!!!!! Your post was a sight for sore eyes. Missed your posts soooooooo much. Its so nice to see a chart posted from someone who actually speaks the same language as me. You haven't missed anything. Just a barrage of "where's the indi?" type of questions . I've spent the majority of my time at the Cisco site doing an enormous amount of research. Not an easy task. Been trying to solve the nasty task of TPO counts & analysis, with my ever evolving spreadsheet. Im getting it worked out with excel pivot tables. Im trying to create macros & vba to simplify my daily analysis to a few clicks. Its still a work in process....but pleaseeeeeee don't be a stranger!!!! Great to see your post!

replicated post pls ignore!

Very sweet of you mzvega My Dayjob got the better of me so I have to find a way to shorten my analysis & make better judgement & hopefully be able to swing trade more then i would like getting into day-trade & to be able to make more trade selection not just EU pair. Manage to get my old spreadsheet & made up some ref. pt to cover for the lack of TPO count bugbear that you are facing. & some (perhaps I need to get in touch with Bandung on this ), More finetuning..... So back on Jones's AMVA which i have been reading for years but too lazy to get into it. Coincidentally too that mention that u've been scouring Cisco recently too.

For today i have my eyes set on NZ hinging on the LTF balance (4&2wks overlay) after seeing initial response of the lows. Hopefully to get into an entry during UK opening as price is making a pullback to Asia buying response. Any critical comments is welcome

DTF
http://i.imgur.com/0rjcoFx.gif

Overlay
http://i.imgur.com/MP6SKPl.gif

Just wanted to share some of the data you can find at Cisco. On the weekends they allow you to access some of their data without a user name & password. Here's fridays data for EU. However, if your plotting your charts the same and doing your homework (analyzing data) you can provide yourself the same data everyday. You won't be dependent on free data only provided once a week, or have to rely on a fee based service to do it for you...........

Very good education from Cisco futures recommendation from Mzvega, newbies into this field should start reading it 1st i reckon. This is what Frank who started this thread said it as his best material on MP during the 1st few post. Do bear in mind that the profiles created for FX are for RTH session of the CME futures As Cisco only deem profiles created during lower volume overnight sessions may be less representatives of the overall market behavior. Nonetheless the application of the theory applies to 24hr markets, one have to see how it fits your trading style ultimately.

I manage to grab an early trade this morning during asia session just after the early morning balance on the break. Is a late trade for me as price have already risen up to the Lower Quarter level of the last 5 days bracketing profile & in contest of the yesterday's LLB. So i m betting the the recovery today back. Besides the odds are high for a rotational trade.

Price is now rising as we speak to retest the upper limit of the 5day bracket.

EURUSD:
http://i.imgur.com/MyqysDM.gif