Volume profile trading system. Market Profile is not a trading system but a market generated information and a decision supportive system along with your existing trading systems. It provides you knowledge about who is in control in the market (Long Term Players, Short Term Players, Day Traders), directional conviction. Market Profile.

Volume profile trading system

Lesson 10 Market Profile Part 1, Day Trading Fearless Video Course

Volume profile trading system. TPO versus Volume Profiles. We have a fascination with numbers and exactness; at the same time we abhor ambiguity. Volume Profiles will show you exactly how much volume, as well as relative volume, occurred at each price as well as the exact number of contracts for the entire session. See the example below.

Volume profile trading system


When most people hear about day trading without charts, it conjures up images of other feats of derring-do —boxing with one arm tied behind your back, tightrope walking blindfolded, and bringing a knife to a gunfight all come to mind. Are we discussing a feat possible only by the fearless few, or is it possible that Day Trading Without Charts is something that is quite straightforward?

The fact is we are conditioned to use charts because every trading book, course, and educational forum is focused on charts. Consider the following scenario. In traditional chart-based analysis, the swing low and swing high would now be considered potential support and resistance.

The volume profile, on the other hand, tells a rather different story. We can see that the top five prices have very few contracts traded; there are very few positions there. Similarly, the bottom four prices have very few contracts traded.

The significant areas are those where the majority of trading took place. The 22, contracts at the top of the high-volume area of the volume profile are far more significant than the 23 contracts traded at the highest price. Before we go any further, we need to consider what those numbers represent.

They represent trades of course. A trade occurs when a buyer is matched with a seller. So the 22, contracts traded means 22, sold and 22, contracts bought. We also have to consider the fact that not all of the buyers and sellers have the same trading horizon or goals. So, of the 22, buyers and sellers, some will be:. Neither do traders that just got out. It is the positions of short-term, intraday traders that will set the tone for intraday moves. These are the minority, and we all know what to do on those days anyway no, not fade the move until you empty your account.

We can see a lot of volume traded over 9 prices. Some will have been in and out, but there are still a lot of intraday traders positioned in that area both long and short.

If we look at the push through the top of the high volume area, do we see any evidence that one side has given up or stopped out?

If we have hundreds of thousands of short positions in an area and the shorts get stopped out, they will do some by buying to cover. In this situation, the shorts are still in. As we return to the top of the high volume area, the most likely scenario is that we will fall back into that range, traverse to the other side, and then find support at the low of the high volume area.

In this case, we can see a larger pop through the top of the high-volume area with a lot more contracts traded in the move up. You are looking for a fast pop up that takes out the offers. We already said that in the high volume area, we have positions both long and short. Now that we have had a fast pop through the top, some of the shorts are out of their positions.

The remaining shorts are nervous. The longs, well they are just fine. An area where there was a good chance that sellers would shy away, where buyers might even add to their position. You can watch it happen every day. This sort of analysis requires a shift in perspective from considering where price has been to where people are positioned, where people lost money and how that may impact their decision making in the short term. If you are interested in Volume Profile, read Dr.

He is the founder of Jigsaw Trading , a provider of innovative trading tools rated the number 1 trading software product on independent review site Investimonals. Peter is also the author of the "Order Flow Foundation Course".

A freely available course, considered one of the best educational resources for order flow practitioners and in use by a number of proprietary trading firms in their intern training programs. Peter regularly contributes articles, videos and live educational webinars to leading trading outlets. So, of the 22, buyers and sellers, some will be: They also will not react to short-term price fluctuations.

These traders will be in and out intraday, but their positions straddle two or more markets. They are trading the relationship between these markets, so they are watching that relationship and not reacting to fluctuations in just one of the markets in their trade.

This represents the bulk of trading in many markets. Certainly in US Index futures. These traders will react to short-term price fluctuations and their reactions are reasonably predictable and quite visible. You may now be considering the possibility of an additional move up. Not so you can profit, but so you can get out of the position. Be the first to comment. Sign-In to Comment Name: PeterDavies Member Since


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