Monday, 19 April 2010

What's my Profile

Splitting the Market profile into meaningful distributions is something I get questions about. I have said that I split the Profile when there has been a breakout from balance. This is when you see an abnormally long 30 minute period that covers more prices than normal. It looks like an obvious new start to something. I do this by toggling the TPOs so that everything is open and I can see the length of each letter of the TPOs. I then create splits at the longest letters and make a Profile out of each distribution I find. I then have a look whether any profiles should be merged if they overlap a lot. It's trial and error until I see something that is meaningful. I end up with good support and resistance information from the VAs and POCs.

Splitting a true 24 hour market such as currencies and particularly the 6E has some added benefits and challenges. I have looked at this in several ways. One way is to try and split the 24 hour profile into its three main timezones and look at those separately, splitting each time zone into distributions when there is a new balance. Another way is to look at only the main time zone - Europe- and chart ONLY that Profile and work off that. Yet another way is to chart only YOUR timezone and work off that.

Which one is best? Depends on which gives you the information you need. I find that with the ES, although I look at what has happened on a 24 hour basis, it is the RTH Profile that I use for my main support and resistance. I am still not sure with the 6E as the Euro v Dollar relationship is impacted by all sorts of news that can appear any time in the 24 hour cycle.

ELmom: I've had people asking about my ELmom indicator. As I said in one of the comments or posts, I have summarised some of my trading plan into an indicator - with lots of alternative rules. This way, I can see quite quickly when a setup is possible. By making a lot of "or" statements and "and" statements in different combinations, I was able to distill a lot into one red-green light indicator. It just makes it quicker to see the forest rather than individual  trees. This is my trading plan so is not sharable, but anyone can create an indicator like this type of indicator by putting in the cumulative and alternative conditions from your trading plan.

Today's trading started in the 6E in the morning London time and switched to the ES just before RTH. The Gap Trade up to previous day's VAH worked. The break down was a bit harder. parallel horizontal EMAs held the first short trade but even had I lost patience, I had a second bite at the trade after the support broke. My  one and only and favourite  Fib number held with the market going sideways into London dinner time. The chart shows it all.


  1. Hello Boss,

    Here is a descent PDF on the best time to trade Currency Pairs.
    EUR/USD-Futures EC, 6E, depends on broker) USD/JPY etc)
    It is from 2004 but still okay.

    The FX markets tend to be most active when the hours of the world’s two largest trading centers overlap. The range of trading between
    8 a.m. and noon EST constitutes on average 70 percent of the total average range of trading for all of the currency pairs during the European trading hours and 80 percent of the total average range of trading for all of
    the currency pairs during U.S. trading hours….”



  2. jenrique42

    I wonder if you're going to transcribe the seminar to a pdf file

    P.D.- me gustaria saber si vais a transcribir el seminario a un archivo pdf

  3. Thanks a lot Tom for the great and prompt response to the splitting question.

    Toggling the profile to see the meaningful breaks is a good tip I believe.

    In terms of levels apart from (V)POCs, (D)VAL/H I found that the end of single prints (often tails) provide very good support.

    Does the "profile" of the market profile, shapes like "b" or "P" give you any hints about potential breaks?

  4. What is your favourite fib number? Do you use any other fib numbers in your trading?

  5. Tom,

    I use NinjaTrader and I can't get the CVD to look like your actual config, with the bars going up and down.
    Have you, or know of anyone who's been able to replicate this?

    Thank you

  6. What is your favorite fib? Thanks.