Tuesday, 14 December 2010

The Euro FX and Market Profile

I have been working on using Market Profile for the truly 24 hour markets, such as the currencies. My current conclusion is to treat those markets, such as the Euro, in the same way that the big trading houses treat them.

Most of these trading houses have trading presences in the three major time zones: New York, London and Hong Kong. There are slight variations to the cities - Hong Kong may be Sydney, Singapore or Shanghai, but broadly speaking these are the areas where the trading originates.

These same houses run "trading books" - positions - that they pass around the world when each regional office stops trading for the day as the dawn is breaking and the sun heads west.

If you look at the markets, the usual human characteristics are evident. Everyone is different, and as the book is passed the local office puts it's own slant on things, adjusting the book in line with it's opinions and news.

So, I join these guys and start my Profile when Globex opens in the U.S. on Sunday afternoon (9.30 pm in London) and create 3 Profiles every 24 hours from that moment - each profile being 480 minutes (8 hours) long. This roughly meets the beginning of activity in the U.S. at about 8.30 pm NY time.

The Euro FX future looks like this in Market Profile:

I use each Profile as I use other Profiles. I split the Profiles as necessary and merge them too. But this is a good starting point for me.


  1. Your blog has become a broken record.

  2. As for anonymous, please remain so.

    EL, you (and others) have given me huge inspiration in my darkest moments of trading. I must admit that when I first came across your blog about 1 year ago I was sceptical - it seemed like the build up to the "sell a system scam" which is prevalent these days.

    However, you have proven me wrong. I've checked you out in various ways and you seem quite legitimate. Your dedication to helping others, your trading 'rewinds' and your obvious depth of experience as evidenced by your references to trading methods and situations has convinced me.

    I am thankful for the benefit of your wisdom. As has been mentioned by yourself and others, 'trading is easy, learning to trade is not'. This continues to be the case with my own trading.

    After around 7 years, I have never really made any money - preferring the easy option of losing it instead. I know my 'enemy' - its me, or rather, my impatience and ill discipline - combined with a large degree of undercapitalisation. I know when to enter a trade and when to exit. Unfortunately, part of my malformed genetic makeup takes over and forces my hand.

    The silver lining - to be hugely optimistic - is that I have gained vast experience in the face of adversity and I tend to know quite well in advance the shape/actions of my chosen market (the DAX). I JUST DON'T ACT on this intuition.

    I feel I am gradually smoothing the razor sharp edges of these problems, and by the time I resign myself to a nursing home I may have found my 'aha' moment!

    Oh well.

  3. Anonymous

    I agree, a broken record of SOUND ADVICE for FREE. In an industry full of charlatans and hucksters, I'll take this broken record any day of the week.

    Take it elsewhere Troll