Monday, 18 July 2011

Market Profile and Envisioning

Before I start to trade, I envision what is possible and what is probable. This is part of my edge. One of the tools I use for this process is Market Profile.

Today's Dow EuroStoxx50 is a good example. When I woke up, the ES overnight trading showed a weak market. I called the Dow EuroStoxx50 down. I decided that the VAL of Friday was resistance and a rejection of that level would result in a distribution downwards.

I then looked for a lower target. I took an eyeball average of the daily range of the last few days and decided that the VAL of the split distribution of 12 July, both Volume and TPO, was a real probability. So 2635 was where I "saw" the market going to if the VAL of Friday was rejected.

The market happily unfolded as I envisaged and a good morning's trade was had. Had the VAL not been rejected then I would need a new vision, perhaps looking for the POC or VAH to be reached, but I would need to see the orderflow telling me this.

1 comment:

  1. Your insights into trading are simply FIRST rate. You have a great approach and it is great to see your success unfold along with your trades.