Welcome to the Traders Laboratory. I would like to ask a question regarding your market analysis. Your methods seem very interesting. How do you analyze to determine whether tomorrow will be a trending day or a consolidation day? Do you look for high volume price levels in either direction? For example, if a high volume area is close to the current price, would you expect prices to reverse at these points?
If the current price is trading between two high volume areas that are relatively close to each other, would this be enough information to consider a consolidation day? Share Share this post on Digg Del. Last edited by ant; at Great post and thank you for sharing. I would like to ask a question regarding one trading setup you mentioned. I also use market internals to judge whether the price will hold or a breakout is likely.
However, all my breakout plays are entered at the pullbacks to the breakout point. There are cases where the pullback never occurs and I end up entering at a higher price. You mentioned that you will enter before the breakout occurs. I am actually working on this technique but have trouble deciding where the stop would be. Do you use a tight stop for such setups? I will then enter using a 10 points stop for the YM. Breakout entry is one of the areas that I hope to continue to improve on with time.
In general, I try to enter a partial position on the breakout using a market order and enter the balance on a retracement, if there is one, using a limit order. For the record, I didn't get into this trend until much later, but here is how one could have played it. Also refer to the previous charts for the profiles. Volume was not confirming the breakout. One could have taken a responsive trade and shorted near the upper limit. The target would have been to the middle of the distribution or the high volume node.
Since we were trading above the high volume node HVN , a bias to the upside would have been appropriate. So if a long trade were taken near the HVN, the target would be to the extreme of the bracket at However, since the ES was in a short-term balance area, imbalance was expected to follow.
When the ES traded to the upper limit, its behavior should be monitored using market internals. In this case, the ES traded through the upper limit on high volume. It's important to know what constitutes high volume for the markets traded. I usually monitor internals on a 1 min and 5 min chart. Divide the ES composite range into octants 8 sections.
A stop can be placed 1. Also, keep in mind volatility and use the greater of the two values. I won't get into volatility here. There are many ways to trade a breakout and one just needs to find the way that works for them.
Another example would be to wait a certain amount of time and if the market is still trading beyond the bracket limit, enter the trade.
Volume divergences is a very powerful signal. I was taught this method early in my trading career from a trading buddy of mine. I have two questions: I have never quite seen volume plotted that way but it makes alot of sense since I use a line on close TICK chart. Also, regarding the stop loss placement I am still having some difficulties where you would actually place the stop.
The concept of time and breakout is something I use as well. Whenever I see price hugging the upper extreme bracket, I anticipate a breakout. I do not remember where I learned this concept but I picked it up about 2 years ago. I actually like the idea of a volume line chart and will add it on my charts to see how it goes. This octant concept is new to me and I have trouble grasping. I may need to look into the Cisco-Futures course.
After reading the posts here, I spent some time thinking about breakout patterns and strategies to play them before they happen. One problem I have relying on volume when playing breakouts is that the breakout bar tall green candle occurs on high volume. Wouldn't this be a late entry because you are entering after a volume confirmation?
The concept of having a long bias if price is trading above the HVN is a similar concept when using pivot points. Traders hold a bias towards the long side when price is above the daily pivot or PP.
Some traders base their pivot on the opening price as well. I do feel comfortable applying time into a breakout strategy.
If price is hugging the upper or lower bracket for some time, this could be a good signal for a breakout. However, I will need to create a stricter rule for this setup. Some people use a combination of bollinger bands and keltner channels to anticipate breakouts as well. This topic has become fairly interesting This is a trading setup that can offer a tremendous edge when mastered because by getting in early, you can completely eliminate risk at the moment of the breakout.
The first breakout bar tend to be quick and fast. Therefore, I would like to be in the trade beforehand to cut a portion of my position loose at this first bar.
If there was a double distributionday or 2 nips then the cleavage btween the 2 also acts like a nip. Try splitting your profile into two preiod 1 hour sections , if your profile chart has volume distribution you will see several bal and imbal levels too play off.
I find its a great way to use MP hope it helps. Thread Tools Show Printable Version. All times are GMT The time now is Add Thread to del. Trading Articles A collection of articles and resources.
Feel free to submit your articles using our article guidelines. Page 1 of 2. Market Profile Strategies Quote: Market Profile Strategies Great post and thank you for sharing. Market Profile Strategies Breakout entry is one of the areas that I hope to continue to improve on with time.
Market Profile Strategies Thank you ant.. Market Profile Strategies The volume indicator is plotted as a line indicator in the chart instead of a histogram. Putting volatility aside, the stop would have been placed 1. If the market trades below the upper octant, the long trade would have been stopped out and a responsive trade could have been taken. A responsive trade would mean entering a short trade at with a target of the middle of the distribution or the next key reference point monitoring internals of course.
The octant stop is one approach covered in the Cisco-Futures course. Market Profile Strategies I actually like the idea of a volume line chart and will add it on my charts to see how it goes. Market Profile Strategies Try splitting your profile into two preiod 1 hour sections , if your profile chart has volume distribution you will see several bal and imbal levels too play off. Switch to Hybrid Mode. Switch to Threaded Mode. Excellent Good Average Bad Terrible. Market Profile Trading Concepts.
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