+125 On The Day, 1 Trade! Cool MP Article Too!!

http://www.youtube.com/watch?v=uyWOstKTMv0

Very Cool video I made today, only made 1 trade because it was a trend day and the move already happened in the morning, when I'm at school >:(


Here's a basic overview of market profile, or auction market theory. I use this a lot in my trading.

Market Profile™, a hybrid of the statistical bell curve, is a form of technical analysis that was jointly developed by renowned trader, software developer and author J. Peter Steidlmayer and the Chicago Board of Trade. Over the years this unique tool has helped traders gain unparalleled understanding of markets, as well as find profitable trading opportunities. Simple in concept yet complex in detail, Market Profile™ organizes a number of elements into a rapidly understood graphic form – revealing trading opportunities other methodologies miss.
How does the Market Profile™ develop? The industry standard 30-minute display takes half-hour ranges and assigns consecutive letters of the alphabet to the ranges. The first half-hour range of the profile is assigned a chronological letter and the array of prices encompassed within that half hour range are displayed along the y-axis. As consecutive half hour arrays are added to the display with their corresponding range of prices and assigned letters; repeated prices move one column to the right and price probes expanding to new highs or new lows continue to occupy the left most column of the display. What is uncovered over time is a Market Profile™ display with the belly representing the frequently traded prices and the thinner part(s) of the profile representing areas of decreased frequency of trade.
What does a Market Profile™ look like? A Market Profile™ can take on many appearances. The standard display takes on the look of a normalized bell curve with the preponderance of letters near the middle of the displayed range and less letters or TPOs as you move towards the extremes (see figure 1 below).


Figure 1 (Normal bell curve).

B
BG
ABFG
ABCFG
ABCFGH
OBCFGHI
ABCFGHIMN
ABCFGHIMN
ABCDFGHIMN
ABCDFGHIMN
ABCDEFIMNO
ABCDEFIMNO
ACDEFIJMNO
ACDEFIJLMN
ACDFIJLM
CDFIJLM
CIJKL
CIJKL
IJKL
IJKL
IJKL
IJK
IJK
I
I

Over time as markets have evolved to become more efficient with locals and specialists impacting the market less and less, a hybrid Market Profile™ has evolved. The characteristics of this hybrid are a preponderance of letter’s or TPOs near one of the vertical extremes, and price rejection at the other extreme (see figures 2 and 3 below).


Figure 2 (3:2:1 up)

B
BCD
BCDEF
BCDEFG
BCDFGHI
BCDEFGHI
BCDEHJKLMN
ACBDNEK
GFHJDH
BCDE
BC
A
A
A
A
A
A
A
A
A
A
A
O
A
A


Figure 3 (3:2:1 down)


A
A
A
A
AB
OB
AB
B
B
B
B
B
B
B
B
B
B
B
B
B
BCD
BCDEF
BBCDEFG
BCDEFGHJK
BCDEFGHJKL
BCDFEHI
BCDEG
BCDE
BC
G
G
G


Hope you guys enjoy it!


Thanks Julian