What's Better Than A Banana Split?

Yesterday's Market profile chart of the ES shows how clearly it's possible to spot order flow as value changes. The key is splitting the Profile into distributions. Apart from the "obvious" support and resistance, the Profile is talking to me and showing me what "they" are doing. Yesterday, whatever news was thrown at the market, "they" just kept on buying.

Traders tend not to use all the info there is the Profile. People somehow focus on the mechanics rather than what the Profile is showing in terms of underlying market activity.

Market Profile Rocks!

If there was anything that was invented for day traders that makes a real difference, it was Market profile. Thanks again, Pete. It just tells me exactly where I am in the market. Learning how to use it is really worthwhile, even though there is little educational material in the public domain that is worth much.

Today's DAX chart shows today, so far. The pic was taken just after noon, London time.  It's magic. The low was held by yesterday's POC. The high was held by the VAH of the first distribution of 09/26. It's invisible until you do the split. Worth learning?

Trend Day Down

Yesterday was a trend day down in the stock indexes (indices?). What that means for me is that if the market retraces some of that move before the open of the next session, I look for a place to put a trade on.

In today's case it was the ES. I was up at about 4.30am London time and had to wait until after 7.30am before my trade appeared.

Price had been trading above the 33EMA on the 2 minute chart. I used 2 minutes as the volume is thin in the Asian session of ES. The Picture tells it all.

Hitting the Target

I awoke at my usual early time and went through my usual morning routine looking at the web to catch up on news and then looking at the overnight charts. I try and get a feel for the day to come. Bullish? Bearish? Sideways?

Once I've done that, I create a vision of the possibilities for the day's range. At the moment I'm trading four markets: DAX, Euro FX, Light Crude and ES. I mark up my charts.

Today's DAX chart shows the simplicity and effectiveness of this process. Price opened just above the VAH. I envisioned at least a test of yesterday's VAL and a possibility of lower if the VA of 09/20 was penetrated and accepted. My bar chart provides the confirmation and timing.

Context

This Light Crude Market Profile chart is a good example of what I have been talking about in recent posts about context. While it's possible to trade CP without this context, using it allows me to have a higher win rate and trade larger size more confidently when I do my business at places that the context verifies.