Market profile and understanding of the language


The reason that non-trending market in the days of "slack" is the lack of information among the participants. When they get their information, they primarily promote directional movement. In the figure a tiny y and z range 9-day moved on the next trading session and formed a long line of fashion around 93-18.

Notice what a strong directional movement was formed at this level.

If the structure of the profile is not uniform, then this profile may reflect either normal deviate normal day, or, if the imbalance is grouped near the high of the day, a trend day. Trading opportunities trending days require a completely different approach than the normal day.

Average deviation of the normal day

During the first hour of the normal deflection of trade represents 50% of the range, and its expansion during the rest of the session is usually double the initial balance range. These extend the range of the normal daily deviations are less frequent and usually end before a trend day. Trading strategy on the day of the normal deflection is to observe a doubling of the range. The figure in the 15th day of a significant range of y and z, but when was the increase in it, there was a high probability that the day began to appear normal deviation.

Buying on pullbacks down during G, H or I to create zones would cost an appropriate strategy, assuming a doubling of the initial range, which in the end what happened that evening.

Trend days

Trend days have very low activity of the horizontal range (usually - not more than 4-6 HABs in the series), while the vertical size is very large. Usually the trend days initial balance range is small, and can be easily surpassed. During the day the market trend continues to move in the same direction, and finally closes around extrema of directional movement. Trading strategy in trend days - buying on a pullback down if traffic goes up and selling on the rise, if the movement is going down, but you should never go against the direction of the day. After a strong trend day you can expect a normal day or day of the normal deflection. The absence of such a trend day after the completion of a warning that the purchase or sale of drowned and near the turn.

The 29th day is a classic example of the trend of the day with a small initial range, which was quickly expanded. In the period, it was clear that the manifest trend day, and traders could buy on pullbacks during D and E, assuming a significant range extension for the day. To monitor the transaction can be monitored side activity to appear in the same row to six HAB, which is common for trend of the day.

This is just an example of the type of classification of trading days, but it allows you to work with the fundamental organizing principle of equilibrium and non-equilibrium (balance and imbalance). Despite the usefulness of bolshogo market information shown in these graphs, to classify different types of days rather arbitrary.

As bolshego attract different types of traders and expand trading hours, market profile reflected the increased volatility and expand the trading range. In addition, the beginning and end of the cycle of equilibrium and disequilibrium moved beyond a single business day.