Market profile and understanding of the language


Market Profile is trying to bring into the context of the internal logic of the market. It is - a method of analysis that begins with understanding the fact that the price itself has no information, like words that make no sense out of context or syntax. But the size of the market - an integral part of its direct expression. Understanding of the language will give you an understanding of the market. For more details on this issue the reader is referred to the book "New Thinking in Technical Analysis" (compiled by Rick Besignor), leaving the publisher "Internet trading."

Give grandmaster chess board ...

Market Profile was developed by Peter Stidlmayerom (Peter Steidlmayer), brilliant and witty thinker. He found a natural expression of the market (volume) and presented it in such a way (the bell curve), so that you can read objective information generated by the market. While trading, apparently, is an art, reliable methodology trade can minimize its subjective elements and maximize the objective. Most market participants do this, considering the many factors that are external to market itself - the feet, the length of the price movement in a given direction, the schedule of when to sell (for example, only the first two hours of work) and the like. These external factors that improve trading, most of them aim to reduce subjectivity. But traders have to use inside information to develop a strategy for entry and exit, and to identify the moment when the real commercial potential show itself. Isolating the inside information, technical analysis tries to construct a mental construct. To understand what a mental construction, it is useful to recall how the chess grandmasters. If you are at any point in the game show for a second grandmaster chess board, he will be able to reconstruct the exact position of each figure. However, if you also show him a second random (not playing) a combination of chess pieces, it can not reconstruct it. Why? Because GM understands the position of each figure in terms of his mental constructs. Random board does not fit into any of these designs, so he can organize what he saw.

Technical analysis - is the structuring of your perception of the market and the pattern recognition that is happening there. You want to see the models on the market in the same way as the GM sees a model in a chess game.

The most fundamental aspect of the structure of the market is in the way of information. Imagine that you are trading through a ticker tape without using a bar chart. Bar chart clearly facilitates the recognition of the important market models.

Way of representation should identify existing models. A good example of this is the representation of numbers, or the number system. Have you ever tried to multiply two Roman numbers? For example, CLVII x XVI (157 x 16)?

In the days of the ancient Romans multiplication was not easy, and now ten years boy can easily do this by ensuring a system of representation of numbers. Roman and Arabic numbers reported the same information, but Arabic is clearly easier to operate mathematically. Market Profile is using an alternative presentation of information on both the horizontal and the vertical movement of the market, which gives a completely different set of models.