Mapping Your Voyage of Discovery - CQG.com

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Profile® is that linking price, time and volume provides a clearer picture of the state of themarket. This can then be used to quantify the traditional methods of patterns andmomentum and place them in a context of the importance.The first concept to understand is:Price + Time = Market AcceptanceEvery time a market trades there is a buyer and a seller. They have made a bargain andexchanged contracts. At the time of the trade, it is impossible to know the circumstances ofthe transaction, but the aftermath can be analysed and conclusions drawn.This leads us to:Market Acceptance = VolumeEvery time there is a trade the volume associated with market acceptance potentiallyprovides clues to the future direction, although at the moment that it occurs, it oftenprovides little insight. It is only the subsequent price movement that dictates interpretation.That is unless the volume can be linked to other indicators, allowing immediate conclusionsto be drawn. This is a key component in analysing the market, and is the reason that from aMarket Profile® standpoint, there is no such thing as overbought or oversold. From a MarketProfile® perspective, we only know that the price displayed that characteristic afterwards.With no concept of overbought and oversold until after it has been proven, this leads us tothe final building block in theory.Volume = Market (fair) valueEvery time price trades it is fair. This is an important psychological aid. A key component toMarket Profile® is that it is long-term players who dictate and end trends.There are two established theories about how the end is formed:1. When trending upwards sellers suddenly match buyers in high volume and preventfurther progress.2. There is no volume as there is simply no one left to buy, as the final capitulation of losingshorts has completed its painful exit. At that point, the supply side strengthens, demanddrops, and price reverses swiftly back to a point where buyers and sellers feel value is fair,and volume goes back up. The reality is that from a Market Profile® standpoint, bothreasons are valid. Therefore, while it’s impossible to know whether a high or low is beingmade at that instant, once a reaction has occurred, any subsequent move back to that areais highly significant. This re-enforces the theory that we have no idea of the importance ofany trade at any price, unless we can link it to previous price action or other types ofanalysis. Chart types such as TFlow and its associated volume and depth-based studies areuseful in qualifying such times.
Types of activityThe behaviour of long-term players is split into two areas:1. Initiative activityLong-term players dictate trends and when the volume they wish to trade cannot besatisfied at one price, their perception of fair value shifts, and price trends.2. Responsive activityLong-term traders dictate the end of the trend by withdrawing initiative activity, takingprofits, or establishing countertrend positions. They also dictate when the reaction to atrend has been completed. Long-term traders are often identified by a single letter printwithin a day. These single prints start trends and end them at extremes and at rejections ofvalue.The Market Profile® display
Page 1 and 2: IntroductionStructure is everything
Page 3 and 4: have been enough. Through time, I b
Page 6 and 7: Part 1Basic Chart TypesConstant vol
Page 8 and 9: The 10-minute chart and the 25,000
Page 12 and 13: Basic philosophiesIt is primarily u
Page 15 and 16: TFlow and Pre Trade AnalyticsTFlow
Page 17 and 18: This is how my TFlow is first displ
Page 19 and 20: SmoothedSmoothed use a proprietary
Page 21 and 22: This example highlights once more h
Page 23 and 24: What does Entry Signal Evaluator do
Page 25 and 26: Momentum IndicatorsThe vast majorit
Page 28 and 29: Slow StochasticsSlow Stochastics re
Page 30 and 31: This chart is half day of the Eurod
Page 32 and 33: Trend Lines and FibonacciThe need t
Page 34 and 35: PatternsIn many ways, patterns are
Page 36 and 37: FX is an area where no one looks fo
Page 38 and 39: DOJI’SThis the only Candlestick p
Page 40 and 41: Analysis from the Profile Area Tool
Page 42 and 43: Intraday Doji’s can be qualified
Page 44 and 45: The top itself was a Shooting Star
Page 46: Fundamental Analysis.How to interpr

Mapping Your Voyage of Discovery - CQG.com

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