FuturesTechs Blog

We appear to have piqued the interest of a few of you this week by adding the Market Profile charts to our reports. Market Profile is a charting method owned and copyrighted by the CME Group and developed in the 1980s by a chap called Peter Steidlmayer.

Steidlmayer was a trader in the Grains Pits and realised that the market was an ordered “auction” process made up of a number of different players, all of whom had various levels of interest in the short or long term direction of the market. The “Locals” like himself weren’t too bothered by long term moves and merely traded “in and out” over the course of the day. It was the “Commercials” or long term players such as Banks, Funds and (in the case of commodities) End Users, who had an interest in moving markets, and keeping these moves going in their favour!

Market Profile attempts to track this auction process on a daily basis to discover which group is running the market at any moment, and therefore whether price moves are likely to be sustained or reacted against with opposite trade. It is a popular tool with day traders in Chicago, and increasingly well utilised by London’s Prop trading community.

We have long used Market Profile as an additional tool to our daily, weekly and intra-day Candlestick analysis, but have steered away from talking about it for the sake of keeping the reports simple.

Now let’s look at a Profile and some of the terminology:

The Profile (see the graphic below) is made up of a series of letters, each letter representing a half an hour period over the course of the day. Instead of spreading across the chart from left to right like a traditional (30 minute) Bar or Candle chart the letters, known as “TPOs” are pushed as far to the left hand side as they will go, and this produces a distribution curve, effectively showing what price most trade has gone through at.

The longest line of letters closest to the centre of the day’s range is known as the “Point of Control” (D on the chart below) and is, effectively, the “mean” average price, sometimes known as the volume node.

If you move 1 standard deviation either side of this price you get the “Value Area”, so we’re not just talking about a price at that the market gravitated towards, but a “comfort zone” for price. Traders watch the previous day’s value area extremes (C and E on the chart below) carefully and this is one of the reasons we are now going to post the previous day’s Market Profile in our reports.

This means there are three more levels (on top of the previous day’s high, low and close) that active day traders will watch out for.

Another thing to watch for on Profile charts is occurrences of “Single Prints”. The chart below shows a “Single Print vacuum” in yesterday’s “K” period, when the market spiked higher and sustained the bid. This gave us support at 111.58 today in the Feb ‘12 Brent Crude, and as it turned out we spent very little time below here before rallying smartly.

The market tried unsuccessfully to “raid” yesterday’s Value Area, but this was rejected and we “accepted” the new higher valuation.

We did write a Blog about this a few years back. Here is the link:  

http://www.futurestechs.co.uk/blog/2010/01/06/technical-analysis-tutorial-market-profile-1/

We will also expand upon our interpretation of the Market Profile in our daily reports from now on, as we have the charts to illustrate what the heck we’re on about!

In the meantime please do drop us an e-mail if you have any questions (if you’re a client, of course!!).

Event: 4 Practical workshops on Technical Analysis, delivered over 2 days by our chief Technical Analyst, Clive Lambert

Date: March 17^th and 18^th 2010

Place: MWB Business Exchange, Houndsditch (City of London).

Details: Join Clive Lambert for a 2 day seminar introducing the basics of Technical Analysis, then delving deeper into three key methodologies used by traders every day.

This course is suitable for anyone from a new trader to an experienced market professional wishing to expand their knowledge on essential technical tools for short and medium term trading.

These practical modules on key trading methodologies may count towards 12 hours of your FSA CPD, based on them satisfying you training requirements*.

Clive Lambert has been a central figure in the UK Futures day trading arena for 10 years now, and has taught thousands of traders how to incorporate Technical Analysis into their daily routine. He is the Author of “Candlestick Charts” and is an accomplished and interesting speaker, who delivers seminars for many organisations including the UK Society of Technical Analysts.

March 17^th - 10am to 1pm - Module 1 - Introduction to Technical Analysis/Support and Resistance - £300 (+VAT)

• Clive will explain the basic principles and the main chart types before looking into the creation of support and resistance levels, and how to spot potential turning points using methods like trendlines and chart pattern recognition.

March 17^th - 2pm to 5pm - Module 2 - Candlestick Analysis - £300 (+VAT)

• After a run through of the history and construction of candlesticks Clive will go through the 7 most powerful patterns in candlestick analysis, sharing his unique insight into the “psychology” of each pattern, and their application on whatever timeframe chart you’re viewing. Clive is one of the UK’s leading proponents of Candlestick Analysis.

March 18^th - 10am to 1pm - Module 3 - Moving Averages and Momentum Indicators - £300 (+VAT)

• These studies are sometimes overused and often misunderstood. Clive will run through the common Indicators used in by different types of traders, the mistakes that are often made in their interpretation, and the correct way to utilise these studies to enhance your trading and understanding of price movement.

March 18^th - 2pm to 5pm - Module 4 - Market Profile - £300 (+VAT)

• Originally from the Futures Pits in Chicago this methodology is extremely tough to convey, as evidenced by the pile of difficult to read books on the subject. Clive breaks down the ideas behind Market Profile and tells first hand, in a practical way, how traders in London and Chicago use this in their daily trading. He has “grown up” around traders using Profile, so understands not only the complexities of this methodology, but its benefits to day traders.

Class sizes will be limited to 12 people, so you are guaranteed training that is both relevant and “personal”. All methodologies will be discussed using live charts of markets familiar to you.

Top notch Refreshments and Lunch will be provided, as well as course notes, either in bound, full colour “paper” format or on Memory Stick.

Delegates will also get a free signed copy of Clive’s book “Candlestick Charts”.
The course will take place at the MWB Business Exchange in Houndsditch (EC3, 5 minute walk from Liverpool Street); a fantastic modern space where delegates will enjoy excellent facilities.

Book now by clicking here or call us on +44 (0) 1702 333461.

Remember, places are limited.

Or take advantage of our generous discounts:

All four modules - £1000 (+VAT), or £800 (+VAT) for FuturesTechs customers**

FuturesTechs customers** can chose individual modules for £250 (+VAT).

If you wish to discuss block bookings for any of these Modules please let us know. I’m sure we can sort something out!!

Yours,

Clive

* Check with your compliance officer prior to booking

**Discount does not apply to FuturesTechs Website customers on month-to-month contracts.