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Candlesticks & Market Profile – our main building blocks

FuturesTechs has been in existence for over 12 years now. We started life to service traders from the LIFFE Floor who had moved up to offices in and around London and suddenly found they needed a new “edge”, with the noise and “feel” of the Pits suddenly replaced with prices flickering quietly on screens.

Although London moved from Floor to Pit a lot quicker than the US our cousins stateside were already further advanced as far as using charts was concerned, and in Chicago many traders were religiously using the Market Profile charts invented by Peter Steidlmayer in the early 1980s and developed by the CBOT (Now CME Group) since.

“Prop trading” has seen a number of changes and challenges since the floors closed for business, not least the surge in “Algo” trading. which effectively took over the “nick a tick” trading that had been prevalent until that time.

So we’ve always reference Market Profile as it’s very much a tool used by day traders, and we’ve found that it can do a very nice job of complimenting the daily and intra-day Candlestick charts that has always been the key “canvas” employed for our daily Technical analysis.

It is a popular misconception that Technical Analysis is a tool for predicting future market direction. We use Candles and Market Profile to come up with the support and resistance levels that could shape market sentiment going forward, and this allows us to make an informed “call” on the state of mind of the market. Is the market in a bullish or bearish mood, and is this mood changing? How it reacts with support and resistance levels gives clues to answer this question, then a trader can attempt to trade with the momentum and the sentiment rather than trying to bat against it.

I say all of this because I am going to be giving a small insight into our methodology and how we combine these two in a webinar next Tuesday for the Global eTrading Expo. Click here to register and hope to see a few similar names in the room on Tuesday at 8.00am ET, 1.00pm UK time (BST).

Have a good weekend, all.