Introduction to Market Profile Trading | Deeyana Angelo | Skillshare

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Introduction to Market Profile Trading

teacher avatar Deeyana Angelo, Derivatives Trader

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Watch this class and thousands more

Get unlimited access to every class
Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Lessons in This Class

12 Lessons (1h 48m)
    • 1. INTRO Lesson

    • 2. MP Lesson 2

    • 3. MP Lesson 3

    • 4. MP Lesson 4

    • 5. MP Lesson 5 section 2 intro

    • 6. MP Lesson 6

    • 7. MP Lesson 7

    • 8. MP Lesson 8

    • 9. MP Lesson 9 section III intro

    • 10. MP Lesson 10

    • 11. MP Lesson 11

    • 12. LIVE TRADE: WTI Crude Oil Open Inside Value Area and rejection

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About This Class

In this course, I am breaking down Market Profile to get to the core of how to start using profile trading the correct way. 

Market profile is still a relatively unknown professional trading concept.

However, it is, by far, the most commonly used tool of professional traders for trading on lower timeframes because it helps you to read institutional order flow, taking out the guesswork on the positioning. Combining market profile with the exhaustion of average daily ranges (also a statistically known mean reversion strategy employed by many hedge funds and prop trading firms) can provide an undeniable aid when it comes to confirming or denying your own trading ideas on the day. Market profile is applicable to futures and spot. It is best used on asset classes with more liquidity such as equities, commodities and Forex.

A distinctive feature of Market Profile is the Value Area aka the distribution curve from yesterdays trading. Distribution curves have a natural edge not only in trading but also in real life applications. 

Value area is combined with current days initial balance range and extensions, to further give you a systematic insight into what the institutional order flow is doing. 

In the files below, you will find a file called Free Value Area that explains how you can calculate the value on your own. 

However if you wish to take the pain out of this, our company has created the first fully functional professional Market Profile tool for Metatrader platforms (MT4 & MT5). You can demo, rent or purchase here:

Blahtech MT4

Blahtech MT5

In another file you will also find further information on our comprehensive OrderFlow Training Program and some DISCOUNTS if you wish to move forward with your development. 

Meet Your Teacher

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Deeyana Angelo

Derivatives Trader


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1. INTRO Lesson: Welcome to the profile trading course from Marcus Stoker's My name is Diana Angelo. I've been a trader for the last decade, give or take both independently and professionally. In this particular course, you will learn about profile concepts of trading, starting with a value area and initial balance, followed by TP owes a K time, price opportunities and time frame transitions. Market profile looks at price action in a very specific way. It organizes the information about price movements not only through price alone but also through time. A unique aspect of profile trading is relying on previous days distribution curve to determine day Today sentiment. You will learn to clearly recognize who is in control on the day and when. The institutional position traders step in so that you can follow the so called smart money for those who have heard about the market profile. But they seem to think that it's some kind of a throwback to eighties trading and that it doesn't work anymore. It's something that you will frequently hear from people who don't know much about profile trading. To begin with, profile trading is by far the most common tool off institutional professional, successful traders so far as to say that market profile is the only concept actually being taught as a university course at Western Illinois University. And this institution, for now, remains the only one offering a market profile course as a part of its curriculum. By using even the most basic profile information, you can build your confidence in the direction off your trades. Likewise, it can also invalidate your trading ideas, but given you factual data, they can strengthen your objectivity when you have to make a trading decision before we begin. I'd like to say that reading market profile is a fairly complex skill to master. There is a lot of material and quite a few concepts to go over. So I suggest that you take your time going through the lessons, stopping the playback and going back over the parts that you might not be completely clear on. 2. MP Lesson 2: market profile is a concept that was popularized by a man called Jim Dalton, who was a c m e trader. As I mentioned in the intro, Being able to read market profile gives you a lot of confidence in the direction of your trays because you'll be able to accurately read sentiment on the day market. Pro Fall has two functions. Checking where intraday sentiment lies in relation to the previous trading day, giving invaluable information on whether the sentiment from yesterday is still around today and the second function is being able to clearly see who is making the moves. Is it the market makers who are also known as locals? And they're only concerned about filling volumes and getting commissions on those trades, and they don't really care about moving the markets to any new levels. They're not looking to radically re price the product of their trading there, simply there to generate liquidity for the markets. Now this function has largely been taken over by algorithms In recent years, however, the principles are still the same. From my experience looking at the price action and profile trading from professionalized, there was really very little change in the way market makers operate there still traded the particular time of day. They still take out short term levels, especially for staring at a five minute chart. And they still serve the function of moving the price up or down to some deep liquidity pools, where the position institutional traders can then fill their enormous positions. So nothing's changed In that respect, you just need to know where to look or, more importantly, when toe look. The second type of market participants is at the large institutional traders such as hedge funds and central banks who work by positioning themselves for longer term asset allocation . Both of these market participants require very different levels. Market makers will work with whatever is around quite nearby price wise, but both participants have set times of day when they're active. I mentioned that institutional traders need levels that have deep liquidity pools that hold enough units of contracts available for their massive orders that go into thousands and thousands start standard lots. And that's why it's also very important to know where your strong supply and demand areas are and where the extremes of swings are. And, uh, I do teach that in one of my other you Timmy courses on supply and demand basics if you're interested in expanding your knowledge to larger timeframes and technical analysis of long term directions. But even once you know that when you're only using supply and demand, the problem remains that supply demand will not give you the information off the sentiment on the day and this is where market profile comes in My methods looks for the sentiment to be on the side of your desire trade direction on the day. Now Mark approval comes from the auction theory that's in the markets. Each participant has a counterpart and that it's a zero sum game. I'm sure you've heard this before now. Morgan Bravo is typically used on a 30 minutes time frame, but there are certain people who have used that on a 15 minute charts and what this does. Working from a 15 and 30 minute time frame, it forces intraday traders to wait for at least 15 minutes to about an hour and 1/2 in some cases for entries. So this naturally prevents over trading because you simply have no choice than to wait for the profile to show you the way with market profile. Let's begin with these two basic concepts, so we have the value area and initial balance, along with initial ballots. Extensions. Value area is used by looking at the value area from the previous day, not from the current day, but initial balance extensions with the other side are used to read the current developing profile. Okay, so in this section, I'm only going to be talking about the value area and initial balance and possible scenarios regarding the Value Area. You may have seen some profile charts with some weird letters on it. Those are called time price Opportunities, also known as T P O's. I will cover them in the second section or Provo trading. So let's go through the definition off. The Value Area First value area is used by taking the value from the previous day's trading from yesterday's training and then comparing where the price is when the exchange opens. So Value area really is a distribution curve from the previous day, and distribution curves have a natural statistical advantage. This is a well known fact, so profound trading takes the information of time and price and then creates a distribution cook. So this means you can only use the value area once the trading is over for that day, much like you would do with reading the daily candle patterns so you wouldn't think Teoh read a candlestick pattern in the middle off a trading day. If you're solely looking at a daily charge, well, in the same way you cannot use current days Value area to read current day sentiment because that value area is subject to change as well. The official definition off the Value area is that it represents 70% off where yesterday's business took place. The way use it is by comparing the open of a particular exchange, for example, Wall Street today with where the price traded all day yesterday, a k where the distribution curve waas. And then, by looking at this, you can quite accurately determine which side the sentiment lies and also how strong it is . Aziz. You will see in the next few lessons, but overall, the Value Area shows us whether the market is out of balance, which means that there is a trend and then also how far out of balance it actually is on the other hand, if you have a balanced market than there, no opportunities for trading. It's a very hard condition to trade because by default there will be no momentum. 3. MP Lesson 3: So I mentioned that the value Area is used by looking at yesterday's value. However, for the current developing day, a very useful concept is the initial balanced extensions, the initial bones. What is it? Initial balance represents the first hour of trading. When the exchange first opens, it generally has the most volume, but these days it's the noisiest period that you can possibly have. And it's also a time when a lot of inexperienced traders make large donations to the market . I know that there's some traders out there who are like trade the open trade, the open treaty open. But honestly, coming from someone who's worked for three different prop trading companies and I have a house in London from it, I would probably tell you not to Tracy open. Unless you've had years and years of profitability and you think you may have seen something that you can take advantage all, then you know, maybe you can give it a go. You know, if you've not had sustained profitability over months and even years, just stay away from that first hour of trading. Your performance is going to massively improve, However, once the first hours over Once the initial balance is done, you can then start looking at something called the initiative activity to confirm the direction of your trading idea. You could even look at pure candlestick patterns that appear after that tricky period of trading. And if you take anything from this course, this would be it. Avoid the first hour off the exchange open now initiative activity that I mentioned just a while ago. It's ah, it's those other time for him participants. So the institutional position traders those are the people that you want to trade with and whether it's intraday or swing trading, it doesn't matter. You still want to side yourself with the position traders within. Today, obviously, is harder because you really need to know when to trade. And you also need to scale your stop loss to the liquidity off the instrument that you trading to ensure that you can still get a higher reward risk. Um, and uh, compared to be to swing traders, you will be using a relatively small stop. So if if, for example, swing traders use 42 about sixties or 80 over 100 pips, stop loss, depending on how long you want to keep a trade, then interesting traders are probably looking at using anything from about 20 to about 30 35 pips for some of the more liquid instruments, like crude oil. Using anything less than 20 pips for an intraday trade, in my opinion, doesn't work very well. And you will just keep getting hits constantly unless you're trading something that has very low liquidity something like Aussie Dollar, for example, cause that doesn't move much now. Talking about intraday trading timing off your Internet traits is extremely important. However, one thing to note, I don't really know of any professional, successful traders who sit on their ass every day watching the markets minute by minute by minute by minute, you would literally go insane very quickly. Not to mention that you won't be able to survive very long in this industry. So you want to work less for more money, not the other way around. Profile trading requires you to know where the value area from previous day is. Like I mentioned before and in the resource is section. You will find a file there will explain how you can obtain free historical data and then use a free online market profile calculator to get the distribution curve, a k a. The value area from yesterday before warned. It's a long documents, and it's a pain to do Right before I had Logic is a company before I had, you know, software engineers helping me to code up all of these indicators that alleviate the pain of end to do some stuff manually, I literally had to do this by hand. So this is why the document exists before block take. That's how we used to do it. And partly it was because I was a little bit allergic to certain trading platforms. The Charger a normal leg to have access to the market pro for trading tool. I mean, we're talking about 100 $20 per month all the way up to, like, 4000 quite ridiculous sums of money. And then, even when you would have access to the pro profile tool, you still couldn't drag it directly on the charge. It was like in this weird window separate to the charge. So So it was like it was so, so horrible. Um, and that's, ah, huge reason why one of the first indicators that me and my blah tick elves developed was the market profile trading. But like I said, you can do this manually if you wish. No problem. But if you want to alleviate the pain of having to do so every single day, consider renting or even purchasing blotter Kempe, especially if you have some funds designated for the trading tools as you're learning each month. If you do want to rent or purchase biotic MP, give me a message if you've never bought anything from Metta Quotes Marketplace It's a little bit of a tricky process to go through soaping me a message over, and I will point you in the right direction to make sure that you have all the steps in place. Now let's see how to use the profile value area. Practically so where the value Area we are looking at, how the market opens today in relation to where the Price waas yesterday at the same time, and when I say when the market opens, I, of course, mean the Elektronik open. So for Wall Street's, that will be 9 30 e s c or equivalent in jmt. I live in London, so it will be 2:30 p.m. And of course, these also go for forex markets Now. Although forex is technically open 24 hours, five days a week, there is still a lot more volume when the electronic exchanges kick in. So we're not gonna be looking at the entire 24 hours distribution curve. I'm talking about intraday trading session trading. So therefore, we're only going to use the regular trading hours the active trading hours for the sessions to determine market sentiment. Looking at the entire value area from the 24 hours is something that you may want to be doing if you want to do a swing trade. So I'm going to show you some value area scenarios that are quite simple. It's all a lot more complicated than it sounds. So bear with me. There are three scenarios, really for the Value area open, and I'm gonna go through each of these one by one. So don't dwell too much in this particular slides, especially if it's not all going into your head straight away. It would be much easier would like some some of these clean graphs that that I've got for you. So just to go over these quickly. The market can either open inside previous day value area. It can then open outside of the previous value. But inside yesterday session range. When you're looking at a session, you have a session high in a session, loath, and finally it can open outside value and outside range, which indicates that the market is heavily out of balance, possibly a very strong trend. So here's this little clean graph that I mentioned to show you the idea off these scenarios now one of my traders referred referred to this as Value Area for Dummies. But honestly, whenever you're learning a new skill, there's a four step process of acquiring new information through experience. It z called Cubs Expert Mental Learning Cycle. This is very useful for performance skills, that castrating playing a musical instrument or sports like anything that you cannot learn by simply reading a book. But instead you have to do it to actually get it. And this is why I start most of the concepts on these simple graphs, and then once you understand these basics in a very clear and concise way, you can then quickly move on to the real charge. So if we haven't opened inside value for the purposes of an today trading, this is largely undesirable. OK, it shows is that the market is in balance. This means that the market participants have accepted the prices at these levels for the time being. When you get a day like this, it rarely means advancements off the price in the same direction. It can indicate that that a reversal of the trend is coming. So when you have this open inside value, a trader than has to wait until the end of the initial balance to see whether there will be any kind off extension off the initial balance, which would indicate that we've broken out of that range. So you would push the price outside of value into a possible intraday, Trent. So now I'm gonna show you this actual charts where this is happening. This is the previous day's value. Right now these lines are extended to show you where the market opens today. So this will be the New York Open right now. So if you were staring at this chart, the market is just opened. So here we go. Carbon dates. Wall Street open can. So when you see the market opening inside value, this is not a good thing. Ideally, you wanted it to open here or below here, the way it's looking right now, there are no trading opportunities. The market is balanced. The second scenario is when the price opens outside of value outside of that distribution curve of yesterday, but it's still inside. Yesterday session range. Okay, so these dashed lines that you can see here they represent session low in session high and they will also be on the indicator in a similar way. So remember we're on Lee using previous days value okay, so therefore, any time something opens outside of value but inside range, it means that the market is only slightly imbalanced now. What usually happens is that the price will go back to touch the Value area edge very frequently, which then may act as a za bounce when the market opens outside of the distribution curve and then goes back to test the value edge and then creates a price action pattern that indicates that the market is indeed reversing or potentially reversing. That will be your your strategy, so trading these value area edges. So here is that on the chart. And this is actually an event that happens quite frequently because trending markets, especially aggressively trending markets. It doesn't happen that often. Most people that I mentor, they they have this idea at first when they haven't been training that long, maybe a year or two, and they keep trying to catch thes thes incredible market trends. But, you know, the times have changed and those kind of days of few and far between. I like to teach you about strategies that do happen quite frequently, and they don't rely on once in a blue moon Superstrong threatened. So when you see something that's opening, um, inside yesterday's range, but outside of value, in many ways, that's actually a really good thing for us Now Here's the same charge, right? So if I had the test off the value as you can see, so we opened higher inside range, but outside of value and then the market went down. What? So here's the value area edge, and on the very next chart, you can see that the price creates this very strong bullish in golf in pattern, then goes back down to tests the newly formed demand area and then kicks off a little intraday Trahant. This would give you an excellent opportunity to go into the market. I mean, even if you were a trend traitor, if you did that, this is an uptrend. This would allow you to play a pullback and then go with the trend. And finally, here's scenario. Three. Open outside of balance and outside of range. Now, when the price opens outside of range, outside of balance, there are a couple of things to note. 1st 1 is that if this happens in theory, this would represent the greatest. The imbalance off all of them and should bring you, in theory, the best conditions to trade right. But if trading was that easy and straightforward, everyone would be a multi multimillionaire, right? So here's another thing that can put a wrench in the works when the market is so out of balance and opens a way above the Value Area and yesterday session range that you may be looking at an exhausted daily range for the day already, in which case this is not an opportunity for going with the trend. But there may be an opportunity for a mean reversion trade. Not always, obviously not always. But in the vast majority of cases, when you have an abnormally large day that brewing a trend, you get this equally aggressive, mean reversion trade the next day because the markets like the norms. Right, So as you can see here, So here's the practical example of that. This is the start of one of the Asian Sessions. So, like I said, in theory, this would be a great opportunity. Just keep going with the trend. Just keep shooting up. Right? But the markets, of course, they don't do that. So, um, here was the same charge sometime later. What happened? We went down. So whoever was looking to go with the strong trend with the inbounds you will be going. Oh, I just lost the trade. As you can see, what happened is that the market consolidated, and then when the other way caution is required. When the market opens vastly outside, arrange an outside of value because it likely means there is no trade with the trends unless you know how to systematically and methodically look for those counter trend mean reversion traits 4. MP Lesson 4: in the previous section. I was talking about the scenario when it comes Teoh opening outside of value area. So while I'm on the subject of that, I want to mention a a price event that can happen in regards to the value that can be useful for some fairly quick intraday trades under the right conditions. Now this event is called the Value Area Acceptance, which is frequently referred to as an 80% rule. Now, an 80% ruled states that if the market opens outside of value, then proceeds to move towards the value, falls back inside it and then closes one period inside the value area, then there is an 80% probability that the price will rotate through the value area to the opposing side. The 80% rule, however, 80% rule is not really 80% because there's so many factors that determine whether this particular market behavior is going to play out or not. It depends on various things, time of day. When this acceptance is happening, the earlier in the trading session it happens, the better it is in most cases. I also observed that if the price is not at a swing extreme on a larger timeframe. That's definitely not an 80% chance of it rotating through it. And then it also depends whether the value area from the previous day it was a normal size value or a comparatively abnormally large value area caused by some kind of an abnormal event or in economic police. And this is why I stopped referring to it as the 80% rule. And instead I simply call it rotation or value acceptance role. Here is a graphical representation of what that will look like. So it's a textbook example to make things easier for now. And please note that for this rule to be true, the market definitely needs to close confidently inside the value, right? So when I say confidently, that doesn't mean this. This is not a confident close right, so a confident, close inside the value is definitely required. So once you see something that resembles the price closing in the value area confidently, then you can expect it to rotate through the value, ultimately reaching the other side. So right away you can devise a strategy, and this is what it means. Doing an opportunistic intraday trade it doesn't mean gung hold discretionary trades. I think it's going to go this way. It means having a reason as to why something would do something right. So if you don't have hard and set rules that you can follow during opportunistic trays that don't actually have a systematic methodic rule behind them is completely pointless. So if you do see this than in certain cases, yes, there's a very good chance, very high probability that the price is going to rotate through the value, in which case you can then devise a trading strategy so you can enter on the basis off the candle that actually closed inside the value in place to stop us above it. And you can place target at the other side of the value that would be retrained. But off course there are other things to take into account. Like, for example, you need to ensure that the trade that you are doing has at least 2 to 1 reward risk ratio . If it doesn't, then you are in danger off having a negative reward risk and ultimately that will come back to bite. You never do negative reward risk trades now. Earlier in the course. I mentioned that it's not a great idea Teoh to trade when the market opens inside value. We had a couple of traders who learned by the market profile and figured they are going to do their own strategies, which is perfectly fine. But then I see them shorting and longing from the inside of the value area on them on the days when the market opened inside value. Unfortunately, these are low probability setups, right when the market opens inside value, shorting from value area high and very value aerial low, expecting them to act at some kind of a range of support resistance, it is the wrong thing to do. If we did do a little algorithm test and there was no relevance whatsoever, I even tried to see whether I can combine with some supply and demand rolls. So you know to at least have some kind of a supply one, maybe a four hour charts when the market is inside value. Um, it didn't it didn't happen, so I would say, if you are looking to trade value area high end value area low when the market opens inside value, that is a bad idea. You can drive yourself, of course, as always. And if you want to know what the numbers were, I think is something like 8% over, like a three year period. I mean, absolutely terrible, terrible statistical data. And finally, one last thing about the value area the whitest parts off the distribution curve, is referred to as the point off control. Contrary to its name, point of control has nothing to do with any kind of control. And it's not great for trade entries. It's also something that one of our traders tried to do and say Why I'm longing off the POC . And I'm like, Why? So, um, on the charge, this is what it looks like, so we'll go over these t pios in a minute. But, um, POC is sometimes in the middle, but what it represents is the whitest points off the profile. So here it is, on the TPL, and here it is on the charge, right? It's one of the same one of the same thing. So point of control, it has nothing to do with any kind off a control. However, it works exceptionally well for your targets, especially if the POC has not been touched before. So if the PSC is still untouched in virginal, then you can use it as your targets, but not as an entry. So, for example, that say that you identify age blades and you see a point of control from yesterday. Yesterday's value has always and you decide to use that as your target Go for it. And now, for the final part of this section, I want to go over some strategy ideas that I've sort of already mentioned. But I just want to summarize them here. So the first thing is that we had the three possible scenarios for the Value Area Open, and I also mentioned that most of us don't trade for the first hour off the open. So during the initial balance, and the reasons for this will actually become even more obvious in the next section. So, with that in mind, after the first hour of trading is done, you can then begin to look for your trade locations, and one very good trade location is the pull back to value area edge. In cases when the market opens above value or below value, you're looking for a pull back and then some kind of a candlestick pattern. We haven t p O to play the bounds from that value area edge. So this technique works extremely well in most instruments that we trade and we have a four x desk. We have an equity desk and commodities desk and then another two people who are kind of like me, which sort of trade everything and were able to trade most things due to the professional experience was so far had and the extended amount of time that we spent on each each separate asset class. I mean, I used to trade for its first when I started, and I only traded like one one instrument traded your dollar exclusively for like two years and then expanded that to your yen and U S. D. N. And then on Lee. When I did that for another year, I then added crude oil into the mix. And then once I started working for a proper trading company, they were they were basically trading S and P. It was an equities desk, so I had to learn how straight S and P. So I did that for three years So because of that, I'm able Teoh to trade anything. I am very well aware off the behaviors of each asset class. Um, but I can tell you that the pullback to value area edge and the subsequent rejection from it it works very, very well in any asset class. You may be looking at even more so during the New York session. So keep that in mind. Obvious problems that you may encounter with this pullback to value area edge strategy and a bounce from it when it comes to practical trade entries is that the markets goes further and accepts the value area, and that continues to go through it instead of rejecting it. Which is why it's also important to know where your supply demand areas are and also my cue points, which represents a systematic swing extremes because those kind of, um, that kind of awareness of larger timeframe zones, it gives you a clear idea where your potential problems are, and then subsequently it also gives you an idea of what may happen. So when something starts to accept the Value area instead of rejecting it in an uptrend, for example, and yet you've hit an opposing supply on the larger timeframe. You will know why that's happening. And then I've already mentioned the 80% rule value acceptance. It's, um it's a strategy idea that can maybe be combined with initial balanced extensions. So, for example, wants the value area acceptance is done. You can then perhaps have a bye. Stop yourself. Stop depending on which side the value is accepting to trigger your order so you would effectively used the initial balance extension for your entry. This concludes the first section on value area and initial balance. 5. MP Lesson 5 section 2 intro: have one. Welcome back to the second part off the profile trading Siri's from Marcus Talkers. In Part one. I talked about the Value Area and the initial balance concepts. So today I'll be talking about something called day types and TP owes, also known as time price opportunities, what they are and how you can use them to further increase confidence in your trading ideas . So while the Value Area relates to looking at a previous days distribution curve, day types will look at the current developing days movement in the developing profile. 6. MP Lesson 6: Before we start with this next section, I would like to repeat something from the first section. Market profile should really be in addition to price action patterns, so it's there to give you extra confidence in your directional trading ideas and not to entirely replace them. It definitely shouldn't be used exclusively to enter positions just because the profile Sessa. There are certain cases when the daily chart looks good enough, purely from swing extremes and price action patterns wise, and there is zero need for the profile to align perfectly as well. Sometimes the profile won't even be that relevant, especially if you're a swing trader looking to enter trays that will last for weeks. In that case, you're going to be a lot less concerned over intraday moves in super accuracy and only interested in what happens towards the end of the trading day. But if you are a short term intraday traitor that he can definitely keep you out of stupid trades. And although occasionally average, Reiter will do stupor trade, no matter how advanced you are. Generally as the years go by, we try to minimize these sort of like Ma pretty moments by relying on the profile on the statistical advantages that the problem can give you, especially when it comes to the distribution curve, a k a. The value area now tp owes time price opportunities. They are a little less safe in that regard because no matter how strong the conditions on the profile may look tp oh, conditions can change rapidly and, uh, and they can also eradicate the initial condition. That was really clear earlier. Having said that, there are certain probabilities in regards to the day types and how often they appear in the market that makes this kind of concept or profile. Trading very, very useful profile is used to confirm the direction of your trades. It can also help you to see whether the institutional traders are interested in the same levels that you're looking at. And finally, you can use the profile to combine with some other methodologies. For example, my own method combines larger timeframes, institutional order flow through supply and demand analyses, large timeframes and then I also have a proprietary concept of Q points, which looks at systematic swing extremes to make sure that all timeframes big and small tell a similar story for best results and best timing. In the first section off this market profile course, I talked about the Value Area, and I mentioned that we must use it on a session procession basis than not operate on the entire 24 hour profile. If you doing intraday traits now, this might be a bit obvious this part. But just in case that you don't have a routine of a prop trader, here are the various exchange times that will be very, very relevant, depending on what you are trading, even if you're based in Asia, because we have a couple of Singapore traders with us as well. And you want to trade gold, which is one of the larger instruments traded during the Asia hours. But you'll still have the majority off the moves happening during Comex hours. Okay, if you have the blah tick MP indicators thes times are actually hard coded in the default settings. For the most part, we actually did our best to include each name and each variation of a product in case of CF D's, which can be named differently with different brokers. So, um, it's usually automatically recognised as soon as you drop it on the charts and then the exchange opens. It has hard coded times to recognize when it should start, and also by default. R Block market profile indicator for meditator is set to start a brand new developing profile as soon as the session starts. Okay, you can change that setting, but you know, to make things easier for everyone with just hard coded it that way, now that you know the exchange opening times, let's have a look at some of these tea pios time price opportunities and what they are and how we can use them. Now, if you watched any off my YouTube videos, you've probably noticed these, like, weird letters here on my charts. And if you've never come across profile trading before, you're probably wondering, what what the hell are they and what they mean? It all looks so much more complicated than it actually is. Andi, I will begin by saying that each of these letters to see the A, B. C and so on and so on it represents one 30 minutes period. By default, you can set it to red represents each 15 minute period as well. But for the purpose of market profile. It is most commonly used one of 30 minutes charge, timeframe and scale. So literally each of these letters is 1 30 minute candle. As the price moves up and down, the letters will create a roper pip or protect if you're trading futures. So time price opportunities TP owes track the full length of the candle much like your usual Candace take. But can mistakes also have an additional information of high, low, open and close, which you will not find on the T. Pio's? So in this example, I have letters A and B, which means we're looking at 2 30 minute candles. So I'm showing you the first hour of trading, which is what first hour of trading is initial balance. Okay, on the most profile indicators, these 1st 2 letters, letters, a letters B will be a different color, and that is to make it easier to recognize the initial balanced range and then to see how the day develops in relation to the initial balance. So these letters, they are what we refer to as the teepee owes time, price opportunities. Why, because you have time. Each letter representing 1/2 hour period and then your price. That shows you where the price went during a particular half hour period. So it's very similar to a candle. If you imagine that each separates letter had a low and a high with a price, price went sort of like a range of the candle. But then, as each new candle prince, a new T P O is printed as well. So you get that time component where you can eventually see how long the price Spence in relation to the whole trading day as it prints more and more rose as the time goes by. So let's go back to these exchange times just for a second. So let's take Wall Street. Okay, so Wall Street's all the way down to the bottom, so Wall Street's eloquent electronic open for me. I live in London, so it happens at 2 30 PM London time. So but defaults are bloodstock. Market profile indicator is automatically set to start the New York profile at 2 30 PM London time, so if we have our market profile set to start at 2:30 p.m. The whole letter A will represent the movements from 2 30 until three PM Letter B will represent the time from three until 3:30 p.m. And so it will continue unto the last period, which is usually letter M. And that's your last candle before Wall Street closes for May my last 30 minutes. Wall Street Candle with starts at 8 30 PM and will end at 9 p.m. On our indicator. There is also this letter Oh, if you can see it there. And that represents the open price where the market opened at 2 30 PM There's also this red Arrow, which, when you look into the life shots, it tracks the live price movements. So it goes up and down and on every market profile indicator. If it's even half is good, you need to have all of these components in some shape or form. So in this example, I'm showing you letters A and B representing the first hour of trading a k a. The initial balance range. So going forward, we're going to use this initial balance range to determine what kind of a day type might be developing by looking at whether the prices of extended initial balance or not, and also how far they have extended now for show you this full chart screen the way I usually see things. The black market profile will show the clothes previous days Tapio on the left and then the developing profile on the right hand side. Most profile indicators up until we started doing this in the same charge, well, actually had the profile on an entirely different window and we were the first to create a fully functional professional standard profile indicator for meta trader. And because of this, we also created the teepee Oh Onley modes for those who only want to see t pios and are not interested in candles. So let me just recap very quickly. The section one material for a second. I said that for the day to day sentiment, you will use the previous day's value area and then compare it with where the price opens today. Andi, that with the initial balanced range, you will be looking at the current developing days profile, so we'll be using today's initial balance. Those red letters that I show you just a second ago to determine the sentiment and see who is making the moves today is that the market makers with locals by looking out for initial balanced extensions that happen during that developing day and these extensions off the initial balance is what makes up the day types. 7. MP Lesson 7: Overall, there are nine possible day types. These 1st 5 you will be able to guess during the developing day. So we have non trend neutral day type, normal day type, normal variation, day type and Trend Day type. The next four will only become obvious and may be useful in hindsight, after the day is over and those are running profile, double distribution day P shape and be shape day type. I'm going to go through all of these one by one, starting with the non trend day. So remember, we're looking at these red letters was my last period. So these red letters and we're trying to determine the day type looking whether the extensions of their we're not in how much it extends by non trend day is characterized by the fact that the initial balanced range is never broken during the trading day. So So there's no range extension, and this is what it looks like, okay, to have the range that gets established for the first hour and it stays there for the rest of the day. And if you look at this profile, you can see there's like letters m here, which means we're pretty much at the end of the trading day. And once the profile starts to become quite thick, like it's printing these T p o rose and it keeps expanding, the structure getting thicker and thicker and thicker that it's a good guess that the further into the trading day you are there's not gonna be much happening until the end of the trading day. So non trend a pretty self explanatory. No initial extensions either side in the profile tp owes, keep building structure. Then we have the neutral day. Neutral day is characterized by range extensions on both sides of initial balance, and this is a couple of examples off what it looks like. So, as you can see, take a look at this left one. You have A and B so that's the first hour of trading. And then as it starts to go into the sea period, you can see that the period see extended upwards and then try to extend further and period D. But ultimately the auction failed, coming back all the way to the initial balance range and then eventually extending it to the other side to okay, given it a neutral neutral day type. So it's a pretty logical conclusion that if you enter the any trades on this on this day and you notice a neutral day type staring at you once it extends both ends, it's probably not going to be the day when the market runs away and has like a massive trend day. So you would limit your profit expectations so you can see how these day types are starting to shape your picture. And then you can change your strategy, depending on what you see. The next day type is normal day type. Normal day type usually extends to Onley one side off the initial balance range. When you see this happening, the price will extend to only one side of the initial balance by the actual size off the initial balance range. So you have A and B red letters representing initial balance. So let's say that this whole range is about 60 pips just for argument purposes. So if the price starts to extend on one side statistically, you could expect it to go for another 60 pips. Before you can gauge that this is a normal day type. Now, if you're only using market profiler trades, then you can determine your profit target purely based on that. I myself, Like I said, I combine profile with other trading strategies, such as average daily ranges. I love the average rangers, but just in pure profile, trading something like guessing that this is a normal day type and then determining your targets based on on that assumption. Then you would set your target 60 pips below the low of the initial balance range, and you would be done for the day. The next day type is similar, but it's called Normal Variation Day. It's like normal day, but the price extends twice the range of initial balance instead of only once. So, for example, if initial Dallas was 60 Pips, then if the price starts to extend and guess to 60 pips and then carry zone, you can then determine that maybe you're looking at another 60 pips extension, which means you will have your targets set 820 pips or below the range of initial balance. The next one is Trend Day. I couldn't even fit this profile into into the presentation. It's so massive, so the name says it all. It's a day when the range gets extended to one side and just keeps going. No trend days are usually characterized by reasonably narrow profiles. So the way you would distinguish it from other day types is that they won't have that stupid, thick structure off like five and six and 70 Pio's typically trend days. If the trend is still going, they will never really have more than five t pios in a single row. In fact, most of them, if they're stupid, strong, they won't even have three depots. And then it stands to reason that if you have quarter trend day in your inner trade and you see the profile starting to print fourth CPO in the 50 p o building structure, it tells you that the trend is likely over, which means you need to think about getting out of the trade again. It gives you an opportunity to bank your profits in a systematic, methodical way, because when the market starts creating that distribution at a new price, it's no longer trending. And there's also one little clue with Sunday's wants to get to know the product that you are trading really, really well. Which Sunday's initial balanced range is generally going to be unusually large. So technically, trend days can also be put in the category off normal day or normal variation day. But what sets them apart from the other two is that they're usually very narrow, with about one or two, maybe three t Pio's per row, and then they won't have many more Teoh tipos until the price settles in a new range like a new chart location somewhere else. These next few day types. They're not really that useful while the market is developing, but it's useful to know why they happen. So running profile is one of those usually running profiles tend to happen on high impact event days. You might even get range extensions on both sides, and then you might have something like crude inventories. That comes up with a very surprising figure. And suddenly that says the price into a trend because of this new information. So markets have to re price. One time I was trading and, um, there was some kind of announcement. It was crude oil, and it was an announcement that one of the refineries in Iraq have shut down or something, and it just kind of shut up and because I heard that and because I sort of saw that it's is kind of breaking out. I actually sat on the trade for a couple of hours, and it was It was a pretty good trade, but it wasn't Aud one to be in on like it's not something you would you would expect to find every single day. So running profiles are relatively rare. The next day type is the double distribution day. You won't find these very often either. In fact, I've only seen a handful of them when crude oil and S and P over the years, and I tried to find you a good example with like to Belize for two distribution curves. So basically, the whole idea is that instead of one distribution curve, they will have to little bellies, and that's what's that sets them apart. So you know anything with the double distribution curve, statistically is extremely, extremely rare. So again, it's a good thing to note should they come in but not that useful during the developing trading day. The next one is P shape profile again only useful in hindsight but P shape days usually, um, usually means short covering. It happens in Bear Trenton's right, so so down trends. And it means that the market participants who have been short all that time are no getting rid of their positions. So they're clearly visible on the pea shaped profile. So not an exact science, but generally may be a good idea to come to stop selling at this point and review whether there's a cause to trade in the other direction. So it's a little clue that the market conditions could be changing, or at least that there might be a correction on the courts and finally be shape exactly Samos P shape, but on the other side. So it occurs in bull trends and means that longs are liquidating. Therefore, you want to see whether there's anything else that may give you a cause to go into a reversal or the very least just considered not buying the next day. Now I would like to point out another thing and regards to something called The Composite Day on our profile. It's located here. If you see this day in says neutral now, profile traders, traditional profile traders, they ah, they use this after the market close to determine whether the day was overall a cell day by day or neutral. And Jim Dalton calls this a composite day so it could be cell by one neutral day. But to avoid any confusion, with people thinking that this is some kind of a signal that we're giving, you were calling a down day update or neutral. But what it is, it is composite day information. So what is it? Well, Jim Dalton's books, which we based the the indicator on it, states that if the open happens at the top of the profiles, the top quarter of the profile, then it's considered a cell day. So it's quite unit directional and then by or update would be if the open happened in the lower quarter of the profile. And, of course, neutral day would be anywhere in the two middles. I kind of think that this part of market brothel is really not that useful, because anyone with even half functioning eyes can see where the day was bowler bear. But sometimes, if especially in cases when the composite day is neutral and then you maybe have overlapping values and sideways price action you can speculates that the market is waning momentum, and it's just printing sideways action in expectation of a trend reversal. So if you combine it with something called Bracketing, which I will talk about very soon, um then you may be able to catch very early. Trent earns. So just to show you what this looks like practically so here you have a neutral compose a day because this is the entire profile for the day and you have that open in the middle. Then you have the by composer day. So here is the open. This is the entire profile, and the open happened at the lower quarter. And finally, it's a cell day sell composite day, which opened at the top off the profiles. We can see it here, and then the profile went on to create. There is extensions and structure lower down. So therefore a cell composite day pretty self with sponsoring 8. MP Lesson 8: I'm moving on to the practical application off these day types that I've been talking about . So once this initial balance range extension happens, your choice off. What kind of day can it be? Become significantly lower. So range extension early in the trading day is a bit less reliable, but you might guess that perhaps we can exclude in on trend A. So as the day progresses and you see price continuing to move away from initial balance, you can make a further guess that we can exclude the possibility of a neutral and non Sunday which relieves you with these other three choices. So Normal Day Normal Variation Day and Trend Day. But so with a trend day, you don't really know how far the prices will go. And considering that markets usually only trend about 30% of the time, especially when you're looking at very large sample size over a number of years, a trend is something that is basically an abnormal market behavior, especially in today. So rather than focusing on these mythical trend days that the mainstream wants to get caught up in advises to focus on normal days up in normal variation, daytime because those statistically are the two most frequently occurring day types in a large sample size. So if you are indeed looking at the trend day just in case you find yourself in one of those 30% days when the market is going crazy for both London and New York, which is extremely, extremely rare. In that case, you need Teoh pay attention not to have more than those five GPO's on any rope. In fact, I'd probably go is far to say as soon as you see 1/4 CPO. Just get out because the trend is likely slowing down. Now. If you do have that range extension, you also need to pay attention to how sustained the move really is, which is where you must start to combine the profile trading with actual price action. Can mystic patterns okay? And I actually have a whole course on you to me dedicated to the advance price action Candlestick patterns, Um, and I would advise you to check it out. It's only short. It's not as long as thes courses because it's more of a workshop to, ah to bump up your canister pattern skills. But for now, just make sure you know that if you see that initial bass extension that also turns into a reversal candlestick pattern of some sort is likely the auction has failed and there is no momentum there. Okay, the next thing that I wanna dry attention to is how to treat single TB owes, which are also sometimes called single Prince. So what are they? Well, if you look at this extension of C period here. So you have these single print sees there's just one letter. So what Single T pios are there lonely single letters that have no other letters in their road? When you first see the initial bass extension in the live markets, everything will look like a single TPL right. But in order for this reaction to be truly sustained, then the single T pose that you see in in here should remain intact when the following periods start to print. So I've actually put this right next to um to these candlesticks as well, so you can kind of see how it relates to the patterns as well. So therefore every single candle that you see in here is a 30 minute candle, so there's no real. There's no real rush. Like for market profile, you don't have to spot stuff in seconds. And in order for you to make a decision, there's actually an hour before you have to do that. So ideally, we're looking for Price to move outside of the initial balance and to stay outside of initial balance. Wants to get that like in this example, you can see here the sea went up and then D kind of started printing higher and higher and higher and higher. It leaves thes single print T pios behind. And at the same time when this is happening on the profile, you're also noticing this bullish and golf finger than another very strong bullish counter in another. So all of it is relating to one another. Now, if I pushed my blotted back test slightly forward in time to see what happened later, still the same chart. If you look carefully on the profile, those single TP owes from the seat period are actually beginning to get taken out by D period E period and F period, which means that whoever bought this initially is no longer around. They sold, and now the profile is starting to chew up the single print GPO's. If I push this even further, you will see that the sea is no longer right. It's no longer and a lonely single print. Now it has a little buddy G. H and I. So if you do get caught in a trend and you're thinking gay, everything is great. But then the single prints start to get taken out. That is a sign off a failed auction where the trend will be over. And then the single prints depots was taught to get chewed up by the period that are coming after. And it means that these guys who bought on the way up have now taken their profits. Some other guys have come in and the original guys air down in the pop celebrating right. The one you can conclude from this particular example is that if you want looking for an extended move away from initial balance and you see the price started to take out, single TP owes it made on the way. It's a sign that there's no sustained reaction. But it's also signed that you may have an opportunity for mean reversion trade so you can fade the move. And rather than guessing how far the move is gonna go and just doing some like wild man trading and blinding blindly just fading any move in any direction, the profile could actually tell you with great certainty if the trend is still there or not . You know, if you really trade, it can tell you that it's time to get out. If you're not in a trade, then it may be able to tell you that it's time to go the other way. So all these little profile clues can help you discern what's going on behind the scenes in a systematic way so that you can stay impartial when deciding on whether to stay in a trade or whether to bail. And here are some statistics when it comes to practical side of trading. The most frequently occurring day types are by far the neutral day types and normal variation day types. So now, instead of constantly expecting a trending day to happen, which is by far the lowest probability event and a day type of the quite a low frequency of occurrence wants to see the initial balance extension. Then you could come to mainly expect one of these data types and plan your trades a core 9. MP Lesson 9 section III intro: So far, we've looked at market profile value area, initial balance extensions and T p O day types. And now it's time to put icing on the cake and learn about time frame transitions is the final part of market profile that I teach. There are the components of the profile trading such as day open types and volume trading, however, because I use supply and demand in my own concept off cue points to determine whether there is enough volume at my area of interest. I've never really had the needs to use volume in that particular way, and I'm not gonna go into supply and demand trading because this is purely a profile course . But suffice to say that I've worked alongside volume traders in some of my prop trading jobs, and every time it's the same story by the time that they're just starting to recognize an area of interest in today. I've already marked that area a few days before that in my weekly trading plan, so this earned me a nickname Mystic D, because I was able to pinpoint reactive areas before the price would even reach it. However, the truth is that there was no clairvoyance involved. In fact, it's just that I was looking at larger timeframe pictures and they were staring in very short term charts. So this is why some parts off market profile trading for me personally are completely obsolete when it comes to my own method, which is a lot more efficient. So I won't be, including concepts such a day, open types and volume nodes strategies. Another thing, when it comes to day open types in particular, is that the daily ranges of various asset classes have pretty much dwindled in today's times. So we're looking at about 50% less range compared to how many Pips or takes per day. Ah, particular instrument moves compared to what it moved back in the nineties. So momentum is so much less during the political uncertainties but also less interest rate differential between the countries. And overall, the simply spells less momentum in the markets, especially when it comes to trading the open off the exchange. Once upon a time, the open may have had strong enough momentum to catch a trade that would that would then have a high, high risk reward. Therefore, rewarding your portrayed location with momentum in which case the trade location doesn't really matter. But when you take out the momentum, you then have to be extremely accurate with your entries. And like we mentioned before, the open is full of noise and whip saws within very, very tight ranges. So I advise you to stay away for the first hour of trading, as explained in the previous lectures. So let's move on to time frame transitions. 10. MP Lesson 10: time frame transitions can show you who is creating the activity that you're seeing on the chart. Is that the market makers who make their money through commissions and sheer volume of trades and whose interest lies solidly in placing his many traces that can? Or is it the institutions who are looking for suitable, longer timeframe areas where they perceive the market to be overvalued or undervalued? So it's either too high or too low, and they was to capitalize on that. These institutional investors are the ones who are able to truly move the markets due to the size off their positions. So in this lesson, we're gonna have a bit of a revision of what is initial balance. And, um, we're gonna have a revision of range extensions. And then we're gonna look at how to read aggressiveness or lack off aggressiveness of market participants. Finally, we're gonna look at bracketing with this trending markets and what to look out for like bracketing, is just another way of saying ranging and then transitioning from daytime to other timeframe participants. Which means locals A the market makers versus institutions. I are the time for participants, right? So just to quickly revised the initial balance. So the initial basses, the range established during the first hour of trading, when the market participants attempt to find a range when a two sided trade can take place . It's usually represented by different color, and our indicator. It's represented by the red lecherous A and B periods. If you're using the market pro phone a 30 minutes setting now, obviously, if you plan to use any profile on a 15 minute period setting, then you have to set the initial balance to four bars rather, too, because it's still want to see the first hour of trading, regardless of whether using a 15 minute period or 30 minute period. Now, here's the new board initial balance. Talking about went to trade and why you want to avoid the initial balance So initial balanced range is created by the locals. They represent the market makers who create liquidity and not direction. They make their money by literally taking commissions from clients, so it's in their interest to keep placing as many traders possible. Local moves are considered something we call responsive activity, and this responsive activity is also referred to as the day timeframe. We also use initial balance to possibly guess a day site, which you should already know from the previous lessons, and that could give us an indication off what kind of day you might be looking at. So using all this information can quite accurately predict where, when and how far the market Congar oh, range extensions. We talked about initial balanced range extensions, right? They will always be created by what the profile traders called the other timeframe. Participants who represent hedge funds and other institutions who generally have no desire to make a many trades were talking about portfolio management, so they're looking to get in on trays. They wouldn't enable them to stay in on, um on a trade for long periods of time. So one month, three months, one year. So it stands to reason that other time frame participants will be looking for very different levels than the locals. Other timeframe participants are also very visible through their extensions of initial balanced range and through the sustains moves that hold outside of initial balanced range. So they create the initiative, buying or selling activity. That's the ones that you want to follow is then logical to presume that if you see a failure of a sustained move above the initial balance, that that's a bad thing. If you're looking to trade anything over one day graduation, okay, Other time from participants are the ones responsible for initiative buying or selling activity. So now we have a concept of locals who trade the day timeframe, creating responsive activity during the initial balance period, versus the other time for in participants, who creates the extensions of initial balance and initiative activity clearly visible in the profile when you know where to look. So when the initial balance rage gets extended, that means that we can possibly guess what kind of a date I'd be looking at. So you can imagine. Now you have a very, very clear picture of what's going on. So how do you read whether these other time from participants are aggressive or not aggressive? Well, when prices go above or below the initial balance range, two things might happen right? Either the market will find buyers or sellers and continue in the direction of the initial balance break, for it will fail to find business and return to the initial balanced range so the auction is not going to be successful if they find business. Well. You want to see is a sustained move in the same direction, and that can be read through candlesticks but also through sustained profile and single print. GPO's. Now the first clue is usually price action, right? So if you get a very strong, bullish and golf thing, that's usually the first clue that the break of initial balance is pretty confident and strong. And then you may expect the direction to continue. And then if you combine that with GPO's and you see that at the same time when the engulfing happened and the extension of initial balance happened and then you get the next candle and the break in the single prints T pios are holding, that's two things that you have that are telling you the same thing that the direction is likely to continue now. What frequently happens on sort of less aggressive days is that the price will go back to test the edge of initial balance. Once is broken in during the first sort of out half an hour to an hour or so, and this is where the TPL lesson comes in perfectly because if you already had a significant extension, you will have all these extended single principios that you're looking at during a particular period. But then, if the price stops advancing in the same direction and it's that it turns around and starts to take out the single print GPO's creating to depose Paro, then eventually three and then four that is a sign that whoever bought or sold is no longer around. And the current market participants may have some other ideas. So this kind of behaviour could also mean that there is profit taking happening. This brings me to the next life. So you have to start differentiating between single print T pios that held outside of the initial balance range after the extension, which means that the price found business and then differentiating a sustained move from a failed auction, in which case the single prints T. Pio is on Lee a buying or selling tail, looking all lonely outside of the initial balance range and the subsequent GPO's, and you'll see what this selling and buying tales look like. They really look like tails. So with the subsequent T pios that happened after this thes tales, the price returns to initial balance, and that is a pretty strong education that the price failed to find business. The more single principios that you have in a tale, the more aggressive the other timeframe participants are. So the longer the tail, the more aggressive they are to differentiate whether the tail is valid or not, you have to wait for another period. So in this case you have see period that created the tail. But it's not really until the end of the deep period that you can. You can determine whether this is a true tale or just a test off the edge of initial balance range before going upwards. And this is where reading price action comes in handy is it's all well to, you know, have the sea period go above the range. But if you combine this with price action, and let's say that at the same time, when the sea a sailing tail printed, you also see a shooting star. That's an indication that there's a reversal patent there as well, so you can have a much better idea by combining the candlestick patterns with what you see on the profile than just by using one or the other. And then let's say, um, this happens and you were expecting a selling tail because you're trading analysis from larger timeframe Selves that this is just a pop into supply before you get an extension to the other side. And then, um and then you're all happy and you went in during the sea periods. But then suddenly this happens. Okay, so what's happening here? Well, we're seeing the extension sustained extension. Unfortunately, in the deep period, it's not the strongest trending day because you have to depose Paro. But this will be an invalidation off the selling tail in the sea, period. Okay, so now you're panicking that you made the wrong decision because you didn't wait for the end of the deep period to see whether the South entail holds. So be aware of that. Make sure that you're selling and buying tales are actually coming from your previously designated areas and large time frames that should bring potential reversals 11. MP Lesson 11: now bracketing vs training markets. Bracketing is really similar to ranging markets. It's simply a Gym Dalton term that he uses, so a lot of profile traders use it as well. Now, when the market's going to balance into a sideways movement off sorts, what becomes really obvious looking at distribution curves a K value areas over several days is that the value areas will start to overlap, sometimes depending on whether you are in a larger timeframe or not. It usually means that the trend is waning. So put prices just losing its conviction, and it's not going to continue in the same direction. So that could be a signal that you can use to try and plan the trades on the opposite side . Generally, I say to people, if you start seeing overlapping values for at least three days, so two days is not quite enough. But three consecutive days. Let's say you see one on a Friday, Monday and Tuesday. Then it's time to look for entries that will give you a set up for a reversal, and then you start monitoring the market for initiative activity to the other side in order to break away from the bracket. Let's say you were in an uptrend up until now, and then the market hits a supply on like a daily chart, and then for three days you have the overlapping values you get. Friday, Monday, Tuesday, It's all overlapping. Come Wednesday, you get the open below value. In a subsequent extension. Off the initial balance downwards, you're seeing an initiative activity taking the markets in the opposing direction. So as soon as something opens below value and extends the the initial bus in the same direction, it means you've caught an early Trenton so well done trending markets. You can see those as well. No training days obviously are very rare, but you will get a trend, but that carries on over a number of days. Sometimes it's like these days is very there's a lot of up and down, up and down before they actually move it away. But if there is a trend, you will be able to see the value areas created with some distance between them. So when the markets open and you do have that distance like there's one value area here and then another one there, it means that the trend is still strong now. Transitions from day time frame to other time frame structure always starts with the creation of the initial balance range. You are kind of unlikely to see a trends to rate from the open. It really doesn't happen that much anymore. Any time price extends the initial balance, this represents the other time from participants. So we've established that already their activity on any day can range from very low to very high and everything in between. Whatever the other timeframe participants do with the price, it will leave a an impression on the market profile structure itself. So market profile readings, they are all about objectivity. It's probably the only concept out there. They can truly invalidate your own trading idea if you're wrong, and you're able to look at all of this from an objective point of view. And to be honest in this respect, it's absolutely invaluable in keeping you out of silly trades. So whatever method you may be using right now, you should strive to make it a routine Teoh. Learn all of this about market profile and then check what the profile looks like on the day using the profile you can really start to become truly impartial, and you can make much better trading decisions based on factual, pro fall events that you can see and analyze in the same way every time. Which makes it all repeatable and not doing wildman trades and trying to use your like Jedi master skills to read the markets. So once those two things come together, what you expect should happen at the the area and then what? The profile is printing telling you the same thing? Well, then you are on the verge of becoming a consistently profitable, systematic trader. Now we already know about day types in. The first reason why I teach about day types is because without knowing them, it z kind of the first step to day time frame transitions. So without knowing the day types, if I try to throw it all into one lesson, students generally find it very confusing. And it's just way too much information, Which is why broken all of this material down into three sections to learn about the Value area and scenarios first, and then we do t pios and data types, and then we connected altogether by tackling time frame transitions, which, in a way, it's an easy concept to grasp, but not without knowing the other two, because it involves all three components. So how do you know who is in control? At Market Open, you already know about the value areas open scenarios so you could be inside or outside correct. So if prices open inside value any activity that happens inside the value area and subsequently inside initial balance on the day, it's always going to be responsive activity so driven by the locals of the market makers, responsive buying or selling because there no major levels to be broken and prices like simply moving around recently established levels. So, um, so you may see, um, things that get broken or tested, like yesterday's lower high or session lower high or a daily pivot test. So anything very short term if you're not looking at the larger picture and birds eye view , you won't know exactly why are prices turned in today, And then when you zoom out and you look at like daily, weekly and monthly, you kind of have those ah ha moments, and this is why so many retail traders get absolutely slaughtered during that first hour of trading, you shouldn't trade it. I mean, trust me. You'll see a vastly improved performance if you don't train during the first our off any exchange open that includes London, Wall Street, Nymex's Comex, Tokyo, right. Any exchange to stay away from that first hour? Now, if the price is open outside of value, that's called initiative activity. As soon as the market opens outside of value, you know that the market is out of balance. Therefore, there is a possibility for a trend, either in one direction or the opposing direction doesn't matter. And it's perfectly capable off catching the early train turns by seeing the market keep opening above valuable, valuable value than you have bracketing. And then one day it opens below value. That tells you there's been a change in sentiment very clearly. And if you do see the initiative activity by prices opening outside of value and then subsequently extensions of initial balance to one side, you know that is the institutions making those moves. So when the market opens outside of value, eventually extending the initial balance range, that is always going to be initiative buying or initiative selling we're coming to the end of the course. There's really no much else to say about market profile at this time, So let's just do a summary of everything that we have learned. The first thing you'll be looking at would be the location of price at Market open in relation to Value Area. Is it outside, or is it inside? Inside? It means that it's responsive activity moves made by market makers We're outside, which means initiative activity and a possibility off further extension of initial balance at some point in the trading day. And then you're looking out for buying or selling tales if the initial bones does get extended to determine aggressiveness off other timeframe participants. But generally the more TP owes these tales have the more aggressive the activity. But your first clue for the initiative activity is the open outside of value area in the desired direction of the trades, and finally, in this section we looked at bracketing versus trending markets. So when you notice that the value area start to overlap over several days, so not just one or two, ideally is 345 If you are in a swing trade, so you've held the trade for a couple of days, three days, four days. You should now think about booking profits because the market has stopped moving in the same direction, and that's it. Four time frame transitions. 12. LIVE TRADE: WTI Crude Oil Open Inside Value Area and rejection: this section is about live trading setups, because it's all very well with the theory. However, I want to show you what these setups look like when you live through them. Now, typically in any single instrument, you will only have 2 to 3 moves a day. So if you're trading anything more than that, it really means you're not selective enough with the set up. So here's a chart of W T I crude oil. There's an open, inside value area scenario. There's also an initial balance extension to the downside already because the Nymex has been open for a couple of hours and I'm seeing a rejection or the Value area to the downside on the scandal, which is a 30 minutes charge now for my targets. I always start with a fairly generous target based on every daily range, and in this case it falls around five times risk reward. But as the time goes by, I typically start to taper my target expectation. The size of the stop loss in this case is about 33 pips, 34 pips and considering the current daily average is 200 pips, it means that my stop list size is well within the probability off my trade reaching at least a 2 to 1 risk reward, which is really all you need for a statistical edge. So I'm not going to be waiting for that huge five times risk rewards like do or die. And neither should do. If you have trades that regularly go to 2 to 1 target, then you only really need your accuracy to be anywhere above 35%. And that means you don't have to win a lot of trades to be quite profitable. As long as you stick to the same risk percentage and you can help it. A similar stop, low size. And now I want to quickly show you the whole picture on the large timeframes. So did you have a better idea why I'm choosing to go short? I'm gonna change the time frame to the monthly chart. Now, on the monthly charge, there is a rejection of a swing extreme, and the price is now hitting this bullish engulfing, which is always an indication of some kind of demand. But if I quickly go down even further to zoom into the weekly chart, you can see that the price has already been poor stops on effectively using this as an opportunity to sell a rally on the daily chart. My idea off the entered a target perfectly matches an older demand area. I use supply demand analysis extensively alongside market profile, and I teach you how to combine both of these concepts in the pro development program, going further down through the timeframes on a four hour chart. There are three black candles but no much else of interest on the one hour chart. There's a nice berry Shingo off with a follow through candle, so all good there as well. And then I'm back on the 30 minute charts. There is some demand but was created out of hours, meaning it's very unlikely to provide a meaningful bands because the volumes is so much bigger during Nymex active trading. Now, I also like to check low time frames just to make sure that there's no obvious strong reversal price action going against my trade at the time. Not that happening now. Back to the 30 minute short. As you can see, it's now attempting to stretch the move downwards, but I'm a little skeptical off this because on the profile there's no single print T pios left behind on the initial balance extension, which implies that the institutional market participants are not aggressive today. So it's more than likely that my initial target or five times risk reward is not going to be very realistic. On a day that looks like this, However, I'm willing to give it a few hours before I think about tapering the target. To be honest, most of the time, I would pull off intraday trade 2 to 1 risk reward anyways, because that's all I need. Now what I do the editing. I'm gonna speed up the video here into a time lapse and our check in a bit later to see what's happening and to give you an update. - Okay , I'm back. Let's have a look. So you remember how I mentioned non aggressive participants? Well, this is what that looks like. You have an extension of initial balance, but the price keeps messing around in the same area. It's sort of making a move, but it's low. It's no committal. And if I didn't have market profile, I might have expected some bad trend downwards to happen. But because I already saw that there is no single prints. I'm not expecting some huge move. In fact, whenever I see days like these, it's very likely that the price will go back to the agile, the distribution curve to the edge or the value area testing in multiple times. But in many occasions, the big reality of trading is that there's a lot of waiting around. You need to have a maximum duration exit rule as well as your price related target, especially betraying the futures. Precisely because of days like these many times, not much will happen. And you're sitting in a trade for hours that is, in some kind of mild profit or, you know, even a mild drawdown. But not much is happening. And this is why I wanted you to sit through these trades with me to get a feel for the real trading day. He's definitely not as exciting as you may have imagined it to be. And during my time as a trader, I developed many other skills. Just Teoh, make the time pass quicker. So done body building, gardening, renovating the entire house. I love to cook really well and yes, there will be times when the trades work out pretty quickly. But then again, you need to know when to make that executive decision to finish your day to stop training because you made your money. You've done your job. So no point sitting there looking for yet another trade back to the time lapse. - Let's have another look. We're now an e period of Nymex treating, and if you missed a chance to go into a trade based on value area rejection the first time around, this would be your second opportunity. Not only is the price testing the edge of value once again, but it's also dancing around the edge of initial balanced range on the T P O profile, too. Remember, we're looking to the value area of yesterday's trading, but the initial balanced range off today's moves. It's this combination that enables a very clear reading off institutional order flow in today. Now, if I was a grasshopper traitor who is after high accuracy and one toe one rescue or trades , I may have both profits that 1 to 1, so I would be entering the market once again for the day. But this type of trading jumping in and out. It's it's very difficult to make it work over long periods of time. That's why I prefer to commit to one trade and then to wait for the maximum duration time to expire. Maximum duration exits is always based on the traders previous live performance and not on some arbitrary number that you may set for yourself. The reason why is because you will behave a certain way during the trade, which will eventually tell you what you are good at. So for me, I know that I'm pretty good at reading crude oil. I also have a pretty high accuracy in crude oil. So technically, I only needed 1.6 times risk reward for my edge. But the only time I will actually take the 1.6 times profit is if I run out of time and the exchange is closing, you can see my alert has popped up That says D R F and a whole bunch of other things. But D R F stands for what I like to call the day range filled now basically, day range Phil has to do with institutional traders re balancing their books for the under date, I literally made an entire career only trading thes types of end of day moves. Now there's a bit more to its, but generally the volume from the profit taking is usually enough to push the price in the opposite direction of the most days. However, since the price hasn't actually moved that much today, there's little point in me booking profits here because I'm not yet seen any sudden moves or Joel step typically come with the deer F move. Usually you will recognize these by a knee jerk reaction and then a very quick turnaround in price. This is even more prevail int if you're using a futures trading ladder, which in all honesty, I don't really recommend if you care. You know about your heart in your health because it can't be really stressful. When the D A ref moves starts to happen, this is why I prefer to stare at meta traded candlesticks. Instead, it gets very emotionally tough to watch the price go up and down and up and down. Even if you're trading four or five futures contracts when you're in a trade and you're watching the ladder, you a lot more aware off the movement now 45 contracts may not sound like a lot, but when you're watching the ladder move around 10 to 15 pips, we're actually talking 5 to 700 bucks up and down, so it plays with your head a lot the first year or so when you size up, there is a growth period that needs to happen inside your head, where you detach yourself from these numbers and Onley focus on percentages. But it's still not easy, which is why I use the trade management software that effectively mirrors my trades from a smaller account through an A p I. I'm gonna go back to the time lapse. Once again, let's talk about the TPL structure and what's happening now based on the t. P o profile, we know that this isn't an aggressive date because there was no single prince to the absence off single print. GPO's means that you cannot use this return to initial balance going over right now to read whether those people who sold crude oil earlier are now definitely gone. So now that 2/3 of the day is done, some of you might be saying, well, the TPS structure is quite wide. So D you should just book this trades and take a scratch A break even. But reading the profile the fact that the price hasn't actually moved into the top part where it opens in the initial balance it means that the pro body off this turning into anything other than the normal day type is highly unlikely. I also know that the normal date type to remind you is the date up with the price extends initial balance by pop. Some of the same number of ticks is one of the most commonly occurring day types. So it means that if I book my profits here, I would be cutting off all potential for another move lower. This isn't conjecture. This is reading the information already presented to you. What do we have normal day type? Yes. 2.5 hours left in the training date. Yeah, pretty much A lot can happen. Price still below the value area? Yup. Definitely. There's a thick TPL structure. Is there more than five t pios still building around the edge of value? Yes. So because of all of this, I'm going to respect my maximum duration exit role and wait, go do something else for a while and then come back to wrap up the strait wherever it is at the time. So once again is no exciting. It's not glamorous. It's actually pretty boring. Ah, lot of the days will be like this, so you can sit there and watch the paint dry. Or you can give attention to your hobbies and family. But make sure to set an alert to come back about half a hour before the market closes to make the final decision on what to do with the trade. Okay, here we go. Remember that joke that I was talking about as a sign that institutions are rebounding positions? Well, here it is. Now, this is something that you cannot explain in like static charts. But when you see it happen A. It's generally a much larger move than the rest of the candles and be it literally happens in a few seconds. So now that I've seen it is definitely a sign that the final push is coming. How low is gonna go will depend on a number of things. But generally you could measure this by using our black tick d r. Two. What I like to do is to change the session schedule toe only. Show me the range off only those final 2.5 hours of trading, and this number will give you a mean average of how much the price usually moves during this time. If you have not traded on the day up until the D a ref move, then you can also base your stop plus size on this number to ensure you get that nice risk reward. So either that or you will know very, very quickly of your wrong one direction. But if you end up missing this dear F jolt, it's not very likely that you will have enough time for a second try because it's a quick move and it happens at the end of the day. So this is the last chance to reach the 2 to 1 target. However, once the initial drop is done, I will be considering making a swift exit ahead off my maximum duration time because now I have the move that I was looking for, so hopefully the rest of it will come quickly. Well, not quite 21 but I'm taking this off now. Anyways, as we like to say, Excuse my language. Don't be a dick for a take. Just because my target is like five ticks away, It doesn't mean that I won't book. What's already There is the end of the trading session and the end of this first live trade video.