Is this Range Extension?

 I have spoken about using Market Profile for support and resistance as well as for the context of my trades. You can see this in a number of posts as well as in my answers to some of the comments posted.

What Pete invented was a different way of organizing market information and we all seem to use it differently. It took me a while to work out how to use it for the very short term trading that I like.

There are different things that the Profile tells me. I look at those different things at different times in the trading day.

When the market opens in, for example, the Dow Euro 50, I look at the opening range in relation to the previous overlapped Profile. I am looking for not only support and resistance but for high volume areas, typically Value Areas, as I know that price should progress through these areas fairly easily. I try and lean against something in the Profile so I can then look at my range bar chart to see if the order flow and momentum indicates I should do something in the area I am looking at.

Again,  there are no “rules”. Pete Steidlmayer described traders as “information processors” and that is exactly what we are. We look at all the available information, give more weight to the “appropriate” parts, and make a decision to do or not do something. We are continually processing information while we are looking at our screens. This why it is critical to focus on what we are doing and not allow any distractions. The other side of the coin is that we must take breaks to refresh ourselves.

 Again, quoting Pete, no one can operate at 100% efficiency 100% of the time so we must set up our information engine in a way that allows us to operate at, say,  70% efficiency and be ready to go to turbo mode when 100% is needed.

What all this boils down to for me, is the requirement to setup my charts with only the necessary inputs so I can get only the required information without overload and duplication.

I know some great Market Profile traders who use no other information. I am not one of those, as I need to get a higher percentage of winning trades. What Kiki and I do gives that high win rate while at the same time providing the benefits that Market Profile provides – context, scale out targets and the information needed to build strategies as the day unfolds.

I woke up today to see the ES already motoring so immediately switched to the Dow Euro 50 (ET) before the open, ready to buy if the order flow continued from yesterday. I have made a small tweak to the CVD to make it the same as the CVD I programmed in MultiCharts. It works better for me. Looks like U.S. traders are having a very quiet day unless they caught the ES trade before they went to bed - about 2.30am in London.

 

Click chart to enlarge