Trading Methods For Market Profile - (Category 1)
Only trade in the direction of the trend (Trend is determined by a rising or falling Point Of Control=POC)
LVA= Lower Value Area UVA=Upper Value Area
LOD=Low of Day HOD=High of Day DBY=Day before Yesterday IB=Initial Balance
Trade setup
#1a: In a down trending market, when
the current session opens below the previous day’s LVA enter a short trade
at the previous day’s LVA and again at the previous day’s POC. Place a
protective stop for both trades 1.5 points above the previous day’s UVA.
Trade setup
#2a: In a down trending market, when
the current session opens within the previous VA and at least 2 points below
the previous days UVA enter a short trade at the UVA. Place a stop 1.5
points above the DBY POC.
Trade setup
#2b: In an up trending market, when
the current session opens within the previous days VA and at least 2 points
above the previous days LVA enter a long trade at the LVA placing a stop 1.5
points below the DBY POC.
Trade setup #3a: In a down trending market, when the current session opens above the previous days UVA and below the DBY LVA enter a short trade at the DBY LVA and again at the DBY UVA. Place a stop for both trades 1.5 points above the DBY UVA. If stopped out on this setup and price remains above the stop level, change directional bias for all category 2 trade setups for the remainder of the day.
Trade setup #3b: In an up trending market, when the current session opens below the previous days LVA and above the DBY UVA enter a long trade at the DBY UVA and again at the DBY UVA. Place a stop for both trades 1.5 points below the DBY LVA. If stopped out on this setup and price remains below the stop level, change directional bias for all category 2 trade setups for the remainder of the day.
Trade setup #4a: In a down trending market, when the current session opens above the DBY LVA and below the DBY POC enter a short trade at the DBY POC and again at the DBY UVA placing a stop 1.5 points above the DBY HOD. If stopped out on this setup and price remains above the stop level, change directional bias for all category 2 trade setups for the remainder of the day.
Trade setup #4b: In an up trending market, when the current session opens below the DBY UVA and above the DBY POC enter a long trade at the DBY POC and again at the DBY LVA. Place a stop 1.5 points below the DBY= LOD. If stopped out on this setup and price remains below the stop level, change directional bias for all category 2 trade setups for the remainder of the day.
Profit targets
for all trades should be in consideration of the risk of each respective
trade and should be placed in consideration of the previous days POC, LVA or
UVA
Trading Methods For Market Profile
Category 2 trades are based off the current
sessions LVA,
UVA and POC with profit targets of
approximately 2 points (they will generally setup after steps 1 and 2 have
occurred in the market profile’s development)
When a Category 2 trade’s entrance level
matches up with a previous days UVA
It is referred to as a Category 2+ trade (category 2+ trades are generally
good for 3 or more points)
Step 1 being vertical movement of price. Step 1 will generally takes place during the Initial Balance period of the day (the first 60 minutes)
Step
2 being the capping of step 1
Step 3 is when the market begins to move more in
a horizontal direction than vertical direction and the bell curve begins to
take shape
Step 4 is when the bell curve is becoming fully
developed and its POC tries to drift towards the center of the IB, if it is
not already in the center (occasionally steps 3 or 4 do not fully develop
and the market enters step 1 again, this is known as minus development)