Value Trading (Market Profile?)

[TheBramble]

When the market opens above (or below) where the bulk of yesterday's trading took place - if, when it trades down to the high of that area, if it does not bounce, but instead starts trading through that level, it is likely to go all the way down and test the lows of that area. And vice versa.

Did somebody else post something along similar lines on here recently?

I'm willing to accept I've definitely lost the plot and am hallucinating wildly, but any confirmation/refutation would be appreciated.

 

[sandpiper]

Tony,

There was something on here. Don't know if it was that recently though. Searching through Lecter's threads might yield something. Anyway, as far as I recall the theory was that if one 30 min bar closed and the next opended within yeaterday's value area the chances are that the low of that value area will be tested.

 

[smiley]

The previous day needs to be normal or normal variation. Next day open outside of range and then double TPO prints in value area of previous session. The other end of the previous days value are will then probably get tested. Cannot provide any statistical likely hood of this set up working. I do find it useful to keep my eye open for this setup though.

tsuntzu

How do you define normal or normal variation?

I assume that TPO doesn't mean "Totally Pi$$ed Off" so if you could please explain that one too I'd be gratefull.

Thanks

 

[TheBramble]

I'll leave tsuntzu to explain Time Price Ops, but that it was my fault for (even if only parenthetically) mentioning Market Profile.

What I'm describing IS the basic building block of MP, but it doesn't have to be viewed that way.

You could determine 'where the bulk of trading took place' using whatever method you choose.

 

[sandpiper]

normal = normal distribution, i.e. 68% of yesterday's trading falls within 1 standard deviation of yesterday's mean, etc.... from memory VA or value area is usually based on 2 standard deviations.

Tony is right in as much as MP confuses map and territory (to coin DBP's excellent terms). Where yesterdays trading took place need not/should not be subjected to some arbitrary segmentation of action into time periods, i.e. 30 minutes. Shame really, 'cos value, acceptance, rejection and other ideas central to MP are all useful (imho).

 

[smiley]

........thanks everybody for your explainations