Market profile?

Beginner Questions
1

Hi
I encountered the term (market profile) several times and i was wondering if it has any relevance to forex?
Thanks
Rafael

2

Hi, Rafael,

“Market Profile” refers to a trading method concocted in the 70’s or 80’s by Peter Steidlmayer. I think it was originally applied to the futures market, and I believe it mostly faded away before retail forex came along in the 90’s. But, evidently, some people still study and/or utilize this method.

Here’s a site where you can read about it: Profile Trading Main Page

Alexander Elder (in his book [I]Trading for a Living[/I]) refers to Steidlmayer as a “method guru”, and basically dismisses him as a shooting star — here today and gone tomorrow.

Clint

3

Hi Clint
Thank you for the information
Rafael

4

Market Profile is actually a product of the CBOT by that name. As a result, it has always been more well known in futures than elsewhere. I used it a lot in the middle 90s when I was working mostly in Treasury futures, but when I shifted to forex I had to move away because the charting wasn’t available at that point. In the last few years, however, I’ve moved back to it because the charting is much more readily available, though often by alternate names.

5

Thank you very much John
Do you know if metatrader supports market profile?
Rafael

6

I thought I saw that some one had developed something akin to it for MT, but I’m not an MT user so I can’t really offer you any suggestions.

7

John, am I wrong or Market Profile uses volume data as part of the charting calculation? If so, could you comment on its applicability to Forex, where us retail traders do not typically have reliable volume information?

Thanks.

8

There are two types of profiles which can be plotted. One is based on price and one is based on volume. If the situation is such that the price profile doesn’t really do a good job of defining the volume distribution - which happens in the case of things like e-mini futures where there is 24 hour trading, but the vast majority of the volume is during NYSE hours - then you want to use the volume profile. Otherwise, the price distribution generally will do just fine.

9

Hi

In my MT software i see an indicator called “Volumes” which displays something similar to what is usually seen in a stock chart. You say it’s not accurate?

Thanks
Rafael

10

What you are seeing is not real volume as there is no aggregation for forex volume outside of the futures market. The MT volume is probably tick volume, which isn’t the same as the traded volume you see for stocks, etc.

11

Has anyone got
Tom Alexander PRACTICAL TRADING APPLICATIONS OF MARKET PROFILE
?