How to make money in the stock market - MQL4 and MetaTrader 4

Irip Irip 2013.09.30 04:30 #601

Which waves can be traded on and which can't?

speculator 2013.09.30 06:15 #602

IRIP:
Which waves are safe to trade on, which are not?

So I'll open a position...

Irip Irip 2013.09.30 06:34 #603

Speculator:

So I'll open a position...

I had a limit on a sell position there, didn't catch it =)

Irip Irip 2013.09.30 11:03 #604

What's not to like about waves!

Market Profile (from the Bloomberg library). Synopsis

A thick profile shows that the price has spent a lot of time at one level. This occurs when the market was in relative equilibrium, as more opportunities existed over time, at a given price. A thin profile indicates a rapid move to a new level, which occurs when the market is in disequilibrium. The outline of the profile shows the ratio of vertical to horizontal movement and is key to understanding what market participants are doing.

The opportunity for a trade with the greatest profit appears when the market is about to shift from balance to imbalance. Moreover, if you can identify such a trading opportunity and accurately calculate the potential magnitude of that shift, you can also assess the quality of that trade and the amount of time required for it.

... this section has 11 letters... and so the 11 filled spaces form a line that contains all these letters. ... this proportion means that the market, in the short term, is in equilibrium or under strong price control. Since the market has also formed a perfect bell-shaped curve, it can be assumed that the market is ripe for a directional move.

Step 1 is always presented and is a move towards disequilibrium - an accelerated rally which starts the cycle. This step of market activity is the only one that is not price driven. It reflects the imbalance that occurs when large capital enters or exits the market. In general, the first step of market activity offers the most profitable trading opportunities. in a typical model, the first-step movement starts out of fashion. The key to determining direction is given by the breakout of the most voluminous (wide) bar on day 15. ... While each successive bar sets a new low, the market is in the first step. Note the lack of price direction even on short time intervals and where the 4*4 formation does not appear.

Step 2 starts with a bar that does not set a new low. It is usually marked by a 4*4 formation. ...In other words, the second step stops the directional movement and starts to build the first standard deviation (the boundary of which will be 67% of the total protruding volume)

Step 3. After the vertical movement ends, the deployment period begins which is the third step of market activity. At the third step the market moves horizontally, building the first standard deviation from one of the edges of the initial range of step 1. Most of the trading takes place in the middle of the range - price extremums have been briefly tested but rejected as either too low or too high. There is little trading at these levels. ...At this step, during the rollout and pullback, the market usually does not reach the level from which the vertical movement began. Instead, only one edge develops, resulting in a p-shaped (321-up) or b-shaped profile (321) down. The numbers refer to the standard deviation number: 1 - says where 67% of the data clusters around the mode, 2 - the thinner section containing the second standard deviation and 3 - the very thin tails. ... Normally, this step continues until a bell-shaped curve with a well-defined mode is formed.

In the fourth step of market activity, the market tries to form a bell-shaped curve over the entire range of step 1. As it does so, the mode begins to shift from the edge of the range towards its centre. Thus, the first standard deviation shifts to the middle of the range that started with step 1, and the combined profile forms a "bell". ... When the data is compiled into a bell-shaped curve, it transforms itself into a 32123 profile (D - profile).

Since you can make the biggest profit in step 1, you must be especially careful to examine the later stages of steps 3 and 4, which, sooner or later, will lead to step 1.
In trading, it will be wise to look for holes or voids in the profile that need to be filled. ... You have the option of trading at the top or bottom of the equilibrium until the voids are filled. ... the market usually develops one edge of the range into a p- or b-shaped pattern before forming a complete bell-shaped curve. ... This means that you can buy and sell the lows and tops before the profile fully develops.

... you can clearly see how the completed bell-shaped curve has formed at the top/bottom edge of the range and step 4 is ready to move to a new step 1. But in which direction...? At this point, upon completion of the bell-shaped curve, your strategy must change. Market activity steps indicate when to use a narrow range trading strategy and when to use a trend following strategy.

When trading market activity steps, you should not lose sight of the larger picture, which begins to affect market direction immediately after the completion of the cycle of market activity on the smaller TF. The bigger picture is the background or context in which the shorter term cycle unfolds.

What the market doesn't do, sometimes, is more important than what it is expected to do - meaning the opposite happens. For example, the failure of a p -shaped curve (or several p - models) to develop into a D - model is a strong bullish sign, and vice versa.

The area of high density is a key - if the market starts to move below it, it gives a signal to sell, and if - above it, it gives a signal to buy.

The science of using volume (symbol density), is the science of reading the market language. To rely solely on the price in trading is like relying solely on the notes when writing music. The meaning that price carries is quite confusing, but in reality, price is just a messenger, and it only matters in the context of market moves, price controllability and uncontrollability, and density. Once traders begin to rely more on internal market dynamics and grasp the meaning of trading density, they move closer to an objective assessment of trading in which control is less personalised but more a product of an accurate understanding of the language of the market.