"Markets in profile" is the next step after reading "Mind over Markets". This will make the link between theory and practice.
Why is "Markets in profile" important to me?
This book is important to me because it will help understanding in a deeper level the auction process and how the different players interact with each other.
"If you can correctly identify which timeframe is in control of market activity, and you have a good understanding of how the individual timeframes generally behave, then you are in a stronger position to trade, invest, and effectively control risk." - James Dalton - Markets in Profile.
If you think about, the edge on most strategies out there rely on the bigger timeframe setup in conjunction with a shorter timeframe entry. If you can understand which player is controlling the auction and where control is likely to change, you can take only the best entries.
Are you trading with the long-term traders or the day-traders? When you open a position next time, think about this question. This book will help you with the answer. Once I was able to properly answer it, I was able to reduce the number of trades and increase the profit/loss ratio (as well as the risk). To me, that meant less commission and more reward on my trades.
What you should expect from it
After taking the reader to a review of the basic concepts of the Market Profile, the author will move to the core concepts of the book. It is strongly recommended that you read "Mind over Markets" first, so you can take more advantage of reading this one. Reading it alone will make it harder to follow up on the trading examples. It will link the theory from the first book, with the practice on a top/down approach to understanding the market and it´s players.
Keep in mind: Market profile is not a trading strategy, but a framework for reading the market generated information and the auction process. Do not expect this to be a "Entry here, exit there" type of book.
It will explain how the different timeframes control the market auction with practical examples. Each chapter in the book is dedicated to a specific timeframe:
- Long-term - the investor
- Intermediate - the position trader
- Short-term - the swing trader
- Day Trading - the day trader (and every one else)
No matter what is your timeframe of choice, you can benefit from it. One of the insights of the book: everybody is a daytrader when it comes to opening a position. No matter what is your favorite trading timeframe.
Take the time to understand and study all the examples provided in the book.Every example is well explained on how the principles of the book apply. It is very helpful and illustrative.
Most valuables concepts to me
- Interaction between different timeframes
- Identify when there is a change of control
- Longer timeframe vs shorter timeframe
- Control risk based on the location of the overall profile
- Top Down Approach
- Read the market - this concept deserves more information cause I used it every day on my trading process. Before the market opens, I go over the top/down approach on the SPY to understand what is the market doing and possible areas where control is likely to change. It also helps to identify what to expect from the market and if bulls or bears are in control.
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Markets in Profile: Profiting from the Auction Process Hardcover – February 16, 2007
by James F. Dalton (Author), Robert B. Dalton (Author), Eric T. Jones (Author)
Hardcover: 224 pages
Publisher: Wiley; 1 edition (February 16, 2007)