Market Ptrofile - To sharpen your trades.

"Viren" has been contributing some amazing and precise decider points for trading called VAH, VAL and when combined with other studies, the clarity that emerges cut down on errors of judgements. I reproduce here his Introduction into Market profile. It is very simple and it is worth your while to spend time on it and add to your trading tools.
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Hello All,

It's nice to see the enthusiasm you have shown in understanding a new concept, which I must say may be a bit different from what you would have heard about the markets so far.

I have already sent out some pdf's to you, but I will again try to summarize in this mail the concept of Market profile and give you the info on operating the software required for this.

The Market Profile is a comprehensive way of organizing the trading day, taking into account price, volume, and time. Financial markets exist to facilitate an exchange between a buyer and
seller. But the markets, with their innumerable participants, seek to facilitate trade at the fairest price.

This fair price is what we call "value"

Markets establish an accepted value each and every trading day based on innumerable inputs: news, earnings reports, economiindicators, geopolitical events, politics, budgets and so on. As
these inputs change day after day, so too does the value of the market.The Market Profile theory holds that each trading day is connected to the next when it comes to determining value; therefore, we can learn a lot about the market today, in real time, by observing where it established value yesterday. This value comes in the form of a range of prices, from a low to high
in price. Today’s value is defined by where the market traded 70% of the volume yesterday. Specifically we define today’s value at the prices between which 70% of yesterday’s volume traded.The 70 % is a global constant and I have not known anybody to tinker with it.

What we’re left with is a low(VAL) and high price(VAH).
1. If the market is trading in between these prices, it’s accepting yesterday’s value and we can conclude that not much has changed between yesterday and today.
2. If it’s breaking out, then value is being established higher;
3. If it’s breaking down, then value is being established lower.
You might simply think of prices that define today’s value area as support and resistance.

If value moves higher, Buyers are coming in, so we advise buy above VAH. If value moves lower, Sellers are coming in, so we advise sell below VAL.


To track these changes daily, you need to download Quotetracker.

1. After you run the program, open it and save the proper NSE symbols in your portfolio.( All details on the website please read or send out an email to them for clarifications).
2. Next in data sources, choose " NSE Real Time".
3. Now when your symbols appear, open the intraday settings by a right click on the symbol.
4. Next, right click the chart and in "select indicators" choose 'Volume By price' in the upper indicator and 'Volume' in the Lower Indicator.
5. Give any colour of your choice, but the highlighted range is your value area, make sure it stands out.
Now you are ready to go... For Trouble shooting, download this QT Guide.

You will get 2 days of data for your unregistered version, which is enough to get you going.

Go through all your stocks now, and find which one traded above value, in value and below value.

Happy charting!!

Viren.
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Thank you, Viren.