Markets in Profile

Market Profile is not a typical indicator. It does not provide buy/sell recommendations but acts more like a decision-support tool. It organizes the data so that you can understand who is in control of the market, what is perceived as fair value, and the potential direction.

Markets in Profile shows the dynamics of markets through the organization of price, time and volume, and how to synthesize this information with your own intuition. Each day, the market will develop a range for the day and a value area which reflects the acceptance level of a certain price range or balance area. The point of control represents the price where most of the trading activity took place.

Market Profile is based on the normal distribution curve, if you rotate the normal distribution curve so that price is along the vertical axis and time on the horizontal axis, you have the structure of Market Profile. Monitoring price distribution over time gives insight into what levels are considered fair and unfair. You may take advantage of this information and identify good opportunities.

Market Profile can be used to identify the "asymmetric opportunities". These are market set-ups based on anomalies where not only do the odds more favor a move in one particular direction (balanced targets) but the situation is such that a move in that direction is likely to be substantially larger than were the market to go the other way.

Markets in Profile shows it clear that the profile is not some magical technical system. People are generally not prepared to take the time and effort to learn what is essentially an art. This book combines potent theory with real-world examples of how the profile makes it possible to take advantage of these "asymmetric opportunities".

Steidlmayer on Markets lays the foundation for understanding and implementing the Market Profile methodology by providing background information based on Steidlmayer's experiences as a commodities trader, and showing how he developed his ideas and learned to apply them successfully within the markets.

CBOT Market Profile Trading Handbook is the only technical book you really need to read. Part One is essential to know very well, the rest is a little outdated but still worth a glance.