Trading day review for ES.
ES was relatively quiet today. We had Overlapping to Higher value with small volume right inside the 19 day balance.
On hindsight we had two good trades today and I must admit that I saw only one as the market was developing today. But It is nice to show these trades backed with Market Profile structure evidence. This is what we call Ruling reason and it is extremely difficult to grasp when first face with it.
Today I will be talking about value versus price because our first trading rule that we will apply is based on the following statement : WE TRADE VALUE NOT PRICE. What do I mean with that. OK let's talk about what value is.
The art of trading is based on the knowledge that price is only one of the three components of market activity with the other two being Time and Volume. The trader that understands market activity on the basis that time spent at price = Volume = Value can identify where to do business on the chart, trading at optimum trade locations relative to value not price.
Market value is where approximately 70% of a session's price activity is conducted. Market Map easily displays the value area region with a vertical bar to the left of the daily profiles.
I decided to start a blog on how to trade the crude oil future market using my products as a trading tool. I will try to post as many articles as I can.
I have also noticed that Wednesday trading is quite difficult because this is the day that the oil inventory is released. For that reason Wednesday blogs will be related to matters other than the day trading opportunities.
In the first few blogs I would like to set out our trading rules that we will apply with Market Map and Balance & Excess indicators but for today let's talk about these indicators.
Market Map is a Market profile software with lots of features. I strongly recommend Jim Dalton teaching to know more about Market Profile.
Market Map will be used to spot trading setup opportunities. I will introduce features as needed. Market Map can display market prices under 6 different views and we will use all of them from time to time.
The most important concept that I would like to put ahead is the following : WE WILL TRADE VALUE NOT PRICES. I know it is difficult for most traders but once internalized this is the key to trading success.
Balance & Excess indicator displays congestion periods as well as buying and selling tails. As Jim Dalton explains how market auctions work the balance periods give us an excellent indication about the wealth of the current auction. A break of a congestion area or a buying or selling tail is the start of a new auction.
We will use Balance & Excess indicator to figure out the daily auction so that we have a better view of the market structure.
We will start with the longer daily balance and excess analysis and combine this knowledge with the shorter daily profile analysis with Market Map.
See you next time ...