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Listen to “What is Market Profile in Trading?” on Spreaker.

Hi, guys. Andrea Unger here. And I want to briefly discuss today something that is no longer that much in discussion, and that is the market profile. The market profile was very popular in early 2000, 2002-3, till 2007-8—things like that, and then slowly became less and less interesting for most of the traders. And today, there is very little information about it. So, is it valid or not? The market profile was profiling the volume distribution during the day or during the period of time, you were arriving for different levels of price so that we could find at what level of price there were the most trades and so on. And we could graph this distribution of the volumes this way or, obviously, other sources of the outcome, and use that with a certain strategy or approach. I think it is a valid approach, but it’s mostly a discretionary approach—or at least, there is a method, obviously.

But to use it, to apply it, you need discretion. And it’s hardly applicable in an automated way. In fact, there is a very similar method with statistics of markets which is more or less the same concept. And there’s a forum, Traders Laboratory, which I suggest you to have a look at because it’s very, very good content in there. And a guy there was posting many, many info and tutorial about the statistical trading of markets and so on. And once I discovered he was a programmer. So, I sent him in 2007 a private message asking, “Why you, a programmer, don’t program an automated way to approach this?” And he came back to me saying that actually there were many smaller issues that were too hard to program in a unique and definite way. Obviously, things that me, not being a programmer,

I could not understand because of the small issues, I’m not a programmer, and they were too hard a concept for me to understand and to evaluate. But he, a professional programmer, thought that even though he was an expert on this, he was not able to merge his two expertise and getting an automated solution to this approach. That said, I did not dedicate the necessary time to study this in depth. I read the Steidlmayer on Markets book which is a very good reference to learn about this, and as I was focusing on automated trading and building automated trading strategies, obviously, I could not spend more time on other approaches. But for those of you who are interested, even though today there is not much about that yet any longer, I believe it’s an interesting topic. So, if you have time and you are interested in it, have a look at it. Maybe in the future, we come back on that; also here in this video channel. Stay tuned, guys.

Ciao, from Andrea Unger.

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Known as the only 4-Time Trading World Champion (2008, 2009, 2010, and 2012), Andrea Unger is a full-time professional trader since 2001 and honorary member of SIAT (Italian Society of Technical Analysis, a branch of IFTA). Appreciated author, he is often invited as a speaker all around the world.