From Thesis to Trade I
Integrating Tools
This series will serve to integrate trading tools and methodologies in a faster-paced visual format. My trading is fundamentally grounded in the market profile, and that is where we will start each of these lessons, which will be like slides building on each other.
Image 1. Pepe Silvia from It’s Always Sunny
In this series we will open with a review of the week using the market profile. Now that you have a fundamental base on the theory from the past lessons, we can apply it more pragmatically now. This zoomed-out view allows us to develop a narrative and to better see themes playing out in the market, which we use to build a trading thesis.
Leveraging the Market Profile
Recall the study guide from CBOT. No sign-up necessary.
Let’s move on to the last week in context. By this point, I will assume you are familiar with terms like value area low and high, value, point of control - and differences like the volume point of control. If not, please mention this in the comments and I can create a guide in the near future.
Image 2. ES profiles. Areas in review
Let’s now use the profile to review each day, beginning with Monday. In tomorrow’s lesson, we will look at these same areas using the footprint, then concluding with a candle chart for razor-sharp entries and manageable stops.
Monday, September 29
Image 3. ES profiles
Always ‘look left’. The profile will then frame the action for the day in question, and help you more correctly guess the action type. Seriously.
So what’s the context here? Looking left, we immediately note singles above (automatically set as solid white lines on my chart), as well as a prior selling tail. These two in combination offer a good chance of more time anticipated to build structure, as well as likely resistance in case momentum slows early on.
That was a great area to sell, targeting singles below (!), and a prior day VAL, which ended up with a selling tail. The NPOC would have been next.
Those clues alone helped us capture nearly the entire day’s trade. Let’s make some real money in the following examples, offering some of the cleanest trading I’ve seen in months.