The “New” Market Profile

by | Jun 10, 2013 | Member Posts | 0 comments

I ran across a thread on a CQG forum regarding “Market Profile” and Pete Steidlmayer, and specifically Steidlmayer’s most recent public discussions regarding “old” Market Profile. There is nothing new, here. As most of you know and I have shown various times, Steidlmayer has been saying this for years now.

Also, my work (and yours by extension) is basically doing what Steidlmayer is now promoting. This is can all be traced back to the work of Don Jones in the early 1990’s, on which my work is based.

I may expound on this later, but for now below are copied the original thread comments as well as my comments.

Market Profile charts at CQG are probably the best in the business, but I see that Pete Steidlmayer concedes Market Profile has significantly evolved from original created at CBOT Pits back in 1960’s, actually became less effective, and he has something new – Volume Strips. This presentation by Steidlmayer was held recently at CME – do CQG charts reflect this innovation or not?

http://www.cmegroup.com/education/steidlmayer-volume-strips-video.html

Furthermore, Steidlmayer says that classic Market Profile has now become totally subjective:http://www.cmegroup.com/education/files/understanding-todays-market-steidlmayer-2012-6-26.pdf

My response:

“Market Profile” was ALWAYS subjective. It was never tradable with a defined edge as originally posited by Steidlmayer. Don Jones proved this over twenty years ago and his insights that were/are backed by rigorous research are a solid basis for how to use the profile graph. Steidlmayer has been promoting the same theme now since at least the late 1990’s, and the 2002 (?) edition of Steidlmayer on Markets is a re-write of his earlier work by the same title, but also introduces the concepts in his software, “CapFlow”. CapFlow introduces yet more rather abstruse nomenclature (a hallmark of “Market Profile”) and takes a rather simple and elegant concept and almost completely obfuscates it by how it is described. It is basically the concept of the migration of value and to trade in the direction of the larger degree migration of value until the direction of the migration changes. The “value” concept is explained clearly in Don Jones’ work.

“Volume Strips” were called “Laser Lines” in Steidlmayer’s book that was referenced above. I coined the term “High Volume Node” years ago and that is basically what “Volume Strips” are – areas of relatively high volume on the horizontal scale. It is the migration of these “High Volume Nodes” that determine the trend of a market in any time frame. Because the auction process is in effect in all degrees of time all the time, one is able to see the migration of value in the smaller degrees of time prior to the “break” of a larger degree auction that is balanced into a trend. It’s an elegant concept that is fairly simple. However, simple explanations are not always easy to “brand”.
Tom Alexander

 

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