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Profile on Forex indicator for MT4
It is known that the traders of financial markets use a variety of approaches to a difficult business prediction markets. The ideology of technical and candlestick analyses looking for specific models to explain current trends and signals of reversals. They are convinced that the chart itself carries all necessary information for the successful prediction of price movement.
Fans fundamental approach monitor many economic indicators, I believe that only this information is useful for understanding the true intentions of key market participants.
Created a huge number of indicators, found many patterns and other tools, with varying degrees of success used by most traders, however, these methods are not without drawbacks, and not hidden. Indicators can change their already ambiguous indicators, price sometimes does not notice the fundamental data, candlestick patterns can give false signals.
In an attempt to find reliable and objective market indicator many traders opt for market profile, which we now try to understand more.
The essence of market profile
This type of analysis was developed a few decades ago, with traders at the Chicago Mercantile exchange. Based on the assurances of practitioners, the methodology is quite versatile and allows to predict the price movements of the foreign exchange market today. It is based on the concept of the normal distribution from probability theory.
The fact that 68% of the observed phenomena are in the range at a deviation of plus or minus one from a certain average value, which was recorded in control. In the range of plus or minus two standard deviations for these values fall into the 95% and 99% with a deviation of plus or minus 3 values. It is known that the normal distribution law is applicable for all data types and the sequence of market prices is no exception.
Now our focus is on the price range, which is formed with a deviation of plus or minus one value. This range is called the zone values. In addition, identify and control the mean value of the price for benchmark and other price drop is possible not to pay attention.
The market profile gives us an understanding of current trends, gives an indication of the order of the largest market participants. It is necessary to have information on the volume of trade. Accordingly, this analysis method shows the best results on the futures market, where this information is, in contrast to the Forex public.
However, the movement of currency pairs in Forex, futures and the stock market is almost identical, and therefore, the market profile will benefit in currency trading on the spot market. In cases when the price leaves the zone and is accompanied by a drop in volumes, traders conclude that leading market participants are not interested in this movement and the price will likely return to the range. If on the contrary, we observed growth, then it signals the continuation of the birth of the trend.
The indicator for the construction market profile
To display the market profile there are a considerable number of indicators, but their differences are not fundamental, because they all work on the same algorithm. Traditionally, analysis using this indicator performed on the 30 minute time frame (TF=M30). As an indicator of the profile on the Forex market take riv_ay-TPOChart:
After added the indicator chart, we can see highlighted area values. The market profile indicator is constructed on the basis of the first two candles of each trading session. Each letter correspond to time intervals of 30 minutes. If you imagine the curve on this letter, then we will have a curve of normal distribution.
The indicator is able to find the mark where the price was the most amount of time. It will automatically set the line at this level is called the point of control. The algorithm will set only one line, while on the chart, there could easily be more. In such cases, talking about a bell curve with the "humps".
A wide range of settings this indicator allows you to adjust the following settings:
♦ LookBack. Here you can specify the number of days, based on which the algorithm will build the market profile.
♦ ShiftBrokerofGMT. It is possible to note the shift terminal time values relative to UTC.
♦ ShowPriceProfile. Visualization of the price profile (if true, - indicates, if false, not shown).
♦ ShowFromStartPeriod. Here we can specify the number of candles, which will build a profile (it is recommended to leave this setting at default).
♦ ModeLetter and ModePseudoLetter. We can choose how the indicator will show the profile of the market (letters or squares).
♦ ShowColorBySession. If it is disabled, will not see a magnetic sensor trading sessions.
♦ ShowProfileInfo. If you activate this option, you will see the border of the profile and its length.
♦ ShowPoc_AsLineSupRes. Gives the possibility of constructing the line based on the reference price.
♦ ShowPocInfo. The essence of this option is to display data based on control points.
♦ ShowCurrentTVPO. Function gives the ability to visualize data by volumes at their current levels.
♦ ShowVAHL_Lines. Option to display lines at the limits of the zone values.
♦ UseVaHL_AsLineSupRes. Holds along these lines, the levels of support and resistance.
♦ ShowOHLCbar. If you activate this option, the left will see a daily candle of the previous day.
♦ ShowIB/ShowDIB. Shows the initial balance or does it work on 2.
There are a large number of settings to change colors, which allow you to provide proof of the algorithm in a convenient form on a price chart.
How to use the indicator market profile
The testimony of this tool scare newbies who see a lot of unintelligible characters and symbols. No wonder the indicator is distributed together with the instruction.
First and foremost, a trader should pay attention to the number of letters in the rows. The more, the longer time the price was on this value. If we see the line is not more than a couple of letters, then we conclude that the price preodoleli this level fairly quickly, without facing considerable resistance.
They say that such phenomena are peculiar to the restoration of previous trend. However, in most cases, the price comes back, like when you jump, that speaks about lack of interest of major market participants in the pulse movements.
The market profile gives an indication of how strong the current situation of bullish and bearish sentiment. If there is an explicit trend we will not see sections of the gray areas. In addition, the profile is quite narrow, because there is no market forces that can reverse or at least flatten the trend. In the case of the flat we will see a wide profile and the distribution curve, the shape is very similar with the ideal.
I recommend to watch these two reviews:
• The Gann Fan
• If you trade divergence
Signals indicator market profile
Consider the conditions under which is formed a trading signal when using riv_ay-TPOChart.
• Find the area VAH and VAL of the previous trading session. To take into account should be the opening price of the current day. If it is below the level of the Val we sell, if above then buy.
• If the graph is not pronounced downward trend, the transaction to sell the rebound from the level VAH.
• If there is a pronounced trend of transaction in the direction of trends in the release of ROS or VAL.
• If, during the two sessions of zone values are not significant differences, we note a weak trend. Agreements entered into by the third day in cases when the price is between the values of ROS and VAL the first day. Open position from VAH.
The market profile is successfully used with other tools, often with moving average and Fibonacci levels.
One of the main advantages of this tool is called the certainty of his testimony. The trader does not have to think of something and think out of himself, give testimony of the clear market picture of each day which a trader can make logical conclusions. The disadvantage referred to the fact that a tool itself is not a panacea for determining the market stages. It should be combined with other indicators familiar to the trader.
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| Category: Forex | Added by: (30.10.2017)
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| Views: 275
| Rating: 0.0/0 |
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