There is one statistically verified edge trading “Market Profile”. That edge is derived from identifying a Balance Area and taking one of two trade types, either a Responsive trade or an Initiative trade.
Auction market principles are robust; they affect the market in all degrees of time. This fact allows the trader to use the same concept to trade any degree of market development he wishes. The concepts are just as valid intraday on a one-minute or five-minute chart as they are in a swing trade scenario involving multiple days or weeks.
Responsive Trades fade the range extremes:
Initiative Trades go with extension outside the range extremes:
In my next post, I will provide you with a Glossary of terms you’ll need to continue advancing with Market Profile techniques.
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