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Download PDF for this presentation here…..
- Learn why Crude Oil is different from indices and equities.
- How to use Market Profile Charts to trade Crude.
- Become adept at creating Swing Trading as well as Intraday Opportunities using Market Profile Charts.
How Crude is Different??
- Trading Time – Trades from 10:00 am to 12:00 am (14 hours)
- Internationally Traded – Traded on international exchanges such as Nymex, etc
- Geopolitical Factors – Main source of Crude Oil is from Geo-politically Sensitive areas.
- Its a Commodity – Usually have clear Supply Demand Dynamics when compared to Indexes and Equities.
How This Affects The Market Profile Graphic??
- Extended Profiles – The 30 minute profile gives us 28 bars for Crude Oil as against 13 for Nifty.
- Due to that gives us multiple Intraday Auction Rotations during the day.
- Hence auctions are generally slow moving with rapid bursts of price movements every now and then.
- The rapid bursts are generally clustered around different markets opening and closing timings.
- eg: Nifty moves around Europe Open, etc.
Auction Market Theory (AMT) and Crude Oil
- Both Orderly and Erratic
- International Trading in Crude Oil makes it difficult to keep tab of development in real time.
- It is widely traded and is life for emerging markets.
- Much bigger players are involved as compared to domestic markets.
- Since Crude Oil is traded practically 24 Hours a Day, we have sharp overnight Gaps due to moves in International Markets.
- AMT Principles Remain The Same
- Supply Demand Dynamics are same for any instrument which has sufficient trading volumes.
- These Cycles keep repeating,
- ACC – MU – DIST – MD
- ACC – MU – ReACC – MU
- DIST – MD – ACC – MU
- DIST – MD – ReDIST – MD
Lets Get To Some Market Profile Charts For Crude Oil
Daily Candlestick Chart – The LT Context
This chart provides what are the IT and LT players are doing. The same AMT principles that are evident on Market Profile Charts are applicable to these Daily Candlestick Charts.
Daily Candlestick Chart Example
Important principles observed in this chart are Accumulation vs Distribution, Acceptance vs Rejection, Absorption vs Exhaustion.
Using these important Principles of AMT we can analyse any markets which have sufficient trading volumes.
After the sellers defended the higher refs successfully prices auctioned down, but bears gradually lost strength as they approached the bracket lows.
The principle of Effort vs Result was evident here.
After seeing the accumulation by buyers at lower levels once again the typical bracketing behavior continued and we just went sideways for 4 days. Any BO/BD from such tight consolidations wont give a directional move, unless we test the balance again first.
This was evident from the subsequent market action.
After the poor trade facilitation to the downside and the big ‘q’ formation, prices rallied. But the prices formed a big balance over several days and hence gave rise to a formation of potential ‘q’ or ‘d’ pattern.
spotting the ‘q’ and ‘d’ pattern is easy, the skill lies in finding out when the stem of the pattern is ending. Thankfully Market Profile Charts give us a way of doing that.
Intraday Market Profile Patterns
Intraday Trading is a breeze when you are using Market Profile to trade any instrument. It does take a fair amount of practice, but once you get the hang of it, nailing profitable trades becomes second nature.
Here are a few examples.
- So as we saw on charts above, we can definitely use Market Profile Charts to trade Crude Oil, and for that matter any commodity like Gold, Silver. Click here to see How to Trade Gold using Market Profile and Order Flow?
- They help us spot opportunities with excellent risk/reward characteristics.
- We can better monitor market development and avoid the price traps which Smart Money creates for Amateurs.
- Most of all it helps us to be in sync with the smart money and trade alongside them rather than against them, as we all know trading against the Smart Money is a lost cause as well as capital.
Watch Video For This Presentation Here
Market Profile Charts prepared using Bell Market Profile. (Which I personally use.)
Visit my Mentor Page on BellTPO.
Charting Platform is Ninja Trader 7 (Free).
You can post your questions and comments in the comments window below.