KETS, GREATEROPPORTUNITIES
All this time, I was using the same minimum trend charting format, but the markets were getting broader andbroader, and there was a lot more opportunity. I got tothe point where I couldn't keep my minimum trend notations on the piece of paper I was carrying, so I begandoing it mentally. I would visualize where the ränge of 70to 75 percent of the trading volume was taking place, andthen I would mentally plot the prices above and below thisarea.My strategy was mainly a follow-through strategy. If themarket moved above the first Standard deviation, I wouldgo with it initially and see whether volume attached itselfto it. If the market didn't attach volume to it, I would startworking out the position. But it was very rare that I gotin front of the market in a responsive way äs I had in thesixties, so trading was fairly easy. I didn't have to keeptrack of a lot of things; I was mainly following the firstStandard deviation of volume, then going with the marketout of that. The markets were so dynamic in those days•46»
Changing Marketsthat even a small move was more than enough of a rängefrom which to operate.Another change that occurred in the 1970s was a changein the speed of decisions required by the trader. Generallyspeaking, a responsive trade is a trade for tomorrow, andyou have almost all day to make the trade, given a fairprice/value relationship. However, initiating trades call foran immediate response, and the tendency is for the tradeto get away from you before you can act. It's important tonote that the ending of one activity is the beginning of anew one; a good trader must perceive this.It's important to sense the undercurrent of change andthe direction in which it's moving so that you can catch itsdevelopment. As I've been describing, the markets changedslowly in 1969 and 1970, and faster in 1973. I looked for achange in the late seventies, and it occurred; äs this iswritten (late 1988), I am looking for another change. Infact, I'm constantly looking for the real change that maybe masked by the old activity. Being prepared for changeis part of the program of the successful trader.
THE DISTANT MONTHS DECLINE IN IMPORTANCE
The last big change took place in 1981. It affected the typeof Information I had been using in my trading decisions.Changes in the tax laws eliminated the six-month holdingperiod for all commodity income. Consequently, all theactivity that I had been tracking on the distant months wasno longer there; it was only a nominal market.Every marketplace must give you a price/value relationship. Before this change, I had used the most distant months•47«
Steidlmayer on Markets
Changing Markets
to establish my price/value relationship. If I feit that theOverall price level of the distant months was too low or toohigh, that gave me some bearing in the market. (I still usethe distant months in this way, but it's much more difficultbecause the volume of activity is usually so low. However,when there is economic reason and heavy activity in thedistant months, äs during 1987 and 1988, I am able to geta very solid reading.)So in 1981 I had to find a new way to determine whatthe beyond-the-day time frame trader was doing. He wasobviously still trading; he just had to be trading more ofthe nearby-month contracts. The market was showing moreof a day trade influence; it had become more of a spotmonth market. The futures markets became still more volatile because the spot month wasn't cushioned by activityin the distant months. All the activity would rush in, andit would be all buying or all selling. I found that we werehaving 15- and 20-cent ranges even on what we consideredlight activity. This made it difficult to read the market.Prior to 1981, the spreaders were probably the mostsuccessful group trading äs a unit at the Board of Trade.The long-term traders could afford to pay a premium toget in and get out, and the spreaders capitalized on thatpremium. The spreaders would seil to them when theywanted to buy and buy from them when they wanted toseil, using the front month äs the pivot to anchor the trades.The spreaders were very, very successful. So with theonslaught of the new 1981 tax law and the lack of tradingin the back months, the spreaders really had no more business. Previously, by observing their activity, I could sensewhat the beyond-the-day traders were doing. Now I hadto find another way of picking up this information.
A NEW KEY: THE FIRST HOUR OF TRADINGI made a decision, based on experience, that a day timeframe trader would usually trade during the first hour oftrading; or, at least, that enough day traders would tradeduring this period to give a good indication of what a fairfirst hour's price would be. Then I knew that the othertime frame traders would all act in concert — either all buying or all selling—so the movement of price beyond thefirst hour could be attributed to their activity.I had observed for several months that the buy brokersor seil brokers would be consistently active in small butconsistent quantities äs the market was developing. So ifthe market exceeded the first hour's ränge, I would attribute this change in the fair price to an adjustment to thebeyond-the-day traders' activity. The magnitude of this adjustment would teil me the degree of their activity andhow much further the market had to adjust in order to finda new fair price.When the market is very active in the early part of theday, you know what to expect. But if you don't have a lotof activity, there are several possibilities äs to what the daywill be like. By analyzing the first hour of trading, I wasable to break down everyday market activity into four typesof days: non-trend days, trend days (the big days I usuallylost money on), normal days (with big opening activity)and normal Variation days (which extended the ränge because of buying and selling). I found that about 99 percentof all days fit into one of these categories.If I was able to figure out what type of day it was goingto be, then the trading was easier because I could implement a trading program geared to that type of day. I raninto difficulty if I tried, for example, to trade a normal day
like a trend day. The idea is that in the present tense you48
lSteidlmayer on Markets
Changing Markets
should be able to determine which type of day you aredealing with. (Later in this book, I'll develop these concepts more fully.)Actually, my deciding to categorize the days by lookingat the first hour of trading was an arbitrary choice. I wastrying to isolate the day time frame traders, and the firsthour of the day is a time when the market settles out. Bythen, everybody who wants to trade has done so or hasexpressed an interest in trading. And I was concerned onlywith how the people who didn't have to trade —like theranch employees who didn't have to buy a used car orgun—would operate.Once I had that reading, I would operate in the pit byeither buying breaks or selling rallies within the developing 70 percent of activity. When we got to the low ofthe 70 percent of activity and we had nothing but buyingby the broker groups, then I would be a buyer down towardsthe end, and hold even äs it moved toward the top. Ifthere was no activity, I could buy because it wasn't goinganyplace anyway, but I would seil äs it moved toward thetop because there was no concerted buying activity thatthe market needed to adjust for.To move directionally, the market needs concerted activity, and I learned to judge how much there was. I couldkeep track of all markets because I monitored the rängefor the first hour of trading to see whether it extendeditself in one direction or the other. Then I would comparethe volume in the market that day with the volume of theprevious day. If it was higher, the market would be at leastunchanged if it didn't continue; if it was lower, I wouldlook for an unchanged or changed direction.The important thing to note here is that I'm in positionfor two of the three things that can happen in the market:the market can continue, change or stay the same. By
putting "stay the same" on your side of the ledger, youadd a profitable time allocation and increase your chanceof keeping or making money past the 50 percent mark.This is a much better strategy than the usual win-or-loseapproach.
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•51 •
NON-TREND DAYS AND NEW ACTIVITY
There weren't many slow markets in the seventies, butwhenever they did occur, I wondered how T could possiblymake a living in this business. I traded hard, but therewas no possibility to make money; no Orders were comingin, and there was no ränge. There was no way I could forcethe market to make money for me.The day after one of these down sessions, I would getin there and take a position. I would buy, say, 50 beans,and the market would move up. I'd take a cent profit andhave a $500 return —and I was glad to get it. At this pointin time, I was like my father worshipping cash, because Isaw lean times ahead. I took the sure thing every time.But nine times out of ten, it would turn out to be a realbig day, where that 50 lot would be worth $10,000 insteadof $500. After a slow day, you don't see a lot of opportunityin the market, so you're naturally cautious and conservative. Yet this is the wrong time to play it safe.It's analogous to my early experiences with the pit emptying out, which I did not at first recognize äs an opportunity. Principles remain the same but must be applied tonew situations. It took me 15 years to figure this out, instead of the two months it should have taken. But at leastnew discoveries continue to come my way —äs they willfor you.
Steidlmayer on Markets
Changing Markets
What I call non-trend days don't occur very much anymore, but they were fairly common in the seventies andearly eighties. One day, the market wouldn't do anything,and the next day would be a big one. These days generallymarked the end of one trend and the beginning of a newone. Although we rarely get non-trend days any more,except during holidays, they still have the same significance: the market tries to make itself hard to read becauseyou're trying to associate volume with an activity. Whenyou can't figure out what the market is trying to do, it'svery hard to apply the volume to an unknown market activity.Another thing that helped me develop äs a trader waswatching young traders who didn't know what they weredoing but who still made money consistently by adaptingto the environment. Such a trader's style would appear tobe one that I wouldn't even consider adapting; on the surface, it didn't appear possible that this style could work.Yet it did. So my challenge was to look beneath the styleto the underlying principle. This kind of learning exercisehas not only helped me find some good new ideas abouttrading, but also helped me to stay mentally young in myapproach to the markets.I found that observing market activity brought the dayinto focus and allowed me to put two or three days togetherand work with larger sample sizes. Basically, I was justballparking all of this information. I was really followingvolume, so whenever an up day had more volume thanthe previous day, or feit that way, I was sure that themarket was going to be unchanged or higher. The keypoint is that most days are related to the previous days.The market gives you a price/value relationship that is slowto change. Most traders are trading for the unrelated days,
which occur less than 10 percent of the time, while 90percent of days are related to the preceding day.People would do a lot better in their day trading, swingtrading or long-term trading if they would realize that themarket takes time to change. The idea that most days arerelated to the previous day is a good illustration of that.
•52
DYNAMISM OF THE MARKETS
One consistent trend since the 1960s is that markets arebecoming more and more volatile. With the trend towardbigger daily ranges continuing, the markets are becomingeven more volatile because they're moving more to thenearby or spot month. As we move toward 24-hour trading,we're going to have still bigger ranges and more volatilitydue to increased spot month trading. The ranges in thecash markets already exceed the ranges in the futures markets on a daily basis. And äs the influence of long-termtraders is concentrating in the spot month, their numbersare also shrinking in the more distant months — therebyaffecting the stability of market activity.Times have changed, markets have changed. People wholook back and say, "Oh, this is like the '61 market," or "It'sthe '78 market all over again," are going to have difficultybecause the conditions surrounding the markets havechanged. Markets never really repeat themselves. Peoplewho expend their energy on researching past markets areremiss because they're not taking themselves into the present through a good, solid analysis. My ability to adjust mytrading strategy to the type of market I'm working with inthe here and now has been a key to my success. Working53
Steidlmayer on Marketswith an evolving market allows one to make changes;studying past markets doesn't. Continual adjustment is atthe heart of being a good trader.We are all intertwined with markets in our everydaylives, although we may not always realize it or understandthe nature of the markets themselves. Until recently, markets have been a mystery to most people; they were setup to be used by experts, and only experts could understand the data the markets produced. In the informationage we are now entering, more and more people are learning to deal with the key pieces of information that marketsfocus on. But it takes time, background, memory —andmistakes —to develop the ability to do this.Traders who study my market principles sometimes runinto difficulties because they expect too much, too soon.Learning to understand the markets is a long process; thereare no simple answers to many of the questions marketsraise. What you need is a flexible but disciplined approachto the principles of the market that will allow you to gainthe information you need to reach your trading goals.
In the early 1980s, the Chicago Board of Trade sparked aninformation revolution by making available information thathad never before been disseminated by the marketplace.The effect of this revolution was to demystify the marketsby allowing people on the outside to more easily determinewhat everyday traders were doing.
OPENING UP THE MARKET
When I was elected a director of the Board of Trade in1981, I was given responsibility for market information.From my base at the statistical department, I feit that bybringing a lot more information out to the public we couldchange the closed image of the industry into a more openone.At that time, Les Rosenthal, the chairman of the exchange, was a strong supporter of opening up the industry.In the early stages, our requests for information were prettyrudimentary. For example, at first we just wanted information on cleared trades from the clearinghouse. No oneeise had ever had this data. When our request came toChairman Rosenthal's attention, he backed us. He understood that the Board of Trade would benefit from opening54
55
'i. JSi;.'''
Steidlmayer on Markets
The Information Revolution
iip. Without Mr. Rosenthal's strong support, the committee wouldn't have had the Information needed to formalizedata from the markets nor the money required to carry outthis important work.The only real project criterion that Chairman Rosenthalgave me was this: Don't do anything that could härm themarkets of the locals at the Board of Trade. I shared thisconcern. My friends' memberships were worth a lot. Wouldwe come out with something that could ruin them, nowor in the future? I didn't think that could happen, but Iadmit losing some sleep over the possibility.The anxiety about what our work might mean spreadthrough the industry. Rumors were everywhere. One storyhad it that local traders would no longer be needed, andthat they were already being eliminated in Bermuda andat other exchanges. Chicago would be next, some said.Of course, äs it turned out, the information revolutiondidn't härm the markets or the local traders; rather, itbenefited them greatly. But at the time, what we weretrying to do was so new that many people didn't understand it.
of Trade, we wanted our new organization of data to reflectthese differences. The form this new organization took —designed to highlight patterns of price recurrence — wasknown äs Market Profile.®The second part of the revolution was the disseminationof volume data at each price traded. The most importantfactor in any marketplace is volume. Volume defines market activity, and volume never lies. It shows what is trulyhappening, and not just what is happening on the surface.So we knew that it was important to show volume information in äs timely and accurate a fashion äs possible.We worked out a System whereby, although we receivedour CBOT volume data a bit late, it wasn't a bulk linerelease; when 200,000 contracts were traded, we knew thevolume at each time/price occurrence. How fortunate wewere in comparison to the buyers who tried to find outhow many sheep my father had bought or sold, and at whatprice. He would never reveal this data to anyone whowasn't a party to the transaction. Now this kind of vitalinformation was made available by a major exchange, tothe benefit of the entire trading community. The name ofthis new System was the Liquidity Data Bank (LDB).®Additionally, we broke down the volume data into twocategories. The first was the local trader who traded forhis own account; the second was the commercial traderwho traded for the house account. The CBOT feit that ifpeople became aware of how these Professional traders
PRICE RECURRENCE AND VOLUME
The information revolution of the early eighties providedprice data organized in a way that did not bend the structure of the market to fit the discipline. Instead, prices werearranged to show price recurrence, which would help todefine market use. Prior to this time, price informationhad been disseminated, but never in a form that clearlyreflected price differences. People learning to trade weretreating all prices the same, when, in fact, prices in anymarketplace are perceived äs different by different peoplewith different programs and different desires. At the Board•56-
Market Profile® and Liquidity Data Bank® are registered trademarks of theChicago Board of Trade which holds exclusive Copyrights to the Market Profile® and Liquidity Data Bank® graphics. Graphics reproduced herein underthe permission of the Chicago Board of Trade. The views expressed in thispublication are solely those of the author(s) and are not to be construed äs theviews of the Chicago Board of Trade nor is the Chicago Board of Trade in anyway responsible for the contents hereof.
57
Steidlmayer on Markets
The Information Revolution
operated, they would gain a better understanding of thefact that Professionals use the market in a logical way. Eversince the inception of commodity markets, there have beenaccusations in the press of price manipulation on the exchanges. Since CBOT trading data has been openly revealed, no such allegations have been supported by therecord of actual trading in the marketplace. The best defense of futures markets has been to open the books for allto see.
no transaction data to work with. The lack of such datatends to enhance the mystery of the marketplace and drivepeople away from trading.People are familiär with transactional data in everydaymarkets —the housing market, the auto market, the grocery störe —and it is important for them to assimilate thesame type of data with regard to the futures markets. Oncethey understand that, in the most basic ways, all marketsare the same, and that data flow in all markets, they willbe able to assimilate data to use in the commodity marketsjust äs they already do in everyday markets.
Local activity is one of the most reliable volume indicators at the CBOT. It varies between 53 and 57 percentof total volume on any given day, with the first Standarddeviation falling somewhere between 55 and 56 percent.This has been very consistent, illustrating the consistentliquidity provided by local traders.By defining commercial activity and then applying volume to it, we developed a good understanding of the commercials' role in the marketplace. Commercial volume hadnever been revealed before, and everyone anticipated thatthe commercials would balk at the prospect of revealingit; their propensity for secrecy was well known. But wefound that the commercials actually enjoyed having theirvolume äs a group available publicly because it allowedthem to see what the other commercials were doing. Therehaven't been any complaints about our data releases, andno one has been harmed by them. In fact, everyone hasbenefitted because now the public speculator has moreinformation to assemble into a package.Almost everyone questioned our idea of having volumeafter the close. "How can that do you any good?" theyasked. In fact, it does a lot of good once you realize howimportant volume is for trade facilitation. You can appreciate the value of volume information if you've ever triedto trade in what we call a nominal market, where there is• 58 •
THE NATURAL ORGANIZATiON OF THE MARKET REVEALED
As we ran our initial market information programs at theCBOT in 1981, we saw that all the commodities we pluggedinto them revealed a beautiful sense of cosmic order, justäs it said in my 1958 statistics textbook. The classic shapeof the bell curve appeared on our screen, just äs I'd surmised it would (see Figure 5-1). The first Standard deviation—using 70 percent of volume on a normal day—wasright in the price/time relationship. (Price + Time = Value)With our data and our program, we had accomplishedtwo things: we had captured the market's natural organization, and we had assembled volume information withwhich we could describe this activity. The public speculator could now relate to the basic market equation:[Price 4- Time = Value]People could now associate a certain price over a periodof time with value. When the market is overvalued orundervalued, they could look for the conditions that would•59-
Steidlmayer on Markets
The Information Revolution
The exchanges are information centers. The more information they disseminate, the more people will trade andthe more successful the exchanges will be.
FUNDAMENTAL, MECHANICAL AND NATURALINFORMATION
cause the market to move up or down. These changingconditions, in turn, dictate whether people will buy or seil.It was difficult trying to fulfill a new role in the marketplace —that of providing on-time information. The CBOTdeserves a lot of credit for its leadership in initiating theproject. Between 1981 and 1984, we worked long and hardon it and spent a lot of money. Now that work is comingto fruition for the good of the entire industry. I think alesson has emerged that all exchänges onust hteed:
Since we have been discussing the importance of information in the marketplace, let's take a moment to considerthe various sources of information available to a trader andhow they should be used.There are three main types of information that you needto apply in the marketplace: the fundamental, the mechanical or technical and the natural.Fundamental information allows you to build your background and to place price in perspective. These are probably the two most important disciplines for a trader todevelop. They allow you to take advantage of situationsand enable you to sense opportunities. They make it possible for you to trade with confidence äs you learn to "feel"the market.Fundamental information is constantly available: fromthe news, trade Journals, government offices and trade reports. However, it is hard to acquire and use fundamentalinformation in a timely fashion early in your trading careerbecause you can't relate it to anything meaningful yet. Youmust build a bank of experience to which you can relatethe fundamental information, and this takes time.The difficulty in using fundamental information is thatyou must interpret the data; then this interpretation mustbe overlaid on the market itself. This calls for timing.
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MARKET PROFILE (R) COPYRIGHT 1984 CBOT.COPYRIGHT 1987 CCB INC.
Figure 5-1. Profile of the 24-hour cash market in Deutsche Marks, illustrating analmost perfect profile. Note how the high-volume concentration in the center of theprofile corresponds to the price/time value area, and how the market feathers out equallyon the two extremes. (Cash quotes courtesy of Midland Bank.)
Steidlmayer on Markets
The Information Revolution
Sometimes you have the "right" data, only to discover thatthe market is doing something eise.So most fundamental information, derived from outsidethe marketplace, should be used only äs background. Itcan serve äs a direct guide for trading only when price isvery advantageous in relation to the data, or when themarket is acting in accordance with the data. The difficultyof getting information on time and then applying it correctly has made fundamental information very hard to workwith. As a result, most people do not use it.Technical information, on the other hand, comes in anice, neat package. It appears to be so easy to use thatpeople flock to it. Technical data can be easy to see andeasy to apply—but good results aren't so easy to achieve.Again, the problem is that some technical data are goodand some are bad; the trader must make choices, interpretand then time the trade. Most traders make the mistakeof using technical data äs the basis for the decision-makingprocess, when in fact, they should be used mainly for timing an idea.Technical data are usually based on the forward projection of past data. But making accurate forward projectionsis a most difficult task in any profession. Those who havemastered some technical skills can use them fairly well.But since most forms of technical analysis don't distinguishamong trades of difficult calibers, at times they lend themselves to large losing positions, äs stops are filled far awayfrom the intended areas.Market Profile and Liquidity Data Bank are, in effect,technical information; but they are drawn from a differentdata base from other forms of technical information. Herethe data base is evolving on-line, and the data representthe current Situation rather than^ the^past. Market Profileprovides faster informationThan other forms of technical
analysis because it is closer to the currently developingdata base, that is, the market. The LDB volume figuresare past data, but they project continuation or change ratherthan higher or lower prices.Given either a past or an on-line data base, the centralquestion is the correctness of the definitions and parameters. This determines the accuracy and value of the information drawn from any data base: bad parameters yieldbad information, while good parameters yield good information. The definitions and parameters I developed forMarket Profile and LDB came from my experiences intrading the market, and they have proven to be useful.However, markets are dynamic. As they change, it is necessary to Update the technical parameters you use or findnew ones, äs we are now discovering with the advent of24-hour trading.After working with the markets for 25 years, I began toformulate my market theory. In the course of this work, Imade a new discovery that I believe provides a new formof market information — the natural form. The natural flowof information allows you to get even closer to the marketand to really experience it äs it unfolds. Unlike fundamental and technical information, which are subject to individual interpretation and timing, the natural flow is objective:it is either present or not. You can choose to ignore it orplace it into a different time frame, but the natural flow isstill there and does not lend itself to misinterpretation. Inthis sense, I consider it the fastest, purest form of information.This has opened up what I think is the best way of approaching the market—the natural way. This approach doesnot exclude any type of market information that may beavailable, but, in fact, allows you to understand them all alittle better. It serves äs the best base from which to in-
• 62 •
63
( ')Steidlmayer on Markets
corporate data and develop yourself äs a trader. The remaining chapters of this book will deal in much more detailwith the natural flow of information and how to use it inyour trading.
THE SIGNIFICANCE OF MARKET PROFILE AND LDB
Everything that I had leamed about the markets throughmy experiences prior to 1981 was formalized in the CBOTMarket Profile and LDB. Through these two media, I wasable to organize the market, define market activity anddescribe that activity by means of volume. Market Profileand LDB gave us practical, working formats for our technical information — information derived through definitionsand parameters firom a data base, which in this case wasthe evolving market.Instead of trying to read the past and extrapolate to thefuture, äs previous technical Systems had tried to do, theobject of Market Profile and LDB was to understand thepresent äs would a local on the floor. These tools havehelped many traders learn to read the market äs it developsso that their trading skills may grow on the basis of realexperience.
64
Market Profile and Liquidity Data Bank crystallize the basictrading concepts I acquired after 25 years on the floor.These included my understanding of how the marketworked, along with various trading assumptions and disciplines that had proven effective and stood the test oftime.During the 1980s, markets became much more volatilethan they had previously been, with larger price ranges.Under these circumstances, äs you'll see, the typical Market Profile evolved into a conglomerate of distributionsrather than a single distribution. The use of Market Profilemust evolve to fit these changing circumstances.As a trader, along with my knowledge and experience,I always had an intuitive "feel" for the market —an understanding that I could never quite express, yet could use inany developing marketplace. This intuitive insight involvessensing opportunities and catching their development äsit happens. In the trading classes I teach, which are alwaysconducted live äs the day's markets are developing, I'vealways been able to make adjustments or see exceptionsto the parameters and disciplines I set out for the students.This isn't so much confusing to the dass äs amazing; andso I never tried to conceptualize these adjustments or exceptions in any coherent framework.
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Steidlmayer on Markets
Understanding Market Profile
I reflected on this for quite some time and found myselfbeginning to explore my natural, intuitive feelings abouttrading. This led to the developments in the latter half ofthis book, which I believe are far superior in methodologyto the mechanical approach of Market Profile. I don't meanthat Market Profile and LDB aren't valuable; in fact, I stilluse all the data developed for them continually. But I'velearned to incorporate these data into my natural way oftrading.Market Profile and LDB are quite simple in concept,but very complex in detail. By contrast, the natural wayof trading is very simple in detail, yet complex in theory.I think it will be more profitable for you to concentrate onthe complexities of the theory than on any mass of details.So in the chapters that follow, I make a deliberate effortnot to overload you with details. I don't want to overwhelmyou with despair at the size of the hill you are about toclimb.In this section of the book, I will explain what MarketProfile is and the concepts behind it. I will present a fewof the basic definitions and parameters based on it. Later,in the portion of this book dealing with trade preparation,I will use these concepts to guide you through techniquesyou can use in preparing for the day's trading. The focuswill be on the natural way of trading and on how you cangradually incorporate the additional information that comesfrom Market Profile and LDB into your trading practices.
First, both Market Profile and LDB are a form of technical analysis, in that the information derived from themis mechanical in nature; it comes from strict and objectiveparameters and definitions. The difference between ordinary technical analysis and Market Profile is that MarketProfile uses the evolving market äs its data base rather thanpast market history. Second, Market Profile is more of apresent-tense information source. It replicates what a traderstanding in the pit can read because he too has pre-setparameters or concepts that allow him to read market activity äs it develops.A third difference between traditional technical analysisand Market Profile is that traditional technical analysis triedto predict the future based on the past, where äs MarketProfile tries to identify the underlying conditions of thecurrent market's movement for continuation or change. Allof the parameters and definitions I prepared for MarketProfile are sound because they are derived from experience and represent the principal, working parts of the market. However, markets are dynamic and changing, and ästhey change new parameters and definitions will be neededto represent the new areas of the market and the changesthat have occurred.The most noteworthy changes taking place currently arethe^ emergence of the opportunity time frame within the24-hour market and the fact that we are getting many moredistributions during the day than