Using MP With Spot Forex

I've been using Excel to draw up my profiles while I learn. My question is regarding the opening and closing times for spot Forex. Obviously, forex is a 24-hr market, so should I just use the US 9:30-4:00 EST hours to start and close my profiles, or should I also be considering the London and Asian sessions, and chart a 24-hr profile?

Thanks,
Brandon

What is the most liquid time for the forex pair that you trade? Use that period for your market profile.

Thanks for your quick reply. I trade mostly the EUR/USD and USD/JPY. The USD/JPY appears to be quite a bit more liquid in the US session, but the EUR/USD seems to be just as active during the European session as the US. In this case, should I use both sessions to chart the EUR/USD profile?

The answer in this case lies in the results. With Market Profile you're trying to determine a Value Area for a trading period in the future. Traditionally (when Market Profile was first created) Steidlemayer to the previous pit session and calculated the Value Areas for the next pit session.

Your objective with forex is to determine which previous period best allows you to establish those ranges (for support/resistance and breakout) for the next trading session.

I have dabble in the area of a rolling profile where each bracket can cause the subtle shift of the Value Area for any upcoming trades but have not used it in trading nor have I back tested it. In theory however this is the ideal profile.

You will hear Market Profile traders say that the value area lines are important at the start of a session but half way through and towards the end the developing value areas become more important - i.e. the value areas that will be used in the next session. This obviously implies that an up-to-date rolling value area would be the best hybrid to use.

One of the reasons that this is not used is because there isn't the software support for it (yet).

Given the nature of the forex market I'm guessing that a rolling profile might be your answer. If you are to try this then I would suggest running 4 rolling profiles of different lengths to start with and see which one gives more insight into the market you're trading.

Ok, that makes sense. I would divide my trading session, in this case the European and US sessions, into 4 profiles. In the 2nd quarter I would use the information from the first quarter to take trades. But would I then combine the 1st and 2nd quarter to trade the 3rd as well as combine the 1st, 2nd and 3rd to trade the 4th or would I just use the information from the one quarter directly prior to the current one alone? My guess is I would not combine them, but I just want to be certain.

Four was an arbitrary number I picked because you can easily break 4 charts onto a screen and compare them by eye. It doesn't point to quarters. What I meant by 4 different length profiles was that each profile would hold a different number of brackets. Traditionally a profile has something between 10 and 15 brackets. So I would create 4 profiles with 10, 12, 14, 16 brackets each and work off the developing value area of each one and see which provides the better levels. This is extremely unscientific but it's a start at trying to identify which length works best in your market.

Oh ok I'll do some experimenting and see what works best. I thank you for your help.