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directionally； we start to put the nearly developed curve into a context。
We'll illustrate this。with an example。 In Figure 9。15； on August 23； the market established a fairly broad range； but one day was。not enough time to fully explore the range or build consensus。within that value area。 For two consecutive days； tradersuld have taken advantage of that underdeveloped profile in the low…volatility environment of development。 The strategy； then； for August 24 and 25； was。to sell the top of value and buy。the bottom of value。 We thus。have a trade location for modest directional moves。within this。bracket。 This。strategy is。valid until the range fully develops。a bell curve。 The idea of range trading within the value area isnfirmed if you see horizontal price prints。（multiple prints at the same price） at the top and bottom of value； as。opposed to single upward prints。at the top or downward ones。at the bottom； which would mean the market was。no longer range trading； but initiating a new directional move。
To continue with this theme of trading a broad initial range until the bell curve is pleted； consider Figure 9。16。 We bined two profiles。to show the oute of two consecutive days。of rapid rallies。 The result is。an unexplored range that the market could spend multiple days。developing。 This。sets。up a framework。for a trading strategy。 It is。very。unusual for a market to sustain a separation from an underdeveloped value area。 Based on our understanding of the psychology of the negotiation process； the market is。going to want to build consensus。before rejecting a value as。too low or too high。 This。is。the core principle of Market Profile trading。 Traders。can take advantage of thisnsensus…building phase。 The premise is。that the market will spend time trading between the projected value area top and bottom until consensus。is。reached toward the center of the range。 The strategy would be to sell the top of value and play for a move at least to the bottom of the first pocket of low volume。 Let's。see how this。strategy would have played out。
Figure 9。17 shows。the market action for the following three days。and how the market slowly declined into the bottom of the pocket of low volume。
A key question emerges。from these examples： How do we know when to stop playing for development and start shifting our strategy to one of looking for direction？ The key is。to always。be trading from a low…volatilityntext of development。 This。can be done by shifting to a larger context once a bell curve is pleted or nearing pletion。 Let's。look。at how this。might unfold on our current example。
Figure 9。18 shows。the six days。leading up to our example in Figure 9。17 as。the market traded in an established range for several days； from August 7 to August 14； 2006。 A multiday strategy of selling the top of value and buying the bottom was。appropriate。
As。long as the market continues to spend time in the same value area； we bine those profiles。into a larger developing bell curve。 That process。draws。to a close once the bined set of profiles。reveals。a fully developed bell curve。
Figure 9。19 shows。the result of bining the profiles。in Figure 9。18。 By the end of the six…day period； consensus。has。developed around a fair price； and the value area has。been fully explored into a bell curve。 This。market is。ready to move directionally。 At this。point； continuing to play for a range trade in the current range is。a dangerous。proposition。
When the bell curve isplete； the trader is。driven to find a broader context to
determine the next directional move。 The context is a larger value area that *************** 201 ***************
gave us。one last chance to buy the bottom of value； and the rally in y…period came out of that point。
When looking for a directional move； the confirming price activity is。a series。of single prints。 Anything short of that type of initiating activity tells。the trader that the market is。not yet ready to make its。move。 The typical target for a rally is。the initiation point of the prior decline。
The alternative scenario in this。example would have been an initiating move that went below the bottom of value。 If that had happened； you would then have looked for a larger bell curve below the market that was。underdeveloped and set your targets。accordingly。
The amount of context to use would be just enough to return us。to a situation of development as。opposed to initiation。 At times； a huge bell curve on the scale of months。or even years。will plete。 Usually； though； we are working in a smaller time frame； and adding a few days。or at most weeks。of prior market activity will provide the necessary。information。 The basic。premise is。that large moves。are built out of smaller bell curves。 For a day trader； knowing what the market is。likely。to do for the year may not be helpful； because the price fluctuations in acplishing the yearly scenario may be far too large for a short…term strategy to endure。
Market Profile is。a general tool that applies。just as。well to global spreads。as。it does。to more traditional instruments。 Because Market Profile captures。the underlying structure of the auction； it is。an effective way of analyzing any auction…based market。
The main principle is。that the market is。always。building a bell curve on some time scale。 By recognizing this。and by matching the scale of the curve we're working with to our preferred trading interval； we can always。be trading in a context of development； moving to a larger bell curve as a smaller one pletes； and back。to a smaller one once an initiating move has。established a range for development。 This。gives。us。a framework。to develop a trading plan involving the key elements。of direction； target； timeline； and confirming events。
CHAPTER 10
The。Ten mandments
ROBIN GRIFFITHS
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The product of this。approach is a rules…based expert system； and my ten …mandments。are a by…product。
My approach to market analysis。integrates。technical and fundamental forces。
I see technical forces as。global； macro； top down； and multi…asset…class。 This。is。a direct result of the work。of Harry M。 Markowitz； 1990 Nobel Prize winner。 He wrote a series of papers。in which he demonst