Trading Techniques  |  JAN 2000

Market Profile Exotics by Jayanthi Gopalakrishnan

Market Profile Exotics The Liquidity Data Bank In this followup to last month ’s article on Market Profile,we go beyond Market Profile to determine price movements.Here ’s a look at the Liquidity Data Bank,which helps traders detect price movements early. When prices move in one direction, it means that prices are being met with acceptance.It is important to realize that trends do not continue indefinitely and there will be points where price levels will be met with opposition,which will indicate either the start of a trend reversal or that the market is likely to go through a trading range.Reversals,whether they are of a major trend or between support and resistance levels,are key signals for making buy/sell or short/ cover decisions. The key to detecting the reversal points is through analyzing the volume traded.Apart from providing the Market Profile,the Chicago Board of Trade (CBOT)also provides the Liquidity Data Bank (LDB), which indicates the volume traded at each price level.Not only does it provide the total volume traded at each level,but also divides up the volume by types of traders.

by Jayanthi Gopalakrishnan