How to Predict Session Profiles

Summary

In this video, the creator explains the concept of session profiles in trading, covering how they shape market movements from opening to closing in different trading sessions. The video highlights the importance of understanding the timing and price behavior across key sessions like London and New York. It details how session profiles can help traders identify high-probability setups and avoid low-probability ones, emphasizing their role as a tool of confluence in a larger trading strategy. The video also discusses various session profiles—continuation, reversal, and their application based on previous session data.

Takeaways

• 😀 A session profile is a framework for predicting price action during trading sessions, considering market openings, closings, and key levels.
• 😀 The three main trading sessions are the Asian, London, and New York sessions, with a focus on the London and New York sessions for the speaker's strategy.
• 😀 Session profiles help traders narrow down high-probability trading opportunities, skipping low-probability sessions to improve trade quality.
• 😀 Market manipulation around old highs and lows is key for institutions to enter trades at better prices, often occurring during kill zones aligned with major financial centers' hours.
• 😀 Session profiles work best as a tool of confluence, meaning they should complement a trader's broader model, not act as standalone trading strategies.
• 😀 A higher time frame bias is crucial before applying session profiles. These profiles are used to anticipate the likely price action for the session after establishing a bias.
• 😀 There are four main session profiles: two for London and two for New York—continuation and reversal profiles for each.
• 😀 The London continuation profile occurs when price manipulation in the Asia session is followed by a small retracement, then a continuation of the trend.
• 😀 The New York continuation profile builds upon the London reversal profile, expecting continuation if London has already run stops, with the New York session pushing the price further in the same direction.
• 😀 The New York reversal profile often occurs when there’s no valid London session profile, with price manipulation during the New York session providing reversal opportunities towards liquidity pools like the London or Asia lows.

Q & A

What is a session profile in trading?

A session profile is a framework that shapes the price action of a trading session from open to close. It provides a narrative of how price is likely to behave during different trading sessions (such as the London or New York session), based on key price levels and market dynamics.

Why do session profiles work in trading?

Session profiles work because they reflect market behavior, particularly the way institutions manipulate price around old highs or lows. They help identify price inefficiencies, or value gaps, which institutions use to enter trades at better prices during the opening and closing hours of major financial centers.

Which trading sessions are most relevant for session profiles?

The most relevant trading sessions for session profiles are the London and New York sessions. The Asian session is also considered when analyzing the London and New York profiles, but the main focus is on London and New York due to the timing of financial center openings.

How can session profiles help narrow down high-probability trading opportunities?

Session profiles help narrow down high-probability trading opportunities by providing a framework for identifying likely market narratives. If a valid session profile is present, it indicates a higher likelihood of a profitable trade. If there is no valid session profile, it suggests a low-probability session, and traders can avoid it.

What is the role of a 'higher time frame' bias when using session profiles?

A higher time frame or daily bias is essential when using session profiles. Session profiles should only be applied once a bias is established, as they are a tool for confirming the anticipated market direction. Without a bias, session profiles alone are insufficient for making trading decisions.

What does the London continuation profile involve?

The London continuation profile occurs when the Asian session manipulates price to a key level, and the London session follows through by continuing the trend. Key signals include a stop run into a higher time frame key level during the Asian session, followed by a change in order flow. The London session typically involves a small retracement before continuing the price movement.

How does the London reversal profile work?

The London reversal profile happens when the London session manipulates price in the opposite direction to the Asian session, typically after a consolidation near a key level. Traders look for a change in order flow and an opportunity to trade against the prevailing trend, targeting liquidity pools in the opposite direction.

What is the New York continuation profile?

The New York continuation profile occurs when the London session has set up a high (or low) at a key level, and the New York session continues in the same direction. The New York session builds on the London session’s narrative, often using additional information from the London and Asian sessions to confirm the continuation.

What signals suggest a New York reversal profile?

A New York reversal profile is likely if the London session has not established a valid session profile (i.e., no manipulation or change in order flow). The New York session might then manipulate price at key levels, reverse direction, and aim for liquidity pools formed by the London and Asian lows.

How do market profiles and session profiles interact with each other?

Market profiles and session profiles are interconnected. Market profiles help establish the overall market structure, while session profiles add a time-based component to the analysis. The session profile identifies the likely behavior of price within a specific time window, and these behaviors align with the broader market narrative to identify high-probability setups.