Rajandran R Creator of OpenAlgo - OpenSource Algo Trading framework for Indian Traders. Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Building Algo Platforms, Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in

Weaker Hand Traders Vs Stronger Hands – Market Profile Tutorial

1 min read

In market profile trading, understanding the distinction between weak hands and strong hands traders is crucial for interpreting market movements and making informed trading decisions. This section will help you identify the types of traders influencing the market by looking at key market signals and behavioral patterns.

Weaker Hand Traders

Weak-hand traders are typically characterized by their short-term focus, limited capital, and emotional trading behavior. They often rely on very precise price levels and are easily influenced by minor market fluctuations. Identifying these traders can provide insight into potential market instability or overreaction.

Key Indicators

  • Mechanical Trading Levels: Weak hands often trade at very specific and visible levels, such as the previous day’s high, low, or halfback point.
  • Visual References: Rely heavily on static references like the open, close, and unchanged prices.
  • Emotional Reactions: They tend to react strongly to minor price changes, leading to exaggerated moves.

Look at the price action relative to key levels like the previous day’s high, low, and the opening price. Precise behavior around these levels usually points to weak hands.

Strong Hands Traders

Strong hands traders are better capitalized, less emotional, and more focused on long-term trends. They often trade large positions and do not rely on precise short-term levels. Identifying strong hands can help you understand more stable and substantial market movements.

Key Indicators

  • Less Precise Entries/Exits: Strong hands are less concerned with exact price points and more focused on overall market direction.
  • Larger Time Frames: They often consider daily, weekly, or even monthly trends.
  • Less Emotional Reaction: Their trading decisions are less influenced by short-term market noise.

Identifying Through Market Behavior

Understanding whether weak or strong hands are in control can also be derived from market behavior. Here are some patterns:

Mechanical vs. Dynamic Behavior

  • Mechanical Behavior: Often linked to weak hands, characterized by precise adherence to static references.
  • Dynamic Behavior: Indicates strong hands, showing less precision but more trend consistency.
  • Strong Excess: Many at times strong excess often signals the presence of higher timeframe stronger hand traders.

Assess Reaction to Market Events

Observe how the market responds to news or economic releases. Overreactions or quick reversals can signal weak hands, while measured responses suggest strong hands.

By differentiating between weak and strong hands traders through market signals and behaviors, you can gain valuable insights into intraday and short-term trading dynamics. 

Example: Market Behavior Analysis

Step 1

Observe if the market trades exactly to mechanical references like previous day’s high/low or unchanged. This indicates the involvement of weak hands.

Step 2

Notice if the market disregards these exact references and continues to new levels. This suggests that strong hands are in control.

Step 3

Monitor whether value starts to build higher or lower away from these references. This can provide insight into potential continuation or reversal.

Understanding these trading nuances is a fundamental step in evolving into a proficient market profile trader.

Rajandran R Creator of OpenAlgo - OpenSource Algo Trading framework for Indian Traders. Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Building Algo Platforms, Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in

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