Market Profile
the profiles create a larger composite profile. Locate the monthly POC of all daily
TPOs. Find the monthly TPO count above and below the monthly POC. This
should give the practitioner an idea of the monthly buying and selling pressure, as
well as an indication of potential future price direction. A larger TPO count below
the POC is bullish, and vice versa. Hence some profile traders only initiate a trade
if the daily, weekly, and monthly TPO counts are all bullish or bearish. It is a form
of multiple timeframe analysis of market sentiment, based on the profile graphic.17.3 Chapter Summary
As we have learned in this chapter, Market Profile is extremely effective in deter-
mining the behavior of market participants and on how they react to current and
future value. It is predicated on the belief that price and value tend to agree over
the longer term and as such trace out a predictable price path based on achieving
that equilibrium. Market Profile charting is unique in that sense.Chapter 17 Review Questions
- Explain how you would determine if there is more buying or selling pressure
on any particular day using Market Profile charting. - Describe how you would calculate the value area using both the TPO and
volume count methods. - What does the value area represent?
- Define trend as it relates to the value area.
- Define the potential points of entry for a trader using Market Profile as a
means of trading the market. - What do single print buying and selling tails represent in Market Profile?
- How would you use Market Profile to forecast potential future price direction?
What is the basis for your forecast? - Explain how reversion to the mean is an underlying characteristic of Market
Profile.
referenCes
Dalton, James F., Eric T. Jones, and Robert B. Dalton. 2013. Mind over Markets. Hoboken,
NJ: John Wiley & Sons.
Keppler, John. 2011. Profit with Market Profile. Marketplace Books.
Steidlmayer, J. Peter, and Steven B. Hawkins. 2003.Steidlmayer on Markets. Hoboken, NJ:
John Wiley & Sons.