Atrader.org ATRADER Interactive Charting and Trading Software

 

 

 

Profile Basics

 

An example of market generated data is essentially a half-hour bar chart of a day collapsed onto the vertical price axis, with frequency of occurrence (volume) on the horizontal. The volume allows one to immediately see which prices are accepted by the market (heavier volume), and which are rejected (say the highs and lows). The hallmark of market generated data is that one can see that all prices are not treated equally by the market.

A typical profile shows that the day's 'structure' is bell-shaped with low activity around the top and bottom prices and heavy activity in the middle. Note that market price is on the vertical and volume (time) is on the horizontal axis. Profiles can be built in real (or delayed) time from a live ticker.

 

There are two types of Profile a Tick or Volume Profile and a TPO profile. Each has its individual merits.

The idealized Profile below, with the bar chart, shows the bell shaped curve for a day with half-hour trading sessions. On this day, the first half-hour, A (8 to 8:30 AM), set the range for the day. As the day wore on, trading was confined to narrower and narrower ranges. The profile shows the characteristic bell shape. Each x (letter) signifies that that price was traded at least once in the specified half-hour. An x (letter) is called a TPO (Time Price Opportunity, or That Price Occurred). No matter how many times a particular price trades in a specified half-hour period, only one TPO is recorded on a TPO chart. On a Volume/Tick profile each tick is totaled and the total drawn on the horizontal axis.

 

Typical Days Tick/Volume Profile

 

 

The value area (VA) is defined as the area within the day within which 70% of the days trading activity occurs. On the chart it is represented as the area in dark blue.

The price at which the greatest activity occurs is known as the point of control (POC).

The start of the upper value area is known as UVA, and the start of the lower value area, known as LVA.

Yesterdays POC and value areas are as equally important and and known a YPOC, YLVA and YUVA respectively.

To trade a normal bell shaped day, clearly the idea is to buy low/ sell high in the extremes of the value area at an advantageous price.

 

Typical Days TPO Profile

 

 

On the TPO chart each letter represents a time period, A is 8.30 to 9.00, B is 9.00 to 9.30. The combined first hour, that is A and B period is known as the initial balance. M and N are the final days periods at 2.30-3.00 and 3.00-3.15 respectively. (Note Chicago time).

The VA is shown on the chart, as the red vertical line. The opening range (OR) is the first three minutes of trading is shown on the chart as the vertical cyan line.

The horizontal cyan line is the point of control (POC) and the horizontal blue line, the days Close.

The Open (O) is represented by the letter O in the profile.