All of the market profile basics you need to start now. See the market in three dimensions and take advantage of where value is. Find value; find opportunity.

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00:00 – Intro
00:32 – What is Market Profile
04:07 – Candle Stick Chart Comparison
05:41 – Reason #1
06:52 – Find Value Find Opportunity
10:04 – Normal Curves & Distributions
11:25 – Normal Day
12:46 – Trend Day
14:10 – Emotion Days
17:22 – Market Profile Anatomy
22:32 – Market Profile Structure
35:14 – Reason #2
36:58 – Real Time Look

We start this tutorial off by talking about what the market profile is and is not. It should be made clear that using TPO charts and volume profile is not a strategy all by its self. Market profile is just a tool that will help us organize the trading data in a useful manner.

TPO stands for time price opportunity and are printed as letters for each 30 minute period. A period lasts from 9:30am to 10am, B period lasts from 10am to 10:30am etc. The volume profile will give us an idea of how many shares or contracts traded hands at any given price level. When compared to a candle stick chart you can see how the volume profile really starts to shine and shed more light on the price action.

The first major reason to be using market profile is to find where value is. If you can find where value is you can find where opportunity is when price disconnects from value. Take the example of an iPhone you see advertised at the same price for weeks on end. All of the sudden price changes and you start to think of how you could take advantage of that miss-priced asset.

The concept of value centers around the normal distribution and one standard deviation. This is going to encompass about 70% of the days trading volume or TPO prints. We can now start to look into where the bell curve is forming. Do we have a normal day? A trend day? An emotion day?

Finally we talk about the anatomy of what makes up the profile. We have the point of control or POC (TPO and volume), value area (TPO and volume), halfback, opening range or OR (sometimes IB if referring to initial balance), and high / low volume nodes.

POC - should be treated as a target and not a place to initiate new trades
VAH / VAL - should be treated as resistance and support. Are we in balance? Fade the areas. Are we trending? Take the breaks.
Halfback - should be used as a target when looking at large gaps or how much of an initiative move is retraced.
Opening Range - Can be used to determine if the day will be contained or breakout.
HVN / LVN - Areas that the market likes to go to and from.

We then get into structural things like poor high and low, weak high and low (sometimes better known as mechanical levels), single prints and double distributions, one time framing as well as spikes and volume taper.

To tie it all together we give you the second reason you should be using market profile. To understand what type of participant is in the market. Is it the pit traders looking to make a few ticks? Or is it the OTF trader looking to set themselves up for Q3? This will tell you what you need to know about trusting mechanical levels.

The broker we use at the end to showcase market profile charts in real time is Tradovate. We are not affiliated however believe their product is getting many more people involved in TPO charts who otherwise would not pay for something like WindoTrader, Ninja Trader, or Sierra Charts.

#MarketProfile #TPOcharts #JimDalton

DISCLAIMER: The information provided in this video is for informational purposes only. It should not be considered financial or legal advice. I am not a Registered Investment Advisor. Buying and selling financial instruments is highly speculative and carries risk.