Concept Of Market profile TPO and OTF other time frame traders explained
Instead of using bars or candles with an Open, High, Low, and Close price, each “bar” in a Market Profile is represented by using a letter Versus the price that the market traded during that time frame – usually it will be on a 30 minutes time frame. Each of these letters is know as a Time Price Opportunity or TPO for short.Market Profile Structure helps in Intraday/Positional Trading , Market Profile also gives an insight into Long Term Analysis,The key to identifying Profile structure early is the IB(Initial Balance).Market Profile Structure gives an insight into confidence of OTF (Other Time Frame) Traders.Profile Framework consists of three elements; Structure, Time and Logic.Structure is the final shape of the Market Profile at end of the day.Structure shows what happened and who was in control.Time is the regulator (market and opportunity) and it validates Value.Logic is understanding how and why market works and this comes with experience.For an Experienced Trader Logic comes first, then Time provides the signal and opportunity and the Structure provides confirmation.Trading is between the Locals and OTF Traders.In order to anticipate movement one needs to know which OTF(Other Time Frame) Trader is in Control (Buyer or Seller).Time Frame larger reflects the type of Control (Intra versus Positional).To Evaluate Control we need to look at Range Extension, Tail, Body of market Profile & Value Area position.Range Extension is when IB is broken (up or down).It is a structural feature that helps gauge strength More elongated and sustained Extension signifies more strength Along with the above need to look out for frequency of Extensions in particular direction.Tail is created when OTF(Other Time Frame) Trader quickly enters the market.Tail at upper extreme of Profile suggests OTF Seller entering the market.Tail at lower extreme of Profile suggests OTF(Other Time Frame) Buyer entering the market.The longer the tail the greater the conviction of OTF Trader.Absence of Tail indicates absence of aggressive OTF(Other Time Frame) Traders in the Market.
