MARKET PROFILE :
WHAT IS MARKET PROFILE ?
Market profile are one of the best analysis tool based on price and volume information of a stock/ index. Market profile charts combines all the information needed ie. price, volume and time on a single chart. A trader can easily gather a multitude of information at a glance. Markets move with various factors mentioned above, and traditional charting techniques such as line chart, bart charts does not provide the combined factors together known as market profile. Therefore market profile charts have an edge over other forms of analysing the market.
What is Market Profile Analysis ?
Market profile Analysis is a study of price, volume and time combined and bring together all the useful information. No other charting/trading system has this edge. User can easily identify all the information on a single chart and therefore analysing the internals of the market comes easier.
How to use market profile charts in Trading ?
Market profile charts can be used as an analysis tool or as a trading system like any other conventional charting platforms. Usually market profile charts are traded based on support and resistance which is clearly visible on the charts where the price interacts with the ‘Point of Control’ or the most demand and supply area where traders are willing to enter/exit. Other trading technique is to compare current day profile with historical profiles with different time frames and split profiles for trading decisions.
How to read Market Profile charts ?
Price: Market profile charts display the price in the same manner as any other day trading chart, with the price scale being displayed on the right side of the chart.
Volume: The volume on a market profile chart is displayed as a horizontal histogram with the longest horizontal lines showing the greatest amount of volume. This means that the price that has the longest horizontal line is the price where most of the volume has been traded. This price is also known as the point of control because it’s the price that had control of the market most of the time.
Time Frame: The time frame on a market profile chart uses letters and/or colors. Each letter represents one unit of the time frame when letters are used, such as 5 minutes or 1 hour. Each color also represents one unit of the time frame when colors are used. A 15-minute chart would use colored squares, each of them representing 15 minutes of trading. A trader can easily see which prices have been traded most recently if he knows which color is the most recent.