Market Profile aka TPO Charts

See the price distribution during the specified time via the TPO Profile (known as Market Profile®) & understand at which levels the price has spent the most time


https://www.youtube.com/watch?v=KgsayU6NCp4

Time Price Opportunity or TPO Chart, shows the price distribution during the specified time, thus forming a profile. This allows you to understand at which levels or ranges the price has spent the most time, as well as to determine the main support and resistance levels.

Market Profile Data Type

GoCharting offers two kinds of Volume Profile:

  • Candlle Data Volume Profile – Maket Profile built using 1min, 5min 30min etc candle data depedning on the timeframe chosen. This indicator is part of the FREE plan
  • Tick Data Volume Profile – Market Profile built using tick data and is independent of the time frame in the candle. This indicator is part of the GOLD PLAN

This can be chosen from the Indicators Menu

Major Components/Key Terms of TPO Chart

Value Area

Price range in which approximately 68% - 70% of the market activity or trading volume took place.

Auction Markets

A market in which buyers place bids and sellers enter offers at the same time. A transaction only takes place in the auction market when there is an agreement on price between the buyer and the seller. The transaction typically takes place at the highest price that a buyer is willing to pay and the lowest price that a seller is willing to sell at.

Auction Point

The auction point is located at the first price that is traded above or below the Initial Balance for the day.

B Letter Shaped Profiles

There are two letter B profile shapes; one shape is that of the capital letter B. This capital letter shaped profile is also described as a double distribution. The other B letter shape is that of a small letter “b”, the profile is long and narrow at the top and wide at the bottom. This structure is usually the result of heavy selling at the top of the profile.

Balanced Market

A balanced market is a rotational market where prices trade around a fair price.

Balanced Profile

A profile that has an approximately equal number of TPOs above and below the point of control is considered to be a balanced profile. A balanced profile indicates acceptance of current value in the marketplace. Most of the trading activity is balanced around a fair price which is identified by the point of control.

Buying Tail

A Buying Tail is a single print column that appears on the lower portion of a profile structure. The buying tail is usually made up of three or more TPOs. It is formed as a result of aggressive buying activity that takes place once prices drop to a price level that the market participants perceive it as an unfair low for the session. As aggressive buyers jump at these lows, their aggressive buying causes prices to quickly move higher towards value.

Column

A column is term that is sometimes used to describe a series of consecutive vertical TPO prints on a profile chart. A split profile is typically made up of a number of different columns. Each TPO column on the profile chart will be for a specific time period, it will have a price high, a price low, an open price and a closing price.

Composite Profile

A composite profile is a profile that consists of two or more profiles.

Developing Range

As the market activity moves up and down within a specific range of prices during the auction market process, this activity results in a developing range of prices for the session. The range continues to develop until the market finds a fair price and begins to distribute and create a value area around that fair price.

Dynamic Day

A dynamic day describes a trading day during which the high or the low of the day’s range are both revisited by market activity during the day.

Ease of Movement

The ease of movement describes the ease by which price goes up or down during a directional move in the market.

Failed Range Extension

A failed range extension results when prices fail to break the range created during the initial balance.Imbalanced Market
An imbalanced market is a market where prices are moving directionally seeking a fair price for a balanced market.

Initiative Buying

Initiative buying takes place in the market when market participants feel confident that market prices are undervalued and destined to move higher. Initiative buying is aggressive bullish buying activity that moves market prices higher.Initiative Selling
Initiative selling takes place in the market when market participants feel confident that market prices are overvalued and destined to move lower. Initiative selling is aggressive bearish activity that drives market prices lower.

Inside Day

An inside day is a trading day where all of the trading activity for the entire day takes place inside the price range of the prior trading day. It is a day of uncertainty in the market.

Ledge

A ledge is formed on a profile chart when two or more consecutive letter columns end their range of price activity at the same price level forming a flat ledge. If the ranges terminate at an equal high the ledge on the profile is formed at the top of the columns. However, if the columns end at an equal low level the ledge is formed at the bottom of the columns.

Minus Development

A minus development is an area on the profile structure where there has been little trading activity; it appears as an area that is underdeveloped on the chart. The most extreme type of minus development is the single print on the profile structure.

Naked or Virgin POC

A naked POC is a point of control from a previous session's profile that has not yet traded in subsequent profiles. The naked POC can be used as a useful reference point "support/resistance".

Neutral Day

A Neutral Day describes a profile structurefor a tradingday with limited range extensions on both sides of the initial balance. Neutral days are formed as a result of market uncertainty and lack of directional conviction.

Normal Day

A Normal Day is a term used to describe a profile structure that is characterized by a wide ranging initial balance, the first two time periods of the day create a wide range. As activity develops for the day, the distribution will generally develop within the range of the initial balance. As long as there is no long term aggressive market participation, range extensions will be limited. That is to say that the market may extend beyond the initial balance by only a small amount to the top or bottom of value, and then return back into the value area. Some normal day structures will not have any range extensions at all.

Normal Variation Day

A Normal Variation Day is a profile structure that is characterized by a wide, but somewhat limited initial balance. The initial balance usually represents about half of the finished profile structure, with a range extension early in the day to create a fairly normal bell curve.

Open Drive

An open drive describes an event that takes place when the market opens the trading day with a strong directional drive. Prices will open and continue to move in one direction without ever breaking the open price. This usually occurs when there are aggressive and determined buyers or sellers in the marketplace.

Opening Range (OR)

The opening range is the immediate range that is created during the first 5 or 10 minutes of activity for the day. It is always contained within the range of the day’s initial balance.

Open Test Drive

An open test drive occurs at the open for the day when prices move towards a direction to test a key support or resistance level.

P Letter Shaped profile

A profile structure that is shaped like the letter (P) is narrow at the lower portion and developed or wide at the top. This type of profile structure is usually the result of short covering rallies.

Pioneer Range

When prices move for the first time into a new price area where it had not previously traded during the current trading session, this initial activity is described as the pioneer range.

Point of Control (POC)

The point of control on a profile chart occurs at the price where the most TPO activity has occurred during the session. Visually it appears as the longest horizontal line on the profile chart. At this level, the price spent most time over the profile range. They are shown as horizontal lines with a thickness of 1px

Prominent Point of Control (PPOC)

Stong forms of resistance and support formed by POCs filtered by entering the minimum number of TPOs a POC must constiture to form a PPOC. They are shown as horizontal lines with a thickness of 2px

Range

A range is the distance that a price travels from (low to high) or (high to low) during a specific period or session. A range is the entire extent of price movement from a price high or low during a specific trading session or period. The range of prices for a session is calculated by subtracting the price low from the price high for the session.

Range Extension

A range extension occurs when price activity expands and extends beyond a previously defined range.

Range Low

The lowest price point on a specific range of price activity.

Range High

The highest price level reached during a specific range of price activity.

Initial Balance Range (IBR)

The Initial Balance Range (IBR) is displayed as a vertical line to the left of the TPO Letters/Blocks which represents the price range of the Initial Balance. The Initial Balance Range Input setting specifies the number of TPO Profile sub periods which makes up the initial balance range. GoCharting allows you to choose your IBR period which can be different from the standard first two periods of a session.

Rotational Market

A rotational market is a market where price activity is bounded by an upper price limit and a lower price limit. Prices rotate back and forth from one side to the other. This type of price activity is also described as a balanced market.

Single Print

A single print is a series of TPO prints that appear on a profile chart without any activity preceding or following it. Single prints may appear on the top or low end of a profile chart as well as in the middle of a profile structure. A single print is a portion on a profile chart that usually represents an area of fast market activity. Price is not in balance in these areas and they are often referenced as points to look at for potential support or resistance. Singles or single prints of the profile are placed in the middle of a profile structure, not at the upper or lower edge. They occur on impulse movements and are used as support/resistance zones, which the price can test in the near future. The singles line indicates where the singles begin to form (in cases when there are several single prints).

Selling Tail

A Selling Tail is a single print column that appears at the top of a profile structure. The selling tail is usually made up of three or more TPOs. It is formed as a result of aggressive selling activity that takes place once prices rise to a price level that the market participants perceive as an unfair high for the session. As aggressive sellers react to these high price levels, their aggressive selling cause’s prices to quickly drop lower.

Time Price Opportunity (TPO)

A time price opportunity occurs every time the market trades at a new price point within a given period, each price point of activity is assigned a single TPO on the profile chart regardless of the size or frequency of activity at the price opportunity. Each letter on a profile chart typically represents all activity that occurred at the price opportunity during a 30 minute period. The TPOs are the building blocks for the Market Profile Charts. Basic element of the TPO chart, where each letter corresponds to a specific time ("Build From").

TPO Count

The TPO count is the total number of TPO prints or letters that are printed on a profile chart for a given period or session. The larger the TPO count on the profile chart, the greater the activity for the session.

Trend Day

The term trend day is used to describe a profile chart with a strong directional movement. Typically a directional day is characterized by a narrow profile structure that continues to extend the price range in the direction of the trend for the day.

Unfair High Price

An unfair high price is a price level that is above current value for a session and is recognized by the long term market participants as an attractive selling point. Unfair high market prices attract responsive sellers.

Unfair Low Price

An unfair low price is a price that is below current value for a session and is recognized by the long term market participants as an attractive buying point. Unfair low market prices attract responsive buyers.

Value Area

The value area on a profile chart is typically calculated by tracking the number of TPOs on the Profile for a given session, and then identifying or highlighting the range of prices that included approx 70% of the trading activity or TPOs on the chart. This identified price range represents the value area for the session’s profile chart.   The upper price of this Value Area is considered the Value Area High (VAH). The lower price of the VA is considered the Value Area Low (VAL).

Volume Distribution

A volume distribution shows the various levels of traded volume at each price within the price range for the session. It is often displayed as a histogram on the side of a profile chart.

Volume Point of Control (VPOC)

The volume point of control on a profile chart is the price level that had the greatest level of trading activity during a session. The price level that has the largest volume traded during a specified period or session. Note: The volume point of control is not always at the same price level as the POC for the session.

Value Area High

Once a value area is calculated and identified on a profile chart, the upper price of this Value Area is considered the Value Area High (VAH).

Value Area Low

Once a value area is calculated and identified on a profile chart, the lowest price level of this Value Area is considered the Value Area Low (VAL).

Volume Value Area

The volume value area is the price range for a session that includes 70 % of the traded volume for that session. GoCharting allows you to alter the VA % per your convenience

Volume Value Area High

The volume value area high is the upper limit of the volume value area for a specific session.

Volume Value Area Low

The volume value area low is the lower limit of the volume value area for a specific session.


Settings #

The settings of the Volume Profile vary depending on whether the underlying data is Candle Data or Tick Data.

In case of Market Profile (Tick Data) the height of the boxes(TPO) is determined by the Tick Multiplier in Settings Dialogue while in case of Market Profile (Candle Data), the height of the boxes is determined by the TPO value

The remaining settings are specific to the indicator. To open the Settings, click on the gear icon in the Chart Tooltip/Legend

Use Lock Aspect Ratio

PROTIP

How to merge profiles together?

Multi-Day Profiles
A multi day profile is a profile chart that consists of a specific number of days/sessions that are combined into a single profile.

Profiles can be merged using the Market Profile Drawing tool under Drawing Menu. We repeat Drawing Tool and NOT Indicator

How to split the profiles

Split Profile
A split profile is a profile chart that is split into separate columns or periods. This makes it possible to clearly see the range of prices traded for each letter column.

Profiles can be split using the Split toggle button in the Indicator Settings Dialogue

What is Auto TPO?

TPO stands for Time Price Opportunity. It is basically the height of each of the tetris like boxes (in terms of price) in a Market Profile Chart.

In traditional softwares, the trader is asked to enter a TPO value of his/her choice which can be tricky for beginners. Hence, we designed an algorithm that will do this for you

Auto TPO is a value of TPO that the algorithm decides based on your montior dimensions and volatility of the underlying symbol making it possible for you to view the letters and boxes clearly. The advantage is that you do not have to adjust the TPO for every symbol or timeframe - it will adjust on its own. However, it has some disadvantages in terms of reduced levels of precisions ar time. The algorithm uses some form of approximation which can never be as accurate as a manul value of TPO entered by the trader.

The TPO value chosen either manually or through Auto mode will appear in the Indicator Tooltip/Legend

Takeways

  • If you are beginner, use Auto TPO to get a feel of Market Profile
  • If you are a PRO trader and know your symbol well, use User Input TPO value based on your discretion. It is more accurate.

What is Poor High/Low

Poor low and Poor High are market profile structure which generally indicates a market that is too long or too short and the shorter timeframe players in the market has low confidence about the current market direction and takes control of market to move it in opposite direction. Generally happens when the market is continuing its trend in one direction and the momentum of the trend starts loosing at the peaks which makes the shorter timeframe traders to think that market is toolong/short.  Generally market trends ends at the peak with an excess or a tail. But if the exhaustion takes place due to lack of momentum at high or lows with lack of excess then such auction is referred as poor low or poor high.

To activate Poor High/ Poor Low, check the Pattern Recognition setting as shown below

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It generally follows the below patterns

  1. Number of TPO at head or tail >= 2 OR
  2. Number of TPO at head or tail = 1 And Number of TPO at (head - 1) or (tail - 1) >= 2

What is Single Print and how to see in GoCharting

Single Prints - a column of single TPOs printed on a Market Profile Chart which has prices both above and below it which have multiple adjacent TPO's. Single prints are unconfirmed while there is still a chance that the print will be filled in by the subsequent TPOs.  hey are only confirmed to be Single Prints when the subsequent bracket has closed without entering the price range of the Single Prints For example, a single print in the letter A TPO price range cannot be confirmed until the subsequent letter B TPO price range has closed.  During an Open Drive breakout, a series of single prints will be observable on the chart. The single print that we are interested in is the first one created when the market breaks away.

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To activate, toggle the Single Print switch and customize the style and color

What do these numbers in brackets mean?

These are ratios with numerator indicating the number of TPOs above the POC and the denominator as the number of TPOs below the POC. The TPOs on the POC are not counted. This allows us to get a sense of Buyer Vs Seller sentiment

How to move the TPO profiles behind the price candles

See this