What is Market Profile?
Quick Answer: Market profile organizes price and time into value distributions, highlighting where auctions were accepted or rejected.
Understanding Market Profile
Market profile organizes price-time data into a bell-shaped distribution, highlighting value areas, points of control (POC), and ranges where auctions were accepted or rejected.
Key Components
Value Area High/Low signal where 70% of activity occurred. Price acceptance above or below value suggests directional bias. Combine profile with volume profile for deeper insight.
Intraday Planning
Day traders plan scenarios around prior value areas—trading back inside signals balancing behavior, while breakout holds signal trend days.
Limitations
Market profile requires steady data feeds and is most effective on futures platforms. Spot forex traders adapt by using synthetic profiles or broker volume proxies.
Data Fidelity
Inaccurate or incomplete tick data distorts profiles. Use reliable feeds and validate levels before acting.
Related Terms
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