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MARKET PROFILE
Market Profile charts were invented in the 1980's. The goal was to offer a
better analysis method to traders at the US commodity markets. The
development was done in cooperation between the trader Peter
Steidlmayer and the Chicago Board of Trade (CBOT).
Market Profile charts are different from the normal display of the price
movements versus the time line. While the prices are still given on the xx-axis, the time line is given in units of "Time Price Opportunities" (TPO) that
are marked with letters. This results in a more or less bell
bell--shaped
distribution of the TPOs over the price span of the trading day.
Market Profile Chart
Use the Market Profile chart for
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Analyzing the distribution of trading activity
Analyzing the "Fair Value" span with most of the trading activity
Analyzing the volume distribution over the trading day
Analyzing of trend movements
Tradesignal offers you Market Profile charts as a designated chart type. However, it is not available for all versions. As an
alternative for displaying the volume/price correlation, you can use the indicator "Price Volume Profile" that is delivered with
Tradesignal.
Due to the special focus of the tick
tick--based Market Profile, it is usually only displayed for one or two trading days. If you want to
display more than two trading days, the history length has to be set to the maximal value of 500000 ticks. If your data provider
offers this history length, you can display up to eight days as Market Profile.
CREATING A MARKET PROFILE
For a Market Profile, stocks, futures, commodities, currencies etc. can be used as long as they show a high trading frequency per
day.
For a quick look at the chart type, right
right--click on an index in the symbol list and select Open in Market Profile
Profile..
CONSTRUCTION AND INFORMATION IN A MARKET PROFILE
The time units for the graph are fixed intervals called "Time Price Opportunities" (TPOs). They are basically trading periods. The
standard setting is 30 minutes but can also be set to one hour.
For each TPO, a letter is used, starting with a capital "A". When the start of the trading is entered correctly, the "A" is displayed in
the chart for the first price in the first TPO. For each new price level traded in that TPO, the letter "A" is added. The size of each
price level is set in the Scale factor
factor.. For example, for a scale factor of "2", the price has to change 2 points (or cents) to open a
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