The unofficial subreddit for thinkorswim®. thinkorswim® is owned by TD Ameritrade, which has recently been acquired by Charles Schwab.
The market profile can be a useful tool in identifying where value is, in a given instrument. Lots of software make volume profile accessible but costs considerable subscription fees. Think or Swim is a free way to access market profile charts, but is buried under the disguise of monkey bar charts. The monkey bar is the point of control, and the playground is the value area.
To start setting up market profile, navigate to chart settings and go to the appearance tab. At the top change the chart mode to Monkey Bar from Standard. Apply this setting and then change the charts time frame to a 30 minute profile chart. This is the standard for market profile periods. Navigating back into the settings and appearance tab, you can change things like the colors of the profile numbers as well as the monkey bar and playground, color of the volume profile as well as the point of control and value area, open and closing prints.
Perhaps the most important part is being able to change the row height, which will impact how much detail your profile shows. Ticksize will be the smallest increment for the particular instrument that you are looking at. In the /ES S&P500 index futures, this value is .25 or one tick, which is a quarter of a point. Given the current volatility of this recording (May 24th 2022) setting a custom size of 2.5 points seems to be a good row height.
Some notes are that the profile will automatically include all of the overnight session data. It starts as soon as the prior day closes. To eliminate the overnight session, we have to turn of overnight data off. There is no way to separate the two and have an overnight profile as well as a regular trading hours session profile.
To just use the volume profile, load a blank chart of the /ES futures and clear the drawing set as well as the studies. From here we want to load a singular study, VolumeProfile. This study will load a master volume profile to the entire chart by default and have it located on the expansion area. To separate this into daily profiles, change the time per profile to day. To get the profile to show for each day, toggle to on expansion area to no, from the default yes. In the very bottom settings you can change the visibility of the show value area low and high lines by turning off show plot. Finally at the very bottom, go into globals and here are the master controls for the colors of your volume profile.
Something not mentioned in the video but that is useful would be to save the chart settings to a chart style that way you can quickly toggle between different looks and feels, without having to rebuild the charts each time.
If you want to see this all visually check out this tutorial video: https://youtu.be/ab_oNfQsONE
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This looks very neat. Can you give a quick explanation how these types of charts are useful?
not OP, but market profile charts show TPOs which are time-price-opportunities. TPO's show a letter (on most platforms, but are numbers in TOS monkey bars) for each time period (typically 30M) which will continue up and down in price according to the ticksize, then after 30M will continue to the next letter.
this yields a 'time-profile' chart if you will. passage of not time, but price building on itself at similar levels over time, will lead to progression on the x-axis so you see a histogram of x: time price spent (total) vs. y: price. so this is a TPO. volume profile is not the same and is a tally of the volume spent at each price. you get different information when looking at volume and time per price as you can see from TPO vs. volume profile charts.
TOS can show the entire day (with EXT or RTH only) TPO chart and volume profile and looking at the two of them you can see value areas and points of control (POC) based on time and volume. they usually do not overlap and will overlap a bit better with EXT hours off, but you lose useful information IMO especially when looking at futures charts.
in my monkey bars, i use colors in the rainbow sequence on a 30M chart to get thru the day and use row height of 0.25 - 1 (depending on how much I want to see, on /ES futures). the colors are ROYGBIV then some additional neutral colors ending up with grey/white. in this manner just using my eyes i can see how price moved thru time by the progression of color and never have to look at the actual numbers to pick out which is which. super helpful otherwise you'll lose your mind looking at TPO charts.
for more on Market Profile charting look up Jim Dalton and Peter Reznicek on youtube. Jim Dalton is the maestro and Peter studied with him. The two of them have literal tons of information on how to read and use these types of charts. it is like learning a new language.
came across this post trying to set each number as a different color. i have a similar 30min set up, but the first 10 numbers share the same color on my chart, and then cycles to the next color. my RTH session basically just has two colors. do you have it set up so each 30min session = different number = different color? could you share your settings?
my /ES settings:
chart TF is 30M
row height 0.5
checked all boxes, playground 70% fill, initial balance 3, VA fill 70%
colors R,O,Y,G,B,I,V,grey,teal,white so it'll look like a rainbow progression, with different number starting every 30m.
thanks. not sure what's going on... i noticed it before too, but the preview shows color progression for each digit, but the chart does not. i tried your settings, and still same result in the chart.
We start this tutorial off by talking about what the market profile is and is not. It should be made clear that using TPO charts and volume profile is not a strategy all by its self. Market profile is just a tool that will help us organize the trading data in a useful manner.
TPO stands for time price opportunity and are printed as letters for each 30 minute period. A period lasts from 9:30am to 10am, B period lasts from 10am to 10:30am etc. The volume profile will give us an idea of how many shares or contracts traded hands at any given price level. When compared to a candle stick chart you can see how the volume profile really starts to shine and shed more light on the price action.
The first major reason to be using market profile is to find where value is. If you can find where value is you can find where opportunity is when price disconnects from value. Take the example of an iPhone you see advertised at the same price for weeks on end. All of the sudden price changes and you start to think of how you could take advantage of that miss-priced asset.
The concept of value centers around the normal distribution and one standard deviation. This is going to encompass about 70% of the days trading volume or TPO prints. We can now start to look into where the bell curve is forming. Do we have a normal day? A trend day? An emotion day?
Finally we talk about the anatomy of what makes up the profile. We have the point of control or POC (TPO and volume), value area (TPO and volume), halfback, opening range or OR (sometimes IB if referring to initial balance), and high / low volume nodes.
POC - should be treated as a target and not a place to initiate new trades
VAH / VAL - should be treated as resistance and support. Are we in balance? Fade the areas. Are we trending? Take the breaks.
Halfback - should be used as a target when looking at large gaps or how much of an initiative move is retraced.
Opening Range - Can be used to determine if the day will be contained or breakout.
HVN / LVN - Areas that the market likes to go to and from.
We then get into structural things like poor high and low, weak high and low (sometimes better known as mechanical levels), single prints and double distributions, one time framing as well as spikes and volume taper.
To tie it all together we give you the second reason you should be using market profile. To understand what type of participant is in the market. Is it the pit traders looking to make a few ticks? Or is it the OTF trader looking to set themselves up for Q3? This will tell you what you need to know about trusting mechanical levels.
Ive got another video format if you find that easier to digest: https://youtu.be/bpravMgflLc
[edited for formatting]