Market Profile

Market Profile

Warning:

ProRealTime does not provide any financial investment advisory services. All information on this site is "General" information only and is not in any case personal or financial investment advice nor a solicitation to buy or sell any financial instrument.

Market Profile ®

Market Profile ® is a graphic representation that shows price and time information as a distribution. Key benefits include:

  • Determine amount of time, number of ticks and volume traded at specific price levels or price ranges during a period
  • Identify prices perceived as fair by the market
  • Identify support and resistance levels to anticipate future price movements

Presentation

In Market Profile ® charts, each group of lettered boxes shows the price or price range where trades occurred in a lower interval of time than the main chart (usually 30 minutes). In ProRealTime, each letter is also associated with a colored box to make reading the chart easier. Key points on the chart include the following:

  • The Point of Control or "POC" (red triangle) shows the price or price range that was the most traded during the profile
  • The Value Area (red line) shows the price range in which at least 70% of trades took place
  • The Initial Range (blue line) shows the price range where trading occurred during the first two periods of the profile (A and B)
  • The green triangle shows the opening price
  • The blue triangle shows the close price (or last price for the developing profile: this price is also shown in the box on the price axis)

Market Profile

Positioning the cursor on the profile provides additional information about it including :

  • Number of ticks that occurred during the profile
  • Volume exchanged during the profile
  • TPO Count (number of boxes in the profile)
  • Number of boxes above and below the Point of Control
  • Open, high, low and close prices

Exclusive features and customizations

Some of the exclusive customization possibilities of the Market Profile ® view on ProRealTime include the following :

  • Set the height (in price value) of each box: You can set each box to be one specific price level by entering the tick size of the security you are looking at, or set each box to be a price range by entering a value larger than tick size.
  • Set the width (in minutes) of each box
  • Show a histogram on the left with the number of ticks at each price level
  • Show a histogram on the left with the volume exchanged at each price level
  • Customize the chart appearance: Colored boxes, Colored boxes with no filling, Letters only
  • Display a split profile starting from the letter of your choice
  • Draw support and resistance lines on profile charts and add comments
  • Construct multi-day profiles by choosing the (x) days timeframe
  • Construct intraday profiles by selecting an intraday timeframe
  • Zoom in on the chart to see the letter in each box, or zoom out to view only the boxes with no letters. For greater precision while zooming, drag the price scale up or down with your mouse.

If a tick histogram or volume histogram is shown on the left side of the chart, a second red line indicates the range where 70% of ticks or volumes occurred :

Market Profile charts

Calculation

To create the chart we begin by drawing series of boxes at prices where trading occurred during each period from left to right. The "A" group is drawn first, then the "B" group and so on. When price is displayed in this manner, it is called a "Split profile" :

Split Profile

To form the completed profile, each box is then moved as far to the left as possible.

Interpretation

There are several ways to interpret profile charts:

  • Prices perceived as "fair prices" are zones where the market spent the most time.
  • In a market that is in a trading range, traders may try to buy below the value area and sell above the value area.
  • If there are significantly more boxes printed above the POC, this may indicate that price is likely to decrease (selling pressure), while more boxes printed below the POC may indicate that price is likely to increase (buying pressure)
  • Points of Control and Value Area high and lows of previous periods can indicate support or resistance levels in future periods. For example, if the market opens below the previous value area and does not break back into it, this could be a bearish signal. But, if it opens below the previous value area and breaks into it with at least 2 prints, this could be a signal that the market will return to test the top of the previous value area.
  • Tops and bottoms of a profile composed of one letter only are called "single print buying tails" or "single print selling tails". These tails may indicate support or resistance in future periods.
To learn more about the interpretation of market profile, download the Market Profile ® Handbook published by the CME.

Historical data

ProRealTime uses tick by tick data to construct Market Profile ® charts. This charting view is best used with the Premium version of ProRealTime, since more historical data is available:

  • In the Complete workstation, up to 1 week of historical Market Profile ® charts may be displayed
  • In the Premium workstation, up to 2 months of historical Market Profile ® charts may be displayed

Market Profile historical data

Start using Market Profile now

To start using Market Profile ®, add it to your subscription, then launch the workstation and click Chart settings button on any price chart to open the "Settings" window. You can then choose change the chart style from the "Style" menu:

Market Profile settings