Market Profile: Anomalies - ASPR, RF, TPOVAR, VOLVAR

Alright, so in our original introduction to TPO charts what we did was we talked about what we're looking at right here and we briefly covered what these bar statistics were. So in this video we're going to get a little bit further into this because this can be a very helpful thing to pay attention to over time. In particular what the normal behavior is over time within certain environments, whether we're trending or arranging and to compare future values to what those norms are. So we're going to cover these in a little bit more depth. We're going to talk about this aspr. What that is is the average sub period range. We're going to talk about the volume value area range, the TPO value area range and then get into the rotation factor which if you watch the introduction to TPO charts video, what I compared this to was Heikin Ashi and not because they're the similar calculation whatsoever, but just the idea of either continuous advance awarded a point or a certain point value versus sideways movement versus decline. And this being weighted in a way that you know, with Heiken Ashi, ultimately coloring the candles, where you'll have some candles that normally would be green but begin to be colored red based on the level of advance with respect to the previous. And this with rotation factor we have a value that's derived which shows us which way the market is trying to move more often. Which way is the market trying to move? Is it up, is it down or is it just relatively sideways? So first things first, getting into this rotation factor and what I have right here is the actual exact description of what we're looking at. So we'll just cover this really quickly and I'm just going to read this over. So it's going to either be a positive number or a negative number. Okay. The rotation factor objectively evaluates a day's attempted direction. So like we said, the market trying to move upward, trying to move downward or moving sideways. And remember, one of the most important questions we're going to be asking ourselves of the two questions we should always be asking is what way or what direction is the market trying to move and is it doing a good job of getting there? So each auction rotation is a step by step, allowing the trader to discern overall daily direction attempts. All right, so this calculation is right down in here. The method for assigning a value of each time period's auction rotation is relatively simple. So when we talk about each auction rotation, we're talking about each one of these single 30 minute candles. So 30 minute bars 30 minute TPO columns. If the high of the current time period is higher than the previous period's high. So if we have something like this, where we're looking at one next to the other, we have four in a row where we have increasing highs. If this is higher than the previous high, then that rotation is given a positive one. If the high is lower than the previous period's high, then it is assigned a negative one. Similarly, if a time period's low is higher than the previous period's low, then a value of one is added. An auction bottom that is lower than the previous period's low. Receipts of minus one. So you can see how this sort of compiles this piece of data that really shows us what level of strength we have in one direction over the other. And if both periods, highs or lows come out even, there's no value. So it's zero. Okay, so this is performed for each period across this, right? So ultimately resulting in, as it says, a number that can provide a good indication of the day time frame sentiment. So again, what way are we trying to move? What direction are we trying to move? Is the market trying to move upward or is the market trying to move sideways? Or rather, is the market trying to move downward or is it ultimately moving sideways? Because there's more of a little bit of neutrality. So it's important to keep in mind, however, that the rotation factor only answers one of the two big questions. And we already got into this. What direction is the market trying to move? So this is something that you'll be paying attention to. In particular, let's say that price has been moving upwards in a trend and we still see that, you know, towards the high of this or towards the high of a prolonged trend, that the market has been still trying to aggressively move upward, but really the market has been moving sideways. You know, this could be an indication of again, when you have the market moving sideways, but. But let's say, for example, you're looking at your rotation factors that are very positive. 25, 12, 17, the market trying to move sideways, or rather trying to move upward and doing a poor job of doing it, then you'd potentially look for a pullback. So you actually do end up having that over here. The market very aggressively moving into the highs, but not really doing much in terms of covering any further distance. You could see that after the market ultimately moves up slightly. So having these positive values, 25, this is very flat. This is the first day that the market pulls back after this trend market falls into the Balance that we talked about, where market will consolidate and have value overlap. And then rather than the market continue upward, what we have is one day of a rotational conviction upward, a flat day. And then finally we get this rollover. So we have a negative value that follows after this period of consolidation. So this is showing us what direction the market is trying to move. The same thing occurs to the downside. If we have the market moving continuously downward, we're going to see that this is going to be supportive of the trend. If you have a market that has been moving downward over time and it has been a very negative value over time, and then you have something like the market moving relatively sideways, well then we would say in this case, let's say for example over here, downward trend, negative 14, negative 4, 1, negative 8, negative 4. The market's still moving aggressively to the downside, negative 13. And then you have a trending day to the downside that is positive, a balance day that's positive. And you're beginning to see that the market has been trying to move downward, but begins to flatten out in terms of conviction. So we start to see that really this just indicates that prices are moving or beginning to move sideways after a period of trending activity. So we use this tool the same way we would use paying attention to value overlap. We're just looking at if the direction of the market or the actual action of the market is showing up with what we're seeing in terms of the candle, or rather the market profile, TPO chart statistics. So the next thing that we're going to talk about is our aspr. So that is this value right here. So at the top, this is your average sub period range. So each one of these columns is a sub period. Remember this is indicative of 30 minutes throughout the day. So each one of these columns representing a half hour period, this is showing us over the course of that day what the average value for that is. So just think about this as we're looking at the average value of 30 minute candlesticks throughout the day. So if we were looking at a 30 minute chart, what we'd be looking at is essentially over the course of the day, the average size of all of these bars added up. Hopefully this will load a little bit faster, but it's not really necessary to even look at that. So we're looking at, we get an idea of how compressed the market was or how convicted it was. So this is something that we can use to sort of gauge where we sit in relationship to previous behavior. So for example, Just to clarify that in a trending market, we'll see that this is typically going to be a high value. When the market pulls back, we'll see that this falls down considerably. And one thing that you should do with these market profile TPO chart statistics is establish what baselines are. Okay. Is established norms. So in composites, in ranging periods, in trending periods, you should have an understanding of what the normal values are so that you could compare. Depending on, let's say that we're two days into a range, you could compare what our average sub period rotation size is compared to what it should be or what ranges have been prior. So, so that you can see, okay, maybe we are towards the end of the range. Normally towards the end of the range, we'll see the average sub period rotation will be somewhere along the lines of one standard deviation below the norm. In terms of my own statistical analysis, what I've taken is all the averages for the last year. And I can see that in ranges in particular, the average rotation size is around 56, 58. So when I see that we are approaching 30, 25, I know that that's typically one of the last days that we'll see within a range before having either continuation or some type of reversal. So if the move is continuing upward, we'll see that the low values of, in the low 30s and in the 20s are typically going to be the last days of that compression before we have some type of expansion. So again, this is showing you the level of expansion on an average, and you're going to see how this develops over the day. So you'll get an idea earlier on. If we're halfway through the day and this value is either very high or very low, what we could likely expect for the duration of the trend, if there is a trend or if it is a balance period, the last things are the TPO and the volume value area range. So that is these figures right here. And we're looking at again, just the high low of both of these. So the value area of volume and TPO both being 70% of where that underlying activity occurred. So if we're talking about the TPO value area range, we're talking about where we spent the most amount of time, 70% of the time. And if we're talking about the volume value area range, we're Talking about where 70% of the volume was transacted. So it's showing us the high and low of those periods. So if we're looking at this balance profile right here, this is where we spent the most amount of our time. And that was between, you know, an $80 to $70 range, right. Looking at the TPO and the volume value area range. And this is the same thing. This is going to be similar to looking at the average sub period range, okay. Where we can say, all right, you know, our normal behavior for a range might be anywhere from 220 to 230. So. So if we were gonna look at normal balance day behavior, normal ranging behavior, we would expect anywhere upwards of one standard deviation below that being 150 up. Then if we see that we are well below those values, we know we are one of those compressionary periods that would typically precede some type of expansionary environment. So this is just gonna show us what type of conditions we're in. Levels of volatility. This is sort of an indication, as well as you can assume, of what the day size is as well, because. Because there's not many times when you have a very compressed value area, but you have a very large day. So this gives you an idea immediately of how tight the days are. And even this, what you can do is start to, as we get further into this, begin to position yourselves for pre breakout, pre expansion. Right. Like we said, depending on what direction this is still, I mean, regardless of what direction this is, this gives you an indication of when we are sort of at that bottlenecking period. So these are the statistics that you'll normally find on most TPO charts. Sometimes you could, if you want, you could just incorporate also the high low of these candles or high low of these TPOs of the entire day. But these, I think, are the most actionable things to be paying attention to.