Market Profile: How Trading World Champions REALLY read the Market!

Market profile, the weapon for your trading.

Why?

I will give you a little explanation. Or you can use a market profile. And what is your result? You can take and choose every day you need it. We take it every day before we trade and also at the trading day. We use it to get more informations, to prepare a context. You have to use a context. This is the number one of your trading. And if you didn't use it, you, you have a problem because you will never found the players, the aggressive players, the small players. And you are not able to organize where you can take breakouts or counter trades. I think it will be a lovely instrument for you to choose it for your trading. And I give you a lot of information in this video and I think you will love it. I translated this video with AI. My English is not perfect, but it will be better and better and better. And I think it is cool for you.

Dear friends, Market profile, Market profiling, the way we actually use it is a wonderful tool. Tpo Time, Price, Opportunity, developed by Peter Stadelmaier, who was a soybean floor trader at the time. And it simply gives us really great information. The information should be viewed in such a way that it allows you to determine a context for the day. There are different profile types of the market profile, but first you have to understand the logic and the basics behind it. It's simply a time based tool that when used in its standardized version, shows you in 30 minute blocks where there is momentum in the market and where there is not, maybe also lethargy. What can you derive from this for your trading day? And when should you, if necessary, look for a counter trade? When do big players come into play and bring an imbalance into the markets? And that's exactly what I want to show you today in a very basic way, so that you get an idea of it. How you can use market profiling wonderfully for yourself. Because I can tell you this is our tool to clearly define every morning and every week, what is the current trend direction with high probability, who is dominating the markets and what advantages can I gain from that? Where are my business zones? Yes, how can I determine from which point a market falls out of balance? And for that I need market profiling. That means then I also use the volume profile. But today is about market profile so that you can create the combination for yourselves. And that's going to be really, really great. So what is market profile anyway? I want to show you so you can get an idea. These here are individual days. One day, second day, third day, fourth day, but how does this whole story come together? Now I'll show you the same picture in an expanded version. And here we can see this. That means this day here, expanded simply means 30 minute blocks where I first get the information. What was the range in the first 30min minutes? The range of the first 30 minutes gives me information about how to assess the trading opening phase. Is it very large or is it rather small? That's the first piece of information that we get from this. Now it continues and the second 30 minutes begin. And so I see the second 30 minutes, the third 30 minutes, the fourth, the fifth, the sixth go back down again and you can already see it. The market is oscillating back and forth. And when we have such a profile, then that's what's called a normal profile, a normal profile, a balanced profile. I've explained this many times already. There are so called trend profiles and there are so called balance profiles. And today we want to take a look together at what that means. Because now I can do the following. I can collapse all this information to get a nice overview. What does the whole thing look like if I want to view the picture in a simplified way from my perspective. And then when we collapse it, we end up with exactly this version. That means nothing else has happened here except that the 30 minute candles are aggregated by time at the corresponding prices. Yes. Where trading has taken place, they are summed up. And then I get a wonderful, in this case, a bell curve. And that gives me really wonderful information. So let's summarize before we move on. We've understood that market profiling is nothing more than a 30 minute chart that is then collapsed back onto the corresponding axis. And with that we get a result that looks exactly like this. Now we come to the next step and this is really, really important. Let's take a look at the whole thing. For example, if we have an image like this, how does it help us? It helps us, for instance, when we look at this day here, because we can immediately see at first glance that the opening trading range is very large. This is variant one, which we absolutely need to remember because it's important to know how the open is structured. Is it very large, is it very small? And so on. These are pieces of information that market profilers always make use of. And you can see it here, for example, very small opening trading phases. And here we have a very large one. This means that the market participants were in total imbalance right from the start. What is the next thing we see here? We see what is Called a buying tail. This means that the market only spent 30 minutes here and then moved explosively, in this case, upwards. Shut up. And such a buying tail shows us strength. What else do we see? Here we see the so called poc, not to be confused with the vpoc, which is volume weighted. No, this is the pocket. This is the point where the market spent the most time on this day. And then we see value area high and value area low. These are also calculated based on the time when the market spent 70% of the main trading activity based on time. All this information together gives us several great insights. We know that there is strength in this profile and the balance is up here. For us, this simply means nothing more than the realization that this is a very strong day at the market open with a very strong expansion. Cool. But what do we do with that? For us, it's now important to know how do we bring all this information together. And that's quite simple. If the market open is very, very large, the probability is high that the market will play in balance. In this case here, the market opening phase is very large. But afterwards the market moves to fairer prices, prices at the top. So how does this contradiction come about? What can I do with that? I can tell you quite simply if you see this, the probability is simply there that the market will run back down here. Because the big market participants simply didn't know right at the start of trading. And then where are the fair prices? They have found them. But very often they will test the market down here again. And all these connections give us advantages because we have a context, an idea of how the market ultimately moves. In the end, it moves. If we open this up and take a look, for example, it looks like this. That means the first 30 minutes, the second 30 minutes. And then we can already see that the market starts to move more and more into balance. And up here accordingly, it starts to form the so called value area. So over time, the market participants definitely accept the higher prices. But down here there is still something left to test. And these are the kinds of things, information like this is completely different. If, for example, you have a small initial balance, it's a bit like a rubber band. When the market then explodes, there's more substance behind it. That's what's called a trend profile. Let's move on. This, for example, is what's called a normal profile. And if you have a normal profile, just like I showed in the previous image, then you know that the market is in balance. You can see it here. The market started with the opening of trading and then it just moved back and forth the whole time. That means the big market participants have the opportunity to do their business at fair prices. A completely different kind of information, because then we know that here and here are unfair prices. And the probability is high that if the market moves here or here, it will want to return. That means it simply gives us the information from the context. There is a likelihood that on such a day we can trade back and forth. And so you can trade beautifully up here and down here. Look for counter trading setups. That's really, really powerful if you want to use this information for yourself, if you like. The next point is this one here. This is for example, a so called normal variation profile. What does that mean? The market is actually balanced, but it looked down here and got rejected. That means here we immediately have the information that these unfair prices were pushed back up very strong. And for us it's of course very important to know how we approach the day. How do we deal with it today it's relatively simple. The probability is high that the market will continue to accept higher prices for now. But now let's take it a step further. And that's exactly what we need when we refer to the past. How can we plan now when we have a trading open the next day? And for that you first have to make a distinction. Normal profiles on the left side or trend profiles on the left side. And then you can use that to pinpoint where the strong hands were. Will they defend those levels again or is it more likely that they'll break? It's always just about context here. This is not a self contained trading strategy, but rather a route planning that we have to and can carry out with this. And then we can look at the volumes. Does the market accept these price areas, for example, here? Then it gets dangerous because then the probability is high that the market will break. But if it doesn't accept them and comes back in here and accepts them again, then the probability is high that the market will continue this trend accordingly. How do I come to the conclusion that there's a trend here? At first there isn't one. But the probability that the market will try to move further up the next day after such a setup is simply there because there was strong rejection down here and it was immediately bought up again, again. And that is information for us. We would have the same information here. If, for example, on a normal day we open the next day and we're right in the middle, then we know as long as the price ranges in the middle are accepted, we can continue this game for as long as we want. And sometimes this goes on for two or three days because we know that 70% of the time the market is in so called balanced sideways phases. And of course it likes to dip below that from time to time, or sometimes it goes a bit above. But what's crucial is whether it comes back again. Because the big market participants need this price discovery in order to position themselves in the market with fair results. And that's important to understand. Let's go a bit further. Let's take a look at a corresponding profile like this one. This is called a double distribution day. Essentially these are two profiles in one very important. There must be what's called a single print here for it to be genuine. What does that mean? Single prints are always individual letters within a profile. And such single prints immediately tell us that there is a high probability the market has currently established a trend profile, or simply put, it's a trend profile. And now we can see the following here. What we have here in effect are two so called POCs. And these two POCs give us the information that the market has, has built two profiles. And in between them, no fair prices have ever been traded. This means that the price is accepted up here and down here. And when we see such profiles, we simply need to know the rules for them. And the rules are relatively easy. There is a high probability that the market will first try to establish this back and forth movement, unless it breaks out of the value area to the upside or downside. And it will try to fill in these unfair price levels here so that the whole thing can potentially become a large normal distribution later on. Because these market participants up here and those who join in afterwards, they will try to fill this empty space here with transactions in order to bring stability and achieve fair price discovery again. And that's what makes market profiling cool. I'd like to briefly summarize this again so that you all understand what this is about. The first piece of information that market profile gives us is what is the structure of the market? And if, for example, the structure is such that we can see balance or trend, then we have information that tells us which market participants are currently moving the game. The second possibility is that the moment we refer to previous days or weeks, we get information that tells us where the global players are happy. And what we can infer from that, where are there low volume price areas that are very likely to be filled or repaired. That's also very cool. Then there's another piece of Information. If there are individual letters at the top of a profile, then that's a selling tail at the bottom, like here, that's a buying tail. That means we have strong rejections. And with that, we can also pinpoint who dominated the market on that day. Now we can go even further and look for what are called ledges. That means multiple letters at a single price level. And these ledges in turn, show us that weak hands are taking over the market there or have held it up, because that also happens. And then we again have information to know how the market is most likely being played there. And now you need to do the following. Now you need to overlay the corresponding volume profile, and then you'll see this additional information. And that's why we use market profiling, because with this information, you immediately recognize whether the whole game, in terms of time and in terms of volume. Now that's the volume profile is fair, because you'll notice sometimes the whole thing looks like this. I'll go back for a moment. And now you can see the market has indeed formed a clear profile in terms of time. But in terms of volume, the whole thing looks like this. For example, now we have an imbalance. And when we have such an imbalance, we need to ask ourselves, how can we take advantage of this? And that's relatively easy because we remember the big market participants need time. And when the market suddenly falls into a major imbalance in terms of volume, then it's highly likely that these guys are going to have a big problem here, especially if the market continues to move away. And here, with very high probability, one or two parties have done some serious business for whatever reason, and they had to push the price out of balance. And that's always a sign of, wow, watch out. Things are really taking off here. So to sum it all up and fully recap everything we've discussed, Market Profile is an incredibly powerful and insightful tool that consistently gives us a significant informational advantage to effectively plan and anticipate precisely where markets are most likely to move and where they are more likely to stay in a stable balance. This also helps us identify which specific repair prices exist, for example, in those areas where virtually no significant time was spent indicating potential inefficiencies or opportunities. How can we define target areas through the single prints? And what can we actually achieve with this? We can clearly recognize through the structures who is dominating the market, when and from which point that dominance ends. And with that, we build a context, a roadmap. That's all it is. But this, that's all it is, is incredibly valuable because it simply gives you the information about who is dominating the market and where the market is being dominated. And that's just great because it's always the global players who dominate the market, and we have to read these traces. If you enjoyed the video, leave us a like, I put a lot of effort into illustrating this for you in a very simple way, and I think I succeeded. Thank you very much for listening.