Market Profile

The Market Profile is a dynamic, real-time database that records, organizes, and displays the market’s evolving auction process.  Its primary benefit rests in its unique ability to facilitate the interpretation of market generated information. 

The foundational building blocks of the Market Profile are time, price, and volume.  When these building blocks are displayed within a Market Profile graphic, traders experienced with the Market Profile are, in most cases, able to identify developing balance and imbalance in the market’s structure.  Interpreting the probability of change frequently provides the trader an undeniable edge in identifying potential opportunities. 

The Market Profile is not a trading system; it does not tell you where you should buy or sell the market, enter or exit the market, or specifically tell you if the market is overbought or oversold. The trader must make those decisions based on his or her independent interpretation and evaluation of the market’s auction process, along with individual factors such as price, time, direction, contract volume, value, and any other information the trader deems important. 

The key to understanding and effectively utilizing the Market Profile lies in correctly reading and interpreting its evolving information graphic.  Through study and experience, traders can learn to identify the market's underlying dynamics and structure and then initiate, manage, and exit trades accordingly.