Market Profile Trading
The Market Profile® is an evolving database that records, organizes, and displays the market’s auction process. Time, price, and volume are the building blocks for creating a Market Profile®. Time is displayed along the horizontal axis and price along the vertical axis, with the distribution revealing structural market patterns.
Market Profile® traders capitalize on their understanding of the market’s auction process to effectively enter, manage, and exit their trades. This approach creates a clear distinction between Market Profile® traders and technical analysis oriented traders, those who base their trading decisions on traditional indicators and oscillators.
Traders use Market Profile® charts to identify and interpret the following market components:
- Multiple-timeframes and their impact on the market
- Probability for trend or consolidation
- Potential for continuation or change
- Key reference points above and below current market activity
- Current condition (attempts, achievements, and failures)
Traders can develop a significant edge by becoming experts at interpreting the auction process displayed on Market Profile® charts.
Two primary benefits according to feedback from users over the years are:
- It helps them incorporate more complete information to make better trading decisions
- It helps them manage their trading process, which includes entries, exits and risk management
For more information about Market Profile®, please visit our FAQ.