Stock Market
How To Make Money In Share Market By Using Market Profile?
Introduction to Market Profile:
1. Definition of Market Profile:
The market profile concept was first presented by J. Peter Steidlmayer and colleagues in the early 1980s.Giving a visual representation of market activity is its main goal, with an emphasis on volume and price data over a preset period of time.
It's just a graph with price on the vertical axis and time on the horizontal axis. Every horizontal bar represents the range of prices that were transacted over a specific time period, like fifteen, thirty, or sixty minutes.
2.Purpose of Market :
Traders can benefit from market profiles in a variety of ways, the most important being the understanding of market structure, sentiment research, and possible trading opportunities.
Describe market profile trading:
The fundamental tenet of Market Profile is that price movement and market activity may be graphically depicted as a bell-shaped distribution, which provides insight into the structure of the market.
1. Time Price Opportunity (TPO): Market Profile charts show price as a function of time, with each time period or price range represented by a letter most frequently vertical axis typically represents price, while the horizontal axis represents time.
2.Value Area: The majority of trading occurs within this pricing range. It is divided into three areas: the Lower Value Area, which has the lowest prices with a substantial volume; the Point of Control (POC), which is the price level with the largest volume; and the Upper Value Area, which has the highest prices with a significant volume.
3.Single Print: A single TPO that stands alone on the Market Profile chart, indicating a price level where there was limited trading activity.
4.Initial Balance: The price range covered by the first few TPOs at the beginning of a trading session. It helps traders gauge the initial market sentiment.
Profile Structure:
In Market Profile analysis, various terms are used to describe the structure of trading days. Here are some common terms associated with different types of trading days:
1.Normal Day:
A day in which the market exhibits a balanced distribution of value, forming a bell-shaped profile.
2.Trend Day:
A day characterized by a strong and sustained directional move, with minimal retracements or rotations. The profile may be elongated and P-shaped.
3.Neutral Day:
A day with balanced trading activity, where the market doesn't show a strong directional bias. The profile is often compact and lacks a pronounced shape.
4.Double Distribution Day:
A day where the Market Profile chart displays two distinct bell-shaped curves, indicating shifts in market sentiment.
5.Gap Day:
A day when there is a gap on the chart between the opening price and the closing price of the previous day, which is noteworthy.
6.Poor High or Poor Low Day:
A day where the market quickly moves away from the high or low, leaving a "poor" auction at that extreme.
Conclusion:
At Share Market Training in Chennai , we instruct students on Market Profile gives traders knowledge about the dynamics of the market. It displays patterns, consensus and divergence areas, and shifts in the public's opinion regarding trade. Market Profile helps traders make better decisions by providing them with a deeper insight of the market when combined with other tools. Seeing the ups and downs of the financial world is like having a second pair of eyes.