1. Trade School: market profile basics
Nick Fosco
September 11, 2010

2. Market Profile History
Developer: J. Peter Steidlmayer
CBOT Traders for over 40 yrs
Developed in the
Graphical organization of price and time
Mostly used for intra-day trading
Source: Market Profile Basics; by Jayanthi Gapa;akrishman

3. Market Profile Fundamentals
Is not an indicator
Does not provide buy/sell signals
Is a decision-support tool
Organizes data to allow for understanding of Market control
Provides understanding of fair value
Identifies direction of price move
Trade positioning
Market Profile data allows for advantageous trade positioning

4. Market Profile Theory
Concept: Market’s daily organization determined by Time, Price and Volume.
Based on normal distribution curve
Value Area: Range of daily prices where 70% of trades take place (one standard deviation)
Market are normally skewed
It is rare to see market prices follow into a normal distribution curve

5. Market Profile Rules Volume is key Volume dries up Volume stays strong
Look for volume action away from value area
Volume dries up
Sellers not happy with price change
Prices will most likely revert to value area
Volume stays strong
New price point is being accepted
Will most likely form new value area

6. Generation The Market Profile
Time Price Opportunities (Tpos)
Represented by letters
Each letter is 30 minute period
Initial Balance
Price Range during first trading hour (Tpos A & B)
Price exploration period
Point of Control
Price with largest amount of Tpos

7. Market Profile Types Normal Variation
- Early trading activity (D) followed by range extension buying.
Trend Day
Prices constantly moving directionally
No interest in price reversal
Double Distribution Day
Original price value was found to be unfair

8. Think or Swim Active Trader
TOS has very similar profile that is located under the Active Trader tab
Let’s go to TOS platform for details