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Mentoring - Market Profile - Concepts - Coggle Diagram
Mentoring - Market Profile - Concepts
The area outside the value area also offers some significance in Market Profile.
By now we know that the market spends most of the time (70%) within the value area.
This implies that the market spends ONLY 30% of the time outside the value area. This is called the non-value area.
Buyers at the bottom (day low) and below VAL have the most advantageous price and sellers the most disadvantageous price for that day or timeframe.
Sellers at the top (day high) and above VAH have the most advantageous price and buyers the most disadvantageous price for that day or timeframe.
The market literally spends very less time at the edges (day high and day lows)
The zones between DH (day high) and VAH and that between DL (day low) and VAL are the non-value areas. These are generally the 2SD zones.
Only trend days get towards 3SD and beyond. So we will not discuss too much into them. Max you can see on a trend day is a 3SD move.
A day high or a day low can either have good conviction or lack conviction.
If there is conviction, generally
single prints
are formed. Single prints are profile structures with only ONE TPO.
Single prints at the top of a profile are called the
selling tails
.
Single prints at the bottom of the profile are called the
buying tails
If the day high and day low does not offer conviction for players,
poor highs and poor lows
are formed. These are also called
weak highs or weak lows
.
Whenever poor highs and poor lows are formed, the Market Profile graphic will have more TPOs at that price at the high or low. That means at these places there is no conviction and short term players are just using it for short trades.
What is a TPO? It is Time-Price Opportunity.
Price always advertises an opportunity. A price goes up advertising for sellers and goes down advertising for buyers.
Time regulates that opportunity. That means time will decide whether that opportunity is available or not.
Volume decides whether that opportunity is successful or not.
A TPO is the building block of a Market Profile graphic. It is also the measuring unit for the graphic.