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Point of Control (Prominent POC (PPOC) - This is the POC that is…
Point of Control
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The market, price, is a function of volume and time. p = f (v, t), where p = price, v = volume and t = time. Sometimes it is also possible that v = f (p, t). We can change delta't but not t itself.
A POC that is formed when the market spends most of the time at a particular price is called a "Time POC (tPOC)".
A POC that is formed when the market spends most of the volume at a particular price is called a volume POC, or "vPOC". This should not be confused with VPOC (which is a virgin POC, which is totally different and would be discussed later).
A POC that is formed when the market spends most of the value at a particular price is called a VWAP POC or "value POC" or "vwapPOC"
Under our framework, we will observe all POCs but we will give more weightage to "vwPOC", as we did in case of options reading. Value is the most important concept in any business.
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Virgin POC (VPOC) - It is the untouched POC from the next business day. If a POC is formed, and then that POC is not touched from tomorrow, it will remain a key magnet for the market, and it would be called a virgin POC (VPOC). We will go through a very important trading strategy around VPOC.
Prominent POC (PPOC) - This is the POC that is prominently protruding in the profile. This POC is formed mostly on neutral and normal days. Basically the POC should literally touch each and every half-hour TPOs. That is it is shown as the most prominent level in the profile area. This is also a magnet and usually works well on days after the formation of normal and neutral profiles.
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Dynamic/developing POC (dPOC) - The POC that is moving during the day is called a dynamic POC. This is very important for observing intraday auction. We can call this as dPOC, or developing POC.
Static or historical POC - This POC is basically any POC that has occured before today and there is no movement in it. This POC can be a good reference point for exits or entries. Because we will look at the auction behaviour at those historical or static POCs. Usually when referring to historical POCs, please use the dates in dd/mm format for easy understanding. For example, 01/01 POC.
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Daily POC - This is the most used POC and the only one mostly used by many retail players. But the real kicker is in using other POCs not known to many.
Weekly POC - This is very important level if a stock or index is breaking that zone. Ideally your dashboard should have all the timeframe POCs because they give some good trading opportunities. For weekly expiries, this can be very important.
Monthly POC - We should always check the monthly or most importantly, the expiry POC, at least on the expiry day. This generates some real conviction during the expiry day.
Intraday POCs - Sometimes when the auction is not clear, we can start breaking down the auction into sub-timezones and then look at those POCs. We will observe these in live market sessions.
We consider Market Profile along with Volume Profile to observe the market's auction process. Along with that, if we start observing value (VWAP), it is a powerful combination.
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