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**MENTORING - Market Profile - Value Area - Coggle Diagram
**MENTORING - Market Profile - Value Area
A value area is a zone where the market spends 70% of the time.
It is also the zone where 70% of the day's prices lie. That much of data lies there.
This is a valuable information as players will know for the next day where the market had done most of its business. It is the value area.
Within the value area, the most important business point is called the point of control (POC).
The PoC is the price where the market has done maximum business for the day in terms of value. It is called the '
Value POC
' or
VWAP
(volume-weighted average price) for the day.
The POC is also the price where it has spent maximum volume. This is called '
Volume POC
'.
The POC is also the price where the market has spent maximum '
time
'. This is called '
Time POC
'.
Generally these POCs will align together on most days. But there are some days when these three are at different prices. That is why we analyse all of them.
That means we can analyse a Market Profile graphic that is based on either Value POC or Volume POC or Time POC.
The VA has two boundaries too. The top end of the VA is called VAH, or value area high. The bottom end of the VA is called VAL, or value area low.
After the POC, the VAH and VAL, which are 1sigma levels, are the most important price levels.
The VAH and VAL are always equidistant from the POC in a volume-based profile or value-based profiles.
However, in a time-based profile, they can be or cannot be equidistant from the POC.
Distance and area in a profile graphic are measured in terms of TPOs.
The VA is the most liquid area for large players to do deals. So they consider historical VAs before making large deals.
This VA is observed over various time frames also to get a context.
We generally divide players in terms of various attributes. For example, we had separated players as leveraged and non-leveraged players.
In Market Profile, or as a part of the auction market theory (AMT), we divide players into two types:
(a) active or initiative; (b) passive or responsive.
Whenever the different types of POCs differ in position or price, there is an anamoly in the market.