Market Profile

Market profile plots price on the vertical axis and time at that price on the horizontal, originally with letters marking each half-hour bracket. The shape, often a bell in a balanced day and an elongated shape on a trend day, shows where the auction spent time. The value area is the range that contains a chosen share of the period's activity, traditionally about 70 percent. The point of control is the price with the most time, or, in volume-profile variants, the most volume. Steidlmayer's contribution was to treat the session as an auction seeking value, not only as a series of bars. Time-at-price and volume-at-price are related and not identical. A market can spend time at a price on little volume, or print a lot of volume in a brief bracket.

Read the day's shape before you invent a trade. A balanced profile, fat in the middle, says the auction agreed on value and the edges are fade candidates until they are not. A trend profile, thin and elongated, says value was not agreed and fading the extreme is how traders die on trend days. The initial balance, the first hour in the original method, is the early auction. A day that extends far beyond it is a different day from one that stays inside it. The next session's open relative to the prior value area is the standard question. Open inside value suggests balance. Open outside value, and acceptance of that open, suggests the auction is exploring new prices.

Use the prior value area high and low, and the point of control, as the map for the next session, together with the ordinary prior-day high and low. Trade rejection at the value edge back toward the point of control when the day is balanced. Trade continuation when the market opens outside value and holds there. Do not force a fade because the profile "should" return to value. Acceptance outside value is how new value is built. Combine with volume profile if you have it. If time and volume disagree, believe the one you can define, and do not average them into a level that neither study shows.

Treating a single profile graphic as a forecast of tomorrow's shape. Also fading every spike because the textbook likes a return to value. And confusing time profile with volume profile when you talk about the point of control. Say which one you mean. They diverge often enough to matter.

Letter profiles depend on the bracket length and the session definition. A different session, a different timezone, a half-day, changes the shape. The 70 percent value area is a convention. Market profile does not know the news scheduled for tomorrow, and a balanced shape into an event is not protection. It is a description of the past auction. The next auction is allowed to leave it and never return.