Original subtitles

The main difference between the two tools is that the market profile is time

-based while the volume profile is volume -based.

The market profile represents the price data on the chart in letter format,

where each letter, called PPO or Time Price Opportunity, represents 30 minutes

of trading.

Letter A represents the first 30 minutes of trading after the session opens.

Letter B represents the next 30 minutes, and so on, adding letters and minutes

until the end of the day.

traders who base their trading on the market profile analyze the opening of

day in relation to the previous day's value area and the evolution of the

initial balance, range that covers the first hour of trading, to determine the

type of day that is likely to happen and propose scenarios based on it.

It should be noted that some traders determine the initial balance based on

first half hour only.

Although volume profile traders usually do not take the initial balance into

account, The message it conveys can be very interesting, mainly because the

narrower the range, the more likely there is a trend day, and the wider the

range, the more likely there is a side day.

An interesting use of the PM is to objectively determine the acceptance or

rejection of a price level.

While in the volume profile, this may be shrouded in subjectivity, the market

profile analysis removes this discretion.

Rejection is indicated by one TPO.

while two or more TPOs begin to represent acceptance.

The evolution of the distribution of the profiles of both tools will tend to be

quite similar, although it is true that they will not be exactly the same.

This is obvious because they do not use the same data for their representation.

An accumulation of TPOs will indicate that the price has spent a long time at

that particular level, while an accumulation of volume will mean that a

number of contracts have been exchanged at that level.

In the volume profile, which is designed based on volume, the most traded level

will not necessarily be the level where the most time has been spent, while the

price may reach a level that in a few seconds accumulates a large number of

orders and turns around, as in the example.

The time that the price is spent at this level is short, but the volume traded

is long.

Therefore, the POC of the volume profile will be at this level, while the POC of

the market profile will not be.

In this chart, we have an example.

On the left, we see how the highest trading level of the market profile is

the top, while the highest trading level of the volume profile is identified at

the bottom.

The POC tells us the level at which the price traded the longest, while the VPOC

tells us where a greater number of contracts were exchanged.

Due to the current ecosystem of financial markets, where the importance

volume is evident, it seems more interesting to use the combination of

plus volume.

volume profile, rather than price plus time, market profile.

This is not to say that the time variable is unimportant or less

Nothing could be further from the truth.

Obviously, time is a key element in determining where participants decide

value of a particular market at a particular time.

The moment of time spent in a particular area is an undeniable sign of

acceptance and therefore value construction.