All language subtitles for 2. Difference between Volume Profile and Market Profile

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.