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

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-based while the volume profile is
volume -based.

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

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

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of trading.

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

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

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until the end of the day.

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

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

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

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

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

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first half hour only.

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

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

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

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range, the more likely there is a side
day.

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

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rejection of a price level.

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

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profile analysis removes this
discretion.

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Rejection is indicated by one TPO.

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while two or more TPOs begin to
represent acceptance.

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

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

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

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

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

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number of contracts have been exchanged
at that level.

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

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

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

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orders and turns around, as in the
example.

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

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is long.

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

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the market profile will not be.

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In this chart, we have an example.

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

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

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the bottom.

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

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tells us where a greater number of
contracts were exchanged.

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

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

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plus volume.

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

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

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Nothing could be further from the truth.

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

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value of a particular market at a
particular time.

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

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acceptance and therefore value
construction.