What is Market Profile?

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  • on October 12th, 2010

If Market Profile hasn’t been a part of your education, you may wonder what it means to see phrases like Point of Control & Rotation & Time Price Opportunity & Value Areas.  I’ve only stumbled upon its benefits in the last few years, and think of it simply as Auction Market Theory.

This is a beginner post, meant to highlight some resources you may consider if the above terms appeal to you.  The father of Market Profile is Peter Steidlmayer, who originated the concept in the 1980′s as a floor trader on the CBOT as a unique way of visualizing order flow.  If you see traders reference Market Profile, there’s a good chance they have roots in Chicago or a background in psychology…anecdotal observation on my part, but there’s some logic to the link.

I like the following description from the CME Manual:

“Market Profile reveals pricing patterns from any market as they develop.  By effectively organizing time and price information, it is possible for traders to see which areas the market is accepting and which ones it is rejecting…and adjust their trading styles accordingly.”

Corey Rosenbloom contributed this use of profile for TradeStation users, FuturesTrader71 & EMiniPlayer & rolcol325 speak “profile”, and Jim Dalton now has a Twitter feed to bring his excellent books into the present.  Like me, you may decide to stick to traditional bar or candlestick charts but like the mindset of “battles for control” and acceptance/rejection of new price levels when stalking trade location.


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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