What Is Market Profile?
💡 Definition
Market Profile (TPO: Time-Price Opportunity) organizes price by time spent at each level. Each time segment (e.g., 30-minute period) prints a “TPO letter” where price trades. The resulting distribution highlights value areas, balance/imbalance, and day structure — a lens on the auction between buyers and sellers.
Where Volume Profile shows how much traded at price, Market Profile shows how long price was accepted there. Together, they map value, participation, and potential turning points.
Visual Representation
TPO Distribution: VAH / VAL / POC & Initial Balance
TPO letters stack where price persists. The widest row is the POC. Value Area contains ~70% of TPOs; IB spans the first two periods (often A+B).
Key Concepts
🧭 Initial Balance (IB)
Range of the first two periods. IB extensions (2×, 3×) can signal trend days; failures hint at rotation.
📌 POC & Value Area
POC is the price with most TPOs (time acceptance). VAH/VAL frame the day’s value; rejections vs acceptance help define bias.
🪶 Excess & Single Prints
Excess tails (one- or two-TPO wide edges) suggest auction completion. Single prints in the middle often indicate initiative drives.
🏗️ Day Structure
Normal, Normal Variation, Trend, Double Distribution, Non-Trend. Structure reveals who is in control and where continuation may occur.
Why Market Profile Works
- Auction Logic: Markets probe until finding acceptance; time at price = validation.
- Behavioral Clues: Excess at edges marks rejection; poor highs/lows imply unfinished business.
- Informed Participation: Longer dwell near POC/VA often reflects institutional activity.
- Regime Detection: Balanced days invite mean reversion; imbalanced days favor trend.
How to Use Market Profile
Practical Playbook
1. Mark Prior Levels: Prior day VAH/VAL/POC and weekly composite references.
2. Identify Open Type: Open-Drive, Open-Test-Drive, Open-Rejection-Reverse, or Open-Auction — this sets the tone.
3. Track IB: Breaks and holds beyond IB point to trend potential; failures suggest rotation.
4. Read Excess & Singles: Excess = potential reversal; mid-day single prints = continuation zone.
5. Align with Context: Balance (fade extremes to VA/POC) vs Imbalance (go with break/continuation).
6. Add Confluence: Blend with S/R, trendlines, Volume Profile (HVN/LVN), and key session timings.
Core Strategies
🔙 Value Reversion (Balanced Days)
Fade moves from VAH back toward POC/VAL with clear rejection; invalidate on acceptance beyond the edge.
⚡ IB Break & Go (Trend Days)
Enter on decisive IB break with initiative flow; trail under single prints or emerging micro-POCs.
🧱 Double Distribution Play
When a second distribution forms, trade retests of the single print seam between distributions.
🧵 Poor High/Low Repair
Thin, untested highs/lows often get repaired later; plan for tests when context supports it.
Common Mistakes
⚠️ Avoid These Errors
- Using VAH/VAL as exact lines — require acceptance/rejection evidence.
- Fading strong initiative days just because price is “outside value”.
- Ignoring the open type and IB — day type often decided early.
- Confusing excess with ordinary tails; context matters.
- Not updating references as value migrates intraday.
Advanced Concepts
🧱 Composite & Brackets
Build multi-day brackets to see higher-TF value. Breaks from brackets often start trend sequences.
🕒 Session Nuance
RTH vs ETH profiles can differ dramatically. Overnight inventory imbalances often mean revert at cash open.
🧬 Anomalies & Micro-POCs
Single-row bumps and micro-POCs show unfinished structure; watch for repairs on later sessions.
📈 IB Extensions & Day Types
Normal, NV, Trend, DD, Non-Trend; IB extension stats can guide expectations for range and direction.
The Bottom Line
Market Profile turns the chart into an auction map of time acceptance. Use IB, VAH/VAL, POC, excess, and single prints to frame the day’s likely path. In balance, fade back to value; in imbalance, ride initiative flow — always with risk defined and context-aware confluence.