Market Profile

The Market Profile indicator provides a comprehensive visualization of price distribution over time, allowing traders to identify key value areas and points of control for any given session. By organizing price data into TPOs (Time Price Opportunities), it highlights where the most trading activity occurred, helping to distinguish between perceived value and price extremes.

Usage

The Market Profile tool is primarily used to identify institutional interest and areas of price equilibrium. Traders can use the following outputs to inform their strategy:

• Value Area (VA): The range of prices where a specified percentage (typically 70%) of trading activity took place. This is bounded by the Value Area High (VAH) and Value Area Low (VAL).
• Point of Control (POC): The price level with the highest concentration of trading activity within the session, acting as a powerful magnet or support/resistance level.
• Developing Profile: The script can plot a real-time developing POC and Value Area, allowing you to see how the market's perception of value shifts as the session progresses.
• Contextual Analysis: By plotting the previous session's profile, the tool provides immediate reference points (Previous VAH/VAL) to judge whether the current market is "in balance" or "out of balance" relative to the prior day.

Details

The script functions by dividing a session's price range into a user-defined number of horizontal "buckets" (TPOs). It then iterates through the price action of the session to count how many bars traded within each bucket.

• TPO Size: This determines the granularity of the profile. A higher TPO size creates a more detailed profile, while a lower size provides a broader overview.
• Calculation: The Value Area is calculated starting from the POC and expanding to include the nearest price levels with the highest activity until the target percentage (e.g., 70%) of total session activity is captured.
• Inspiration: This implementation incorporates structural concepts and logic influenced by the work of lonesometheblue, juliusCrypto, and Ricardo Santos.

Settings

Settings for Generating Market Profile

• Declaring TPOsize: Sets the number of vertical divisions used to calculate the profile.
• Specifying the Timeframe: Determines the session length (e.g., 'D' for Daily, 'W' for Weekly).
• Defining Value Area: The percentage of total TPOs to be included in the Value Area (default is 70).
• Sessions to display: Limits the number of historical session profiles rendered on the chart.
• Adjust Size of Plot: Controls the horizontal width/scaling of the profile boxes.
• Colors: Individual color pickers for Value Area High, Value Area Low, Point of Control (POC), and the Previous Value Area.
• Show MarketProfile: Toggles the visibility of the TPO-based profile shapes.

FAQ

How do I interpret the Point of Control (POC)?

The POC represents the price at which the most time was spent during the session. It is often regarded as the "fairest" price for that period and frequently acts as a significant support or resistance level in subsequent sessions.

Can I use this on intraday timeframes?

Yes, the script allows you to specify the timeframe for the profile (e.g., Daily) while viewing it on lower intraday charts like the 5-minute or 15-minute timeframe.

How do I access Market Profile?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.