Market Profile

The Market Profile indicator provides a visual representation of price activity over a specific time period to help traders identify areas of high and low market value. It utilizes a vertical price axis and a horizontal time/activity axis to create a bell-shaped distribution, highlighting the Point of Control (POC) and Value Areas where the majority of trading activity occurred.

Usage

The Usage section focuses on identifying market balance and imbalance. Traders use this tool to determine where the market perceived "fair value" to be during a previous session or timeframe.

• Point of Control (POC): This is the price level with the highest amount of activity (Time Price Opportunity). It acts as a significant magnet or support/resistance level in future sessions.
• Value Area (VA): This represents the range of prices where a specified percentage (default 70%) of activity took place.
  • Value Area High (VAH): The upper boundary of the fair value zone.
  • Value Area Low (VAL): The lower boundary of the fair value zone.
• Timeframe Selection: The script can automatically determine the most relevant higher timeframe (HTF) to profile based on your current chart, or you can manually select periods ranging from 1 minute to 12 months.

Details

The script follows the methodology devised by J. Peter Steidlmayer. Unlike traditional volume profiles that rely on volume data, the Market Profile (often referred to as TPO - Time Price Opportunity) measures how much time price spends at specific levels.

The calculation segments the higher timeframe into 20 equal price "channels" between the period's high and low. It then iterates through the intra-day bars to see which price channels were "touched" or "included" during that time. The more bars that pass through a specific price channel, the longer the horizontal line becomes, eventually forming the profile shape. This allows traders to evaluate market value development regardless of volume availability.

Settings

General Settings

• Higher Time Frame: Sets the period for which the profile is calculated (e.g., Daily, Weekly). "Auto" adjusts based on the chart timeframe.
• Percent for Value Area %: Determines the percentage of total TPO activity to include in the Value Area (typically 70%).
• Show POC Line: Toggles the visibility of the Point of Control line.
• Keep Old MPs: When enabled, historical profiles remain on the chart. When disabled, only the most recent profile is shown.
• Show: Options to display "All Channels," "Only Value Area High/Low," or "Don't Show Value Area."

Visuals

• Line Width: Adjusts the thickness of the profile lines.
• Sizing Rate %: Controls the horizontal length of the profile to manage chart clutter.
• POC Line Color: Sets the color for the Point of Control.
• Value Area Color: Sets the color for price channels within the Value Area.
• Non-Value Area Color: Sets the color for price channels outside the Value Area.

FAQ

How is the POC calculated in this script? The Point of Control is identified as the price channel that contains the highest number of intra-day bar intersections within the selected higher timeframe.

What is the difference between this and a Volume Profile? Market Profile (TPO) measures time spent at a price level, whereas Volume Profile measures the actual amount of shares or contracts traded at that level.

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