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Market Profile: Volume & Market Development
| EEE ESSENSE EES
a Market Development is due to the result of Auction
process between participants
2 Markets essentially move due to its perceived ‘Value’
by Traders
2 Markets constantly fluctuate between Balance and &
Imbalance
2 Balance is where majority of participants agree upon
the Value. Imbalance is where participants differ on
Value Market Profile: Volume & Market Development
o Balance is where Trader needs to get ready. Imbalance is
where Trader reaps the Profits
a Cycle of Balance — Imbalance — Balance takes place in 4
Stages
© Accumulation (Neutral Days, Non Trend Days, Normal Days)
© Trend (Trend Days, Normal Variation Days)
© Distribution (Neutral Days, Normal Days, Non Trend Days)
© Trend (Trend Days, Normal Variation Days)
2 Above Cycle is a guide. At times only 3 Stages occur Market Profile: Volume & Market Development
Ta
© Accumulation (News is terrible along with Economic
Data)
O Trend (Still disbelief, Price & Value continue higher)
5 Distribution (Belief and Confidence comes back,
Volumes cannot cause same movement)
& Trend (Confidence is at highest, Ol and Volume Peak
out, Breadth of the Market weakens) Market Profile: Volume & Market Development
a fSSSSSSSSSSSSSSSSSSSESISSSSGSEEGSSSUSSEESSISUGSEESSSSCESESSISEGSEESSSSNGSESSSSSIGSEESSSSNGSEESSCESOGEESSGES
© Volume Areas are used to identify Market sentiment
co Volume reference points help in identifying change in
market before it shows up on structure
co Volume Areas are also used as Support and
Resistance
2 Type of Volume Areas; High Volume Area & Low
Volume Area Market Profile: Volume & Market Development
High Volume Areas
2 a
© High Volume Area develops when market spends too
much time at a range of price.
a Price rotation during this range is high and both Buyer
and Seller are active forming balance region
co High Volume Areas are region of fair prices and
hence attracts price towards it
a When Price spends too much of time in a High
Volume Area it tends to move away from it in search
of new value Market Profile: Volume & Market Development
High Volume Areas
BR EEE EEE EEE EP
© High Volume Area is not a rigid level for the market
to follow.
co When Trend is too strong Price will not return to (or
near) High Volume Area
© High Volume Areas provides enough time to liquidate
or build position as price slows in this region
co If Price moves above High Value Area and then
comes and revisits, it usually is a good entry point if
trend is to continue. (Support) Market Profile: Volume & Market Development
High Volume Areas
TREND
a
tay, rr ro Market Profile: Volume & Market Development
Low Volume Areas
SEES Se EE
3 Low Volume Area reflects directional conviction of
OTF Traders
2 Low Volume Area forms during unbalanced market
3 Like High Volume Area this too can be used as
Support/Resistance to place trades
a Low Volume Areas are formed by Excesses, Single
TPO’s & Gap ups along with fast price movements
0 It can be used as a “Trend change” Indicator as well
since it represents Rejection Market Profile: Volume & Market Development
Low Volume Areas
Wh hk i ‘FAILS TO GO Ta _ TRENDS DOWN
t hth a a |
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