What is the profile of the market and why should you learn it?
The internet is full of market information, some of which can be confusing and not helpful. To be successful in the field of stock trading, a trader or potential investor will need to have all the correct information. But how do you know which information on the web is correct and which information is not? Well, it all depends on what you read and what advice you follow.
Before going into the details of creating a successful career in stock trading, there are a few basic concepts you should know. One of these concepts is the market profile. What exactly is the profile of the market and why is there so much hype around it today?
The Market Profile is simply a method of keeping abreast of the market. Here you plot the value of time on one axis and price on the other. Most of the time, this forms a bell-shaped curve. Peter Steindlmayer introduced this concept while trading at the Chicago Board of Trade (CBOT); the idea was then opened to the public in 1985.
The market profile can help the day trader to identify other participants in the period (in simple terms, the big players) who have the power of both money and information. Traders can make better decisions by following the big guys who are driving the market.
What is Market Profile Trading?
Using the Market Profile, traders can read current market trends in real time. It takes into account the latest market data and can provide traders with excellent analysis based on time, price and volume so that with the help of the best possible information, the trader can decide what to do. then.
Market profile is like having a superpower in the trading world. This gives the trader an x-ray view of the current market. The best thing about Market Profile is that it can work in all market conditions unlike most trading systems which can only work in specific market conditions, for example, trending markets or lateral. With the Market Profile, you can get a clear picture of balanced and unbalanced market conditions at any time, whether it is up or down.
The stock market has several different players, mainly positional traders, day traders, scalpers, swing traders, big buyers, and big sellers. The price fluctuations in the market are mainly due to the actions of all these players combined. While the big buyers and sellers have their specific prices at which they want to buy / sell the stocks, all the other players form a bridge between them and can provide liquidity in the market. It is this interaction between large players and short-term players that distributes trading volumes and forms the bell-shaped curve that is a feature of market profile charts.
The bell curve
A market is generally formed to facilitate trading, and the stock market is no different. Here, the price of a script will only increase until the last buyer has finished buying, and no one wants to buy the stock at a higher price. This maximum price is known as the unfair price.
Likewise, the price of the stock only decreases until the last seller has sold the stock. When there is no one left who will sell at a lower price, then that point is defined as the unfair low.
We can say that the market helps facilitate trading by using the ‘double bidding’ process where when the up auction ends, the down auction begins and vice versa.
The value area is defined as the range between unfair high and unfair low.
Market Profile Charts
There are many different software programs that can help you effortlessly build market profiles using data from an Excel sheet. First of all, you will need to understand how these software works.
All half-hours of the trading day are designated with a letter. This is called the TPO Opportunity or Time Price.
The first 30 minute range is given with an “A” while the next 30 minutes are marked with a “B”. This process continues until the end of the market range.
Control Point (POC): POC can be defined as the price level at which the most time has been spent (price profile) or the most commercial activity (volume profile) takes place during the day. At the end of the day, a market profile chart shows what happened during the day; at the same time, it also shows who is responsible for the events.
How to read a market profile chart?
As we all know, a market profile chart shows price on the Y axis and volume on the X axis. The time frame uses a combination of letters and colors. It is easy to understand the price of the stock, but volume and timing are another matter.
The volume on this chart is displayed as a horizontal histogram where the longest horizontal line shows the largest trading volume. This point is also called the checkpoint because it is this point that controls most of the market.
The period on the profile graph uses letters as well as colors where each letter represents a unit of time; it can take 5 minutes or an hour. These, along with other indicators, can be used to highlight and take notes on a market profile chart. The sell and buy tails are represented by the lowest buy and sell TPOs for that particular trading period. These value areas can represent around 70% of TPOs.
At StockPro, we understand that these and other concepts of stock trading are not the easiest to understand. Therefore, with the help of Dr Seema Jain, Ph.D. IIT Delhi, we have come up with the Combined Market Profile Course. This course is taught by Mr. Bhavneet Singh, a distinguished trainer and mentor from our StockPro institution. He completed his B.Tech from the National Institute of Technology in Jaipur. He has over 10 years of experience in stock trading with a particular focus on scalping in Bank Nifty Options. He is a prestigious NISM Certified Professional for Equity Derivatives, an expert in the field of technical analysis using market profile, volume profile and order flow analysis. He is also an expert in options trading.
What will you learn in the course?
The course is divided into 6 modules
MODULE (A): Market Profile Analysis (Estimated Time Required: 1 week)
Introduction to market profile charts and how to create them.
Key elements of the profile chart and how to read the charts.
Balance and imbalance.
Market profile structures (both trend and non-trend).
Value area relationship.
Types of market openings.
Identification of long term buyers and sellers through graphics.
Get free access to market profile charts.
MODULE (B): Analysis of the volume profile (Estimated time required: 1 week)
Introduction to volume profile charts and how to create them.
Key elements of the profile chart and how to read the charts.
Volume profile structures and value area relationship.
Identification of long term buyers and sellers through volumes.
MODULE (C): Analysis of order flow (estimated time required: 1 week)
Introduction to Order Flow, Order Flow Conditions, Reading Order Flowcharts.
Understand the market imbalance, the importance of the checkpoint.
Importance of rejection of delta prices and order flows.
Fair price absorption and order flow support and resistances.
Configure order flow exchanges on cancellations and continuation.
MODULE (D): Miscellaneous (Estimated time required: 1 week)
Exclusive private Make or Break live trading session on Bank-Nifty expiration day (minimum 30 LIVE trading sessions)
Combine Market Profile, Profile and Order Flow to make your trading decisions.
Intraday scalping on Bank-Nifty options.
Time and sales analysis.
MODULE (E): CLASSES OF RISK MANAGEMENT, MONEY MANAGEMENT AND TRADE MANAGEMENT.
Trading Psychology – Most Important Strategy Than Any Other Strategy.
MODULE (F): UNDERSTANDING THE OPTIONS
What are the options? (CALL / PUT options)
Basics of options – Options terminologies, ITM, ATM, OTM, option premium, option writing, historical volatility, implied volatility.
Purchase options vs. Sale of options.
Analysis of open interests.
Interpretation of intrinsic value.
Understanding the Option Greeks.
What is the specialty of our course?
- The course is designed for everyone; it doesn’t matter whether they are beginners, investors or advanced traders.
- Our course focuses on intraday trading and is very useful for those who wish to hone their trading skills.
- With exclusive private live trading sessions that we host, this course ensures that our students can implement what they learn in the classroom.
- We also provide long term support to all of our students which helps them learn the curve and keep going even after completing the course.
- Using free resources, we learn how to generate market profiles and volume profiles.
- Students can also repeat the course for up to 6 months after registering for the course if they do not understand any concepts the first time. Students also have access to recorded videos of the classes so that they can refer to them when needed.
- Separate sessions are organized to dispel any doubts that our students may have. These clarifications can be made on the Telegram channel during the training or even during the live course.
- We have a separate telegram channel for the StockPro Market Profile Combo Course where members can get daily business ideas directly from us.
- Signing up for our courses also gives members access to our specialized telegram group which has been created for members of the Market Profile Combo Course. Here, members will be part of one of the largest trading communities and will be able to interact with like-minded traders and investors for up to 6 months.
- When students register for our classes, they are automatically added to our 5 premium and rockstar groups.
Customize Excel scanners to help students find potential breakout stocks.
Personalized OI Index sheets that are automatically updated in real time.
Free access to the “All-in-one Trading Course” which is based on technical analysis and fundamental analysis.
If you want to be successful as a trader or stock market investor, then this course is ideal. Not only can you pay it off in installments, but you will get back a lot more than the amount paid during the training process itself. It’s a win-win situation for all of us, so why wait? Contact us today for more details.