What is Market Profile?
The dictionary defines distribution as "the position,
arrangement, or frequency of occurrence over an area or throughout a space
or unit of time." The volume of everything distributes around a mean
over time. Why should trading be different?
A balanced normal distribution or bell-shaped curve
can be formed from the this basic pattern of market behavior, namely the
continuum of imbalance, balance, imbalance, balance, etc.
When market activity forms a bell-shaped profile, a
segment of market action is complete and the market is ready to move.
This balanced distribution is the long-term framework to which to relate
short-term moves in individual sessions.
Using Market Profile data, as exemplified through the
charts on this page, you can see the distribution structure visually.
Being able to recognize the market's structure greatly simplifies the
trading process, by developing a simplified set of rules for specific
market conditions. Market Profile is a tool rather than a buy/sell system,
reading Market Profile data involves grasping principles, not just memorizing
rules. Market Profile data captures and lets you see changes in the market
so that you can adjust accordingly. This means that once you can recognize
the patterns with Market Profile data, the knowledge can be applied to
trading in all markets.
Click
Here to view a short video introduction to Market Profile
CBOT Market Profile® and Market Profile® are registered trademarks of
the Chicago Board of Trade (CBOT), which holds exclusive copyrights to
both.