TPO & Market Profile
TPO (aka Market Profile), is a profile based indicator that shows the duration of market activity at particular price levels.
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TPO / Market Profile Overview
TPO or Time Price Opportunity (also sometimes referred to as Market Profile), is a profile based indicator that shows market activity, based upon the time that price traded at particular levels.
A TPO 'block' is rendered for each level that a price trades at.
Each letter within the 'block' represents the period of time in which price traded at that particular level - Typically, the timeframe used is 30 minutes.
Collectively, these blocks (TPOs) form the shape of the Market Profile.
As TPO charts represent time, the wider the row of TPOs, the more time price traded at that particular level.
Elements of TPO / Market Profile
Point of Control
The widest row of TPO 'blocks' is considered the Point of Control. Throughout the entirety of the session, this is price traded This is the level where price traded for the longest period of time, throughout the entirety of the session. It is considered the 'fair-value' price.
Note: If there is more than one level of equal width, the point of control is considered as the row closest to 50%, of the very highest and very lowest price of the entire session.
Value Area
By default, the Value Area represents the area across different price levels, where buyers and sellers traded for 68/70% of time throughout the session.
The top of the range is considered the Value Area High (VAH), whilst the low of this range is considered the Value Area Low (VAL).
Initial Balance
The Initial Balance is a range comprised of the first two periods of the session: A & B. As Market Profile is traditionally viewed on a 30 minute time frame, the Initial Balance would be considered as the 1st hour of trading within a session.
The logic for the Initial Balance will be dictated by the timeframe chosen. Therefore, should you choose a different timeframe other than 30 min, the first two periods A & B will be used for the Initial Balance Range.
The high of these first two periods combined is considered the Initial Balance High. This is shown with the label (IBH).
The low of these first two periods combined is considered the Initial Balance Low. This is shown with the label (IBL).
Single Prints
Whereas the Point of Control within a Market Profile is the level where price traded for the longest duration of the session, Single Prints is the opposite. Single Prints are where price trades for a short period of time. If price moves quickly through a level without revisiting, a single TPO 'block' is rendered.
This often shows an inefficiency within the market as price was not traded for very long during this period. Price can often revisit these areas to test these inefficiencies. Each one of these solitary 'blocks' is considered a 'Single Print'.
Configuration of TPO / Market Profile
Below we will explore each of the TPO / Market Profile's layer settings, demonstrating how to customise and configure each of the respective inputs.
To add TPO / Market Profile to your chart, navigate to:
Indicators > Official Indicators > TPO > Click the '+' to add to your chart.
General Settings
Split TPO
This toggle will split the profile across the session's candles. This will overlay each of the TPO blocks over their respective candles.
This can be useful to assess the composition of the TPO / Market Profile as a whole.
Width
Given that TPO / Market Profile is based upon time, the 'Width' input is a little different from other profile based indicators on TradingLite. Depending upon the price action, you may have to adjust its default input.
Align
Choose whether the TPO / Market Profile aligned to the left or right of its respective session.
Order-Flow pro? You can configure the TPO and VPSV layers to align opposite, rather than opting for one over the other with their default align input.
Ticks Per Row
This input designates the price range in which the TPO / Market Profile blocks are formed. Selecting a higher value will aggregate more price ranges together, whereas selecting a lower value will provide a more granular view.
Hide Values
Toggling this input will remove the letters shown with each block of the TPO / Market Profile.
Draw Background
Accompanied with a color picker, enabling the 'Draw Background' input will highlight the entire area of the TPO / Market Profile's session. This area will be highlighted across all areas in which price traded during the session - by default this will be a 24h period.
Opacity
To ensure that you are still able to view the price chart, this setting will allow you to decrease or increase the 'Opacity' of the TPO / Market Profile.
Headers
Above the TPO / Market Profile, key data points are displayed within the Header. These include:
Value Area High - VAH
Point of Control - POC
Value Area Low - VAL
Initial Balance High - IBH
Initial Balance Low - IBL
Each of these key data point's visibility can be toggled, in addition to being re-ordered to suit your own display preferences.
The color used for each value of the header is determined by the color specified in each section below.
Point of Control
Unlike the various volume based profile layers available on TradingLite, the TPO / Market Profile's Point of Control (POC), is determined by the node of the profile in which price traded for the longest period of time throughout the session.
Extend
There are two options to extend the POC. 'Simple' will double the extension of the POC. The other option 'Naked Extension', will extend the POC indefinitely until price revisits this node in the future.
Value Area
Similar to the principle of TPO / Market Profile's Point of Control (above) the Value Area, is defined as the area in which the majority of time in which price traded. This is traditionally 68/70%.
You will have the following options to configure the Value Area:
Value Area Percentage
Value Area Brightness
Toggle to 'Draw Rays'
Toggle to 'Draw Labels'
A color picker for the Value Area Rays - Note this choice of color will also be reflected for the raw values shown for VAH and VAL, within the Header.
Session
Traditionally the TPO / Market Profile was always configured to coincide with the start of the 'session' within legacy markets. Given the 24h nature of the crypto markets, the majority of traders consider the start of the session to be 00:00 UTC. The duration of a full session would therefore be 24h.
However, with TradingLite's TPO / Market Profile layer, you can configure your own custom session duration. This includes traditional legacy market times:
AZ - Asia - 23:00 - 07:00 UTC
EU - Europe - 07:00 - 15:30 UTC
US - America - 13:30 - 20:00 UTC
Initial Balance
The Initial Balance is a range comprised of the first two periods of the session: A & B. As TPO / Market Profile is traditionally viewed on a 30 minute time frame, the Initial Balance would be considered as the 1st hour of trading within a session.
For a full, in-depth explanation to Initial Balance, in addition to some basic strategy implementation, please see our TPO / Market Profile Advanced Guide.
Upon enabling the Initial Balance, you will have the following configuration options:
Toggle to 'Draw Rays'
Toggle to 'Draw Labels'
A color picker for the Initial Balance
Single Prints
Single Prints are formed on a fast movement of price - due to an inefficiency of buyers and sellers at that particular price level. These take the form of a singular TPO / Market Profile Block, within the profile itself.
TradingLite's TPO / Market Profile 'Single Prints' will highlight these blocks by drawing a Ray until the end of the session.
For a full, in-depth explanation to Single Prints, in addition to some basic strategy implementation, please see our TPO / Market Profile Advanced Guide.
Upon enabling the Initial Balance, you will have the following configuration options:
Toggle to 'Draw Rays'
A color picker for the Single Balance
'Show Tails' will distinguish Single Prints of the TPO at the very top, or very bottom (the 'tails'), and allow you to view these separately from the other Single Prints within the main body of the profile.
Naked Extension', will extend the Single Prints indefinitely until price revisits this node in the future.
Now you know how to enable and configure TradingLite's TPO / Market Profile layer, we recommend that you view our TPO / Market Profile Advanced guide where various concepts are explained in more detail, along with some basic strategy implementation.
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