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Market Profile Trading A to Z



Market Profile Trading Glossary

Glossary assembled by Andrew Hall, iTradePod. If you have any feedback or would like to see a term added or amended please leave a comment below or contact us.



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S



Selling Tail - single TPOs on the top of a profile; a gauge of sellers’ reactions to a higher advertised price opportunity. The greater number of single TPOs that form the Selling Tail the more aggressive the sellers’ reaction.




Short Covering Rally - usually produces a P shape profile, a short liquidation rally takes place after an extended down move where some profitable Short Sellers, who entered positions higher, decide to take profits by closing all or part of their position. This is opposed to a genuine Bullish rally that is caused mostly by new Long Buyers entering the market and taking control. This type of price action is fractal so its occurrence in the day time frame may be coming to an end whilst it has only just begun on a the monthly timeframe.




Single Prints - a column of single TPOs printed on a Market Profile Graphic which has prices both above and below it which have multiple adjacent TPO's. Single prints are unconfirmed while there is still a chance that the print will be filled in by the subsequent TPOs and are only confirmed to be Single Prints when the subsequent bracket has closed without entering the price range of the Single Prints. For example, a single print in the letter A TPO price range cannot be confirmed until the subsequent letter B TPO price range has closed and the letter C TPO price range has opened. During an Open Drive breakout, a series of single prints will be observable on the Market Profile Graphic. The single print that we are interested in is the first one created when the market breaks away. For an upward breakout, the trader focuses on the lowest price that has a single print and vice versa for a downward breakout.




Six Candle Count (6CC) - whenever there is a range extention on a day where pVA is overlapping we will count six 5min candles (i.e. one TPO) before placing a trade in the direction of that range extension.




Smart Money - smart money has the influence and ability to move the market directionally with conviction. Smart money trades based on the laws of supply and demand. Smart money appreciates and factors in all relevant market information and data.




Smart Volume - the volume footprints of smart money, as oppposed to the all inclusive volume that includes the volume retail traders. Volume is studied to identify volume of participants that have the ability to move the market. Smart volume is either Responsive or Initiative.




Spike - a breakout price probe that occurs towards the latter part of the session such that it cannot be confirmed as having been accepted or rejected as either a Selling Tail or a Buying Tail. If the spike was accepted, value/balance would be established within the range of the spike. However, the trader has to wait until the next RTH session open to determine whether the spike has been accepted or rejected.

How to trade the Spike
Upward Spike

  1. Setup I: market opening price below an upward spike.
    How to trade: this is a Bearish indication since the spike was rejected leaving a Selling Tail. The trader ought to be looking for shorting opportunities.

  2. Setup II: market opening price within a spike.
    How to trade: setup indicates price acceptance and confirms the upward move. The trader should look for opportunities to Buy Long the lower extremes of a bracketed market.

  3. Setup III: an opening price trading above an upward spike.
    How to trade: this setup indicates that odds are in favour of even higher prices until buying is stemmed in order that two-sided trade can be facilitated. The trader should be prepared to take a go-with approach to profit from this set up.

  4. Setup IV: an opening price with the bottom of the spike acting as support.
    How to trade: with trade entry close to the bottom of the spike, this setup provides a KRA to lean against for a stop loss order and entry based on market structure.

Downward Spike

  1. Setup I: an opening price above a downward spike.
    How to trade: this is a Bullish indication since the spike was rejected leaving a Buying Tail. The trader ought be looking for Long opportunities.

  2. Set up II: market opening price within a spike.
    How to trade: this setup indicates price acceptance and confirms the downward move. The trader should look for opportunities to Sell Short the upper extremes of a bracketed market.

  3. Set up III: an opening price trading below a downward spike.
    How to trade: this setup indicates that odds are in favour of even lower prices until selling is stemmed in order that two-sided trade can be facilitated. The trader should be prepared to take a go-with approach to profit from this set up..

  4. Set up IV: an opening price with the top of the spike acting as resistance.
    How to trade: with a trade entry close to the top of the spike, this setup provides a KRA to lean against for a stop loss order and entry based on market structure.




Squawk Box - a unique and descriptive audible way to receive price and Order Flow data as it unfolds on the trading pit floor and gain firsthand knowledge of information that was once only available to pit floor traders. The commentator will make you feel as if you are standing right alongside them in the pit. Traders Audio, our squawk box partner, was one of the first CME S&P 500 Futures Trading Pit Floor Squawk Box services available.




Symmetrical Profile - the profile of a model trend day has a distribution that is relatively even throughout despite it being an Elongated Profile. This is the opposite of a Profile where the distribution is uneven and disproportionate throughout and there is no prominent POC. Profiles that lack symmetry, such as a triple distribution day, display Anomalies. They are by definition disproportional to the Normal Distribution shape and are likely to require repair.


In a trending market, symmetry implies directional conviction accompanied with Order Flow. In a balanced market, symmetry implies establishment of value. On the other hand, the absence of symmetry implies anxious market sentiments are driving price activity.




Sideways Market - horizontal price activity developing accepted value in a balanced region allowing two-sided trade facilitation.







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