Market Profile Trading A to Z | Order Flow | Auction Market Theory | Value Trading | iTradePod

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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VAM - Value Area Migration. When a Value Area is set apart (without overlapping) from the prior Value Area(s) we say Value Area Migration has taken place. Depending on the wider context, Value Area Migration indicates market imbalance often resulting in a trend. Contrarily, balanced (sideways) markets have overlapping Value Areas which lack Value Area Migration. Unlike the average trader who is often intoxicated by fluctuating price action, studying how the Value Area is shifting (migrating) from one trading session to the next keeps the astute trader focused on trading value.

Value Area - at iTradePod we have a mantra: Dont’t trade price, trade value; price and value are not always the same. The value area is where approximately 70% of a session’s price activity is conducted (see Normal Distribution).

Value Trading - the art of trading based on the acknowledgement that price is only one of the three components of market activity with the other two being time and volume. The trader that understands market activity on the basis that Time spent at Price = Volume = Value can identify where to do business on the chart, trading at optimum trade locations relative to value, not price; Long below value, Short above value.

Volume - the number of contracts, shares or lots traded over a given time interval. For a directional move to continue it must be sustained by volume. There are two types of volume:

  • Horizontal Volume: - see Volume at Price.

  • Vertical Volume: - volume over a given time period. Vertical volume is usually displayed in a histogram or bar chart below a price chart. The trader usually has to wait for the candle chart's time interval to complete before interpreting the volume that occurred.

Volume at Price - this is the volume that occurs at an exact price as opposed to the volume commonly dispayed in the bottom panel of a price chart. This type of volume is displayed via a Volume Profile chart, often adjacent to the Market Profile graphic, and allows the trader to observe Order Flow at various KRAs.

VPOC - Virgin Point Of Control. VPOC is a POC that has not been touched by prices on subsequent days i.e. prices have never traded at that POCs price since it was formed. A POC that has been penetrated is less dependable as a pivot. VPOC is sometimes referred to as the Naked Point of Control (NPOC).

Volume Profile Chart - Display of horizontal volume traded at exact prices using a Market Profile® style chart. Volume Profile Charts are a primary component of VWAP.

VSA - Volume Spread Analysis. A very popular proprietary market analysis method that was conceived by Tom Williams (Chairman of TradeGuider Systems). VSA is utilised in the TradeGuider software to analyse a market by observing the interrelationship between volume, price and spread. This method is particularly good at highlighting imbalances of supply and demand and shares many concepts with auction market Order Flow principles.

VWAP - Volume Weighted Average Price. This is a simple average that adds up all the prices that were traded at during the day and divides by the number of price points that were observed.

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