Glossary

Asymmetric opportunities: An asymmetric opportunity is present when the risk of a trade is exceeded multiple times by the profit opportunity.  Risk is measured from the location of an entry to the stop ) with the potential profit being calculated using an exit at a potential previous key reference area.

Auction process (two-way): The auction is how the markets  facilitate trade. Prices constantly auction from low to high and from high to low to fairly distribute the bids and offers presented by the market participants of all timeframes. 

Accumulation - Accumulation is to buy as much as possible within a price range.

B

Balance: This refers to trading ranges, brackets, balance areas, congestion areas, and consolidation ranges—they are all synonymous terms. Balance occurs in all timeframes. And is relatively equal highs and equal lows. The word relative is important.

Bracket: A very well defined price range containing market activity within its upper and lower limits.

(b) Shape Profile: A profile shaped like the letter (b). Skinny at the top and fat at the bottom. This formation is typical a stage 2 and 3 to the down side.

Buying tail: This is formed by single prints (single TPOs) on the bottom of a profile; a gauge of buyers’ reactions to a lower advertised price opportunity. The greater number of single TPOs that form the buying tail the more aggressive the buyers’ reaction.

D

Daily range: The height of the profile from high to low. While trading occurs in the electronic markets for most of a 24 hour period, when we refer to daily range we are referring to the time that a market is open—the traditional “pit session” hours.

Demand -is inventory to buy at a specific price. Or but differently demand = buying@price.

Distribution - Selling inventory at the highs.

Dynamic Day: A day during which the top or the bottom of the day’s range is retested.

F

Failed Range Extension: A range extension failing to close outside the initial balance. As a result the long term trader failed to successfully extend the range.

G

Gap: Is another form of excess. Price moves rapidly away from a prior trading level or reference; a gap signifies a total reordering in market thinking.  A Gap is measured from the previous day’s high or low—not from the settle. A gap signifies a market that is out of balance and presents a large opportunity.

Initial balance: The price range during the first hour of open out cry trading. 

Initiative Buying: When commercial traders decide to buy above the Value area.

Initiative Selling: When commercial traders decide to sell below the Value area.

Imbalanced Market: A trending market.

M

Market Profile (MP): A way to structure market activity by using volume at price. 

N

Normal Day: Slight range extension beyond the initial balance.]

Normal Variation Day: The range is extension is 2 times the initial balance.

Neutral Day: A day when you have both a range extension up and down. Neutral days are formed when both the long term buyer and seller are involved in the same price range indicating their uncertainty. The day usually ends with little change.

P

p shape profile: A profile shaped like the letter (P). Skinny at the bottom and fat at the top. This type of profile shape is an indication of a stage 2 and 3 in and up trending market.

Point of control (POC): The mean of volume at price. 

Probes - The markets method of price discovery is a probe. Single candles or price bars that have substantial tails. Probes signify that responsive buyers and sellers were found in the areas they occur.

R

Responsive buying: Buying below the Value area low.

Responsive selling: Selling above the Value area high.

Rotational Market: A market confined by an upper price limit and a lower price limit and rotating back and forth from one side to the other. Also called a balanced market.

Range extension: A price probe outside of the established range that indicates that more aggressive participants have entered the auction.

S

Sideway Market: A horizontally developing market where buyer and sellers are in agreement and price range is usually tight.

Steps of The Market:
1. Trend
2. Stop point
3. Balance
4. Retracement or continuation

Selling tail: Single prints (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.

Structure: A building has structure when a building is well build the structures is sturdy, and so strong it takes a great force to move or them.   However, a poorly build building will fail easily. When we look at a profile we are looking at the structure of the building. A fully developed profile is analogous to a strong building. A profile full of voids, and lack of volume is similar to the weak building that will fail easily.   

Supply - supply is the inventory available for sale at a set price. Or put slightly differently Supply = for sale @price.

T

Trend day: Long term buyer/seller takes control of the market from the open into the close.

Trade facilitation: The degree of price ease at which a particular market trades in a direction and the amount of volume generated during the move as a measure of liquidity.

Timeframes: Market activity is influenced by a wide variety of participants operating under a wide variety of timeframes and motivations. 

•  Scalpers are very short-term oriented, trades being completed possibly in seconds,Today most scalping is done via computer.
• Day traders come to market each day flat (no position) and leave the day flat. They depend almost exclusively on technical information.   
• Swing traders’ timeframe is usually 3-5 days.  They use technical information with an awareness of fundamental information. 
• Position traders may hold positions for months or even years They tend to follow fundamental information first, followed by market valuation, and finally market-generated information to supplement their understanding of market activity. They move markets; and when they do, the other timeframes “pile on”.
  

TPO: The basic building blocks of the Market Profile® are called Time Price Opportunities, or TPOs. Each half hour of the trading day is designated by a letter. When a certain price is traded during a given half hour period, the corresponding letter or TPO is recorded next to the price. Any time period may be selected.

U

Unchanged: Is simply the close, or settle, for the prior pit session. It is an important day timeframe reference.

V

Value area: The value area is where approximately 70% of a day’s business is conducted (roughly one standard deviation). 

Volume Distribution: Display of volume traded at different prices using a Market Profile chart.

VAL - Value Area Low, the bottom of the value area.

VAH - Top end of the value area