Saturday, May 23, 2015
How To Use “Market Profile” To Improve Your Forex Investment
Market profile can be used to really improve trading success stories. Many investors may wonder what a market profile is, and how it is used. These answers are actually simple, and are much less complex than they sound. Market profile can go by other names, such as time price opportunities, or TPO, and volume profile, as well as others. A market profile is a chart which has time increments of one half an hour, as well as prices and currencies. This will allow you to determine which times see the most market movement, as well as the general direction the movement takes. A market profile chart will show which times and which prices see the most activity by traders, and which time periods are slow when it comes to trading. When you use a market profile you will notice trades which are more profitable, because you can pinpoint market movements usually. This is not foolproof, and no investment ever is, because the markets are not always predictable. Using a market profile chart can help you minimize the risks involved though, while maximizing your potential gains. You do not have to have level 2 access to get the data needed to create a market profile chart, so you can do it regardless of your access level. Simply list the prices vertically on the left of the chart, and the volume of trading horizontally on the bottom of the chart. You have two options when it comes to the time frame in thirty minute increments. You can use colors or letters, and determine the exact time that each block represents on your market profile chart. Market profile charts can help you easily determine many factors. One of these is which prices have been traded in the last few minutes, and another is which time of day is the most active on the market for a specific price value. How you use the market profile will depend on which type of trader that you are, but these charts can be invaluable in determining the levels of support and resistance, and the placement of pivot points if you use them. Market profile charts can be used by all traders, whether you are a short term or day trader or you are in it for the long haul. Once you have designed your market profile charts, examine them closely. Look at all the factors involved that affect your trades. Your market profile can be used alone, or it can be combined with other tools and types of analysis. No matter how you use the results of the market profile analysis, it can be a very useful tool in your investing toolbox. Whether you are a day trader or a swing trader, or another type, you can use market profile charts to help you evaluate possible trades, and to set your levels of support and resistance to minimize possible losses and raise the odds of a profitable trade. The whole point of trading is to increase your capital, not lose it, and market profile charts can help you do this.