Market/Volume Profile: TPO Counts

[sethmo]

Hi,

I've been reading up on Volume Profile, I've read the CBOT Handbook and I'm slowly making my way through Mind Over Markets, however I'm a little confused about the TPO count.

I'm trying to make broad generalisations here based on the count to include in my study of the Profile. If I understand correctly, seller count is on top and buyer count is on the bottom. So, when the top number is higher, there are more sellers in the market (so prices should start moving down) and when the bottom number is higher there are more buyer (prices should start moving up).

I've attached a screenshot of the EURUSD I've been looking at today. In this situation, is it correct to assume that "Responsive Selling" should start taking place? If the numbers were inverted (i.e. 134 on the bottom, 94 on the top), then "Initiative Buying" would taking place and I should anticipate a rise in prices?

Reason I ask is that sometimes I take a look at the TPO count, it implies more sellers, for example, are in the market, but prices just race higher. And vice versa. It's kind of disorienting when looking to confirm a trade - I wouldn't want to enter long when there are more sellers in the market, for instance. Or am I missing something or using the count wrong? :?:

I know in the handbook, the author states TPO counts are less important in the 24 hour market of today but surely there must still be a way to put them to good use.

Thanks.

Seth

 

[RPEX]

I'm late but i will do my best. The key point here is that the TPO count is not really that useful anymore as you say.

I'm trying to make broad generalisations here based on the count to include in my study of the Profile. If I understand correctly, seller count is on top and buyer count is on the bottom. So, when the top number is higher, there are more sellers in the market (so prices should start moving down) and when the bottom number is higher there are more buyer (prices should start moving up).

Don't think about seller count/buyer count because traders are both. you need to think in terms of market participant types: short term (liquidity providers, scalpers) vs long term (paper, hedgers, funds).

The TPO count is the ratio of TPOs above the POC over those below it. The side with less activity (less TPOs) according to MP shows the hand of the longer term trader - which has a greater bearing on the long term move.

Why? Think about the participants. Short term scalpers largely do not hold positions overnight, they aim to take very few ticks and rely on being filled passively - think about the bid/ask spread. In contrast the longer term traders don't care about this, they are buying/selling with an agenda other than taking a few ticks home to spend on prosititues and cheap jewellery. They will pay the spread until and will be much more aggressive (depending on how impatient/urgent is their need). Therefore it is safer for the short term trader to conduct his business away from where the long term trader is being aggressive.

I've attached a screenshot of the EURUSD I've been looking at today. In this situation, is it correct to assume that "Responsive Selling" should start taking place?

I haven't read mind over markets but i don't think MP is very prescriptive in the sense that something "should happen" basically anything can happen as there are many long term buyers and sellers who all think differently and have varying degrees of power.

 

[Quantower]

Quantower platform has a new panel, called TPO Profile chart (Market Profile). It has a lot of features and options:

• Splitting & Merging the TPO Chart
• Key elements of TPO Profile — POC, Value Area, Singles
• Building a TPO Profile for any time period
• Overlaying the standard chart over the TPO Profile
• Custom Session Time
• Volume Analysis Tools (Volume Profiles, VWAP)