📊 Mastering Market Profile for Intraday Traders
Written by: RTS Group | Category: Trading Education | Suitable for: Nifty, BankNifty Option Buyers
🔍 What is Market Profile?
Market Profile is an advanced charting technique that helps traders understand where the majority of trading activity happens at various price levels. Instead of just price and time like traditional candlestick charts, Market Profile adds a third dimension — volume or time spent at price — to identify where value is created in the market.
It was developed by J. Peter Steidlmayer at the Chicago Board of Trade (CBOT) to help traders see the “auction process” of the market.
📦 Key Components of Market Profile
- TPO (Time Price Opportunity): Each letter (A, B, C...) represents a 30-minute time slot and shows how much time price spent at that level.
- Initial Balance (IB): The price range of the first 1 hour of trading (first 2 TPOs). A breakout from this range often leads to directional moves.
- POC (Point of Control): The price where the most trading occurred. It represents the fairest price of the day.
- VA (Value Area): The price range where 70% of the trading took place.
- VAH: Value Area High
- VAL: Value Area Low
📈 How to Read Market Profile for Intraday
1. IB Breakout Strategy
If price breaks above IB High → Buy Call Option (CE)
If price breaks below IB Low → Buy Put Option (PE)
2. POC Revisit Strategy
Price often returns to the Point of Control (POC) during the day.
If price is above POC and revisits it with rejection → buy CE.
If price is below POC and revisits with rejection → buy PE.
3. Rejection at VAH/VAL
If price moves above VAH but falls back into value → Sell or buy PE (mean reversion).
If price moves below VAL but climbs back in → Buy or buy CE.
📊 Example Market Profile Breakdown
- IB High: 25,103.40
- IB Low: 24,983.20
- VAH: 25,131.60
- VAL: 25,095.80
- POC: 25,109.23
Interpretation: Price is consolidating near IB High and POC. Breakout above VAH with volume → directional upside move likely.
💡 Real-Life Intraday Setup Using Market Profile
🔼 Bullish Scenario (Buy CE)
- Price opens above VAH
- IB High breaks with volume
- Price holds above POC
Action: Buy CE with stop below VAL. First target = IB Range size, second = previous day high.
🔽 Bearish Scenario (Buy PE)
- Price opens below VAL
- Breakdown below IB Low
- Price below VWAP or EMA 20
Action: Buy PE with stop above POC. First target = swing low, second = gap zone if any.
📌 Advantages of Market Profile
- Identifies where smart money is trading
- Highlights support and resistance zones with logic
- Works well with VWAP, RSI, Option Chain, and EMA
- Great for Option Buyers looking for low-risk entries
📚 Final Notes for Learners
Market Profile is not a prediction tool. It's a market structure tool — it helps you understand context, auction behavior, and value areas. If used with price action and basic indicators like VWAP and RSI, it becomes a powerful trading edge.
💬 Keep studying real examples every day using tools like GoCharting or TradingView (with VPVR). Practice identifying IB breakouts, POC tests, and value area shifts.
📌 Tip: Always mark IB High/Low, VAH, VAL, and POC before 10:30 AM. It gives structure to your intraday plan.
Created for learners by RTS Group. Stay tuned to our daily blog posts on Market Profile analysis for Nifty & Bank Nifty option trades!
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