In recent articles we talked before the Market Profile, defining it as a tool through the fixing of prices and volume allows us to evaluate the progress of the trend, and Value Area, as that area within the Market Profile, in which there are at least 70% of total trade and that allows us to refine the indications of the Market Profile in order to understand and predict the performance of our trend. Let's see how we can do for use in the practice of forex trading, the concept of Market Profile. In this first article we will begin to introduce the concept of Market Profile, which will then be continued in the next study.
Basically, the Market Profile is plotted on the basis what the market tells us. We know that the concept of Market Profile is designed in the '80s by Steidmayer, who reported on the graph, the concept of price and volume, bringing the volume on the X and Y axis of the price.
We see that there is a represented by the curve upward at the central value of prices, where the volumes increase, which forms the Value Area, which is the price which, according to several traders who took part in the market, the currency pair or the one commodity that is in reality. It is a great way to realize if the value of a currency pair is overestimated, therefore, must necessarily fall, or if it is underestimated, so will tend to rise.
If the price is too high, going to watch our figure, we realize that the volume of trade is minimal. So that price is actually perceived by the market as too high. Similarly, the area that lies below the Value Area has prices that are perceived as too high by the participants, so there are very few trade, confirmed by low volumes.
We started looking at the chart that shows the concept of Market Profile and Value Area.Related articles and advices - Become a Forex Pro: Learn the Basic Orders. This volume is located on the X and Y axis of the prices. The central area of the graph is considered as our Value Area, or one in which there were more exchanges.
We also know that to calculate the Forex FX Market Profile, we use a specially developed program. I'm online at social network: forex.This software is to calculate the area of the value of the Value Area and goes to establish the checkpoint, also known as Point of Control, POC, which is the widest part of the Value Area, or from where ever we have had trade more. The POC is to sum up, very briefly, the evolution of price during the trading day.
Besides this, the Market Profile allows us to have available the following information:
• opening price;
• the range of the first hour of trading;
• the Value Area;
• the Point of Control, also known as POC;
• the closing price.To know more click on my site Source: http://www.liteforex.com/
Using Market Profile at Forex FX Market