A Market Profile is an intra-day charting technique (price vertical, time/activity horizontal) devised by J. Peter Steidlmayer, a trader at the Chicago Board of Trade (CBOT), ca 1959-1985. Steidlmayer was seeking a way to determine and to evaluate market value as it developed in the day time frame.
The Market Profile is a unique charting tool that enables traders to observe the two-way auction process that drives all market movement—the ebb and flow of price over time — in a way that reveals patterns in herd behavior.
Market profile was introduced in 1985 by J. Peter Steidlmayer, a trader at the Chicago Board of Trade (CBOT), as a part of a CBOT product. It provided a visual representation combining price and time information in a statistical distribution, often resembling a bell curve.
Market Profile is a charting and trading methodology that organizes price and time data to display market structure visually, helping traders identify value areas, market balance, and high-probability trading zones.
Market Profile analysis can provide valuable insights into popular trading setups used by traders. For example, the 80% rule, failed auction, and poor highs/lows are popular trading setups that traders can use to enter trades.
By looking at a Market Profile chart, traders can see where the market has been over the day and develop trading plans accordingly. It helps find supply and demand levels and possible turning points in price action.
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