Quantity Profile is a dynamic software that shows volume-at-price data for order circulation merchants. Whereas the patterns of Quantity Profiles might initially seem random, there are recurring shapes that may doubtlessly present perception into market path, assist & resistance zones, reversal areas and extra.
Under are 4 frequent Quantity Profile shapes and the way order circulation merchants can interpret them.
P-Formed Quantity Profile
A P-shaped Quantity Profile sometimes happens when a market rises sharply after which consolidates. After value reaches the higher finish of a P-shaped profile, there is usually a interval of consolidation the place steadiness is reached between consumers and sellers.
The decrease portion of a P-shaped profile is lengthy and skinny representing low quantity rejection. The broader higher part represents the place a “truthful” value was reached and buying and selling exercise elevated.
Whereas P-shaped profiles usually happen throughout uptrends, a P-shaped profile may also mark the top of a downtrend indicating a potential brief protecting rally. Since brief protecting is normally seen as non permanent energy inside a market, P-shaped profiles might be interpreted as bullish indicators.
b-Formed Quantity Profile
A b-shaped Quantity Profile types when a market falls sharply after which consolidates. The alternative of a P-shaped profile, a b-shaped Quantity Profile can happen on account of lengthy liquidation. Whereas P-shaped profiles symbolize brief protecting, b-shaped profiles symbolize a interval of promoting earlier than steadiness is present in a market.
The higher portion of a b-shaped profile is lengthy and skinny representing low quantity and an “unfair” notion of value. The broader backside part represents the place value as soon as once more reached a steadiness between consumers and sellers.
b-shaped profiles are generally discovered throughout downtrends however when a b form is seen throughout an uptrend, it will possibly doubtlessly point out a reversal. As a result of b-shaped profiles symbolize longs exiting the market, they’re typically understood as bearish indicators.
D-Formed Quantity Profile
D-shaped profiles happen when there’s a non permanent steadiness in a market. The Level of Management (POC) is usually positioned within the middle of the profile indicating a steadiness between consumers and sellers.
Some merchants may interpret a D-shaped profile as a uneven or sideways market that lacks a transparent path – since neither consumers nor sellers have been extra aggressive. Nonetheless, affected person order circulation merchants may search out D-shaped Quantity Profiles in anticipation of a possible breakout in both path as institutional gamers construct up their positions.
B-Formed Quantity Profile
A B-shaped Quantity Profile arises when two D-shaped profiles happen inside a specified time interval. Though there is just one worth space and POC, some order circulation merchants will separate the profile into 2 separate “D-areas” with their very own worth areas. That is the place NinjaTrader’s Quantity Profile Drawing Instrument can are available in additional useful, plotting customized profiles on the fly.
Whereas B-shaped profiles are typically interpreted as a continuation of a pattern, it is very important word which POC is extra dominant – indicating whether or not exercise was biggest on the prime or backside of the profile.
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Quantity Profile is included with NinjaTrader’s Order Movement + suite of premium technical evaluation instruments. It options 3 profile modes, 6 show modes and might be utilized to charts as each an indicator and drawing software.
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