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Answer |
Method A
First, we count the number of TPOs in the profile, and take 70% of
that number (70% is configurable by the user). This is the number of
TPOs we're looking for in our Value Area.
Next, the Point of Control (POC) is determined by finding the price
which contains the most TPOs. If there is a tie (two or more prices with
same number of TPOs), the price closest to the center of the profile is
used as the POC. The number of TPOs in the POC are counted and this
number is used as our initial TPO count. At this point the Value Area
only comprises the POC
and the number of TPOs in the POC.
We now inspect the two prices above and below the POC. If the two prices
below the POC have more TPOs, those prices are added to the VA.
Otherwise, the two prices above the POC are added. We increment our TPO
count by the number of TPOs in the prices we just added to the VA. We
continue repeating this process, adding two prices at a time, until we
have met or exceeded our 70% TPO Count, and completed our VA. The upper
price of this Value Area is considered the Value Area High (VAH). The
lower price of the VA is considered the Value Area Low (VAL).eSignal
Market Profile charts calculate Value Area in a similar fashion.
Method B
First, we count the number of TPOs in the profile, and take 70% of that
number (70% is configurable by the user). This is the number of TPOs
we're looking for in our Value Area.
Next, the Point of Control (POC) is determined by finding the price
which contains the most TPOs. If there is a tie (two or more prices with
same number of TPOs), the price closest to the center of the profile is
used as the POC. The number of TPOs in the POC are counted and this
number is used as our initial TPO count. At this point the Value Area
only comprises the POC
and the number of TPOs in the POC.
We now inspect the two prices above and below the POC. If the two prices
above the POC have more TPOs, those prices are added to the VA. If the
two prices below the POC have more TPOs, those prices are added to the
VA. If there is a tie, we add both the two prices above and the two
prices below. We increment our TPO count by the number of TPOs in the
prices we just added to the VA.
We continue repeating this process until we come to the point where
adding two prices would exceed our 70% TPO count, at which point we
begin adding one price at a time using the same method. Once our 70% TPO
count threshold is met or exceeded, our Value Area is complete. The
upper price of this Value Area is considered the Value Area High (VAH).
The lower price of the VA is considered the Value Area Low (VAL).
CQG Market Profile charts calculate Value Area in a similar fashion. |