[Music] foreign [Music] Optimus Futures here today we're going to be discussing TPO charts what their purpose is their basic components and how Traders can use this tool to their advantage we're also going to dive into a little bit of the theory around TPO charts and some of the more advanced settings that can be found on the Optimus flow platform so here in front of me uh it's just a Bare Bones TPO chart with its most basic components you can get a little bit more complicated than this but for now we'll focus on the basics and I'll go over some of the key areas to watch out for so the first thing you need to understand about the profile is that it's different than candlesticks or monkey bars or a line graph all the information is collapsed onto itself from right to left so moving this way uh as you can see this is that same day in Candlestick form I'll make this a little easier for you to see this is a 30 minute time frame 30 minute candlesticks and this is that same day all right uh so both have 30 minute time periods both encapsulate one full day of trading but the benefit of the TPO chart is being able to see the data collapsed into a statistical distribution so if you split the profile up like this you can really see the similarities between the Candlestick charts but we're just missing the bodies and the Wicks of those candles you may also be wondering what each of these letters stand for and it's pretty simple each 30 minute period instead of being a red or green candle like in the Candlestick charts are given a letter to represent a chunk of time so the first 30 minute period is a the second 30 minute period is B and so on so that's pretty simple uh the next thing I'll point out is this small triangle uh in the a period this is Market open and this triangle and the M period is market closed pretty simple pretty straightforward for now okay so I've been focusing on this day here and this is a standard balanced day where on both price extremes buyers and sellers stepped in and shoved price back into the middle here that brings us to our next concept of fair value I'd like to draw your attention to the highlighted area this is what's considered fair value it's calculated um by using the most active 70 of the profile so the remaining thirty percent are the shaded areas down here and up here and that's where price was not considered fair by market participants so when price discovered lower Market participants responded by buying because they believed this was a good deal and when price drifted above value market participants responded by selling they thought this was overpriced and so press did not spend a lot of time in these areas and the majority of the day was here and that's why it's considered fair value just for this specific day not in the grand scheme of things but just for that day excuse me you might also be wondering what this white line is here right here and this is the point of control every profile we'll have one there's one here one here as you can see every profile will have one and it's the it's the point where price spent the longest period of time transacting around so for many Traders this becomes a really important reference point into the future and can sometimes be used as support and resistance the longer and the thicker and the more stacked tpos within the point of control becomes it becomes more important it becomes a stronger reference point in the future the thinner and the smaller the less significant it is for Traders foreign this really brings us into the next part of the video where I'll show you how you can really critically analyze TPO charts and use that analysis on a daily basis I'll walk you through some of the most common date type distributions and profiles that tend to develop in the marketplace so before we get into the day types I'll talk about two important Concepts here the first is excess and the second is something called a poor low these concepts are complete opposites of each other and I'll explain why so excess is formed on a profile when there are at least two TPO prints at the bottom or the top of the profile as you can see here here here and here this shows a market rejecting those prices temporarily and they believe that its price has gone too far from value during that daytime period so for Traders that use candlesticks this is similar to a wick a bottoman wick or a topping tail uh so understanding why excess forms in the marketplace is an integral part of auction Theory which I will not get into today however the TPO chart is the main instrument used by Traders to read the auctioning process as it plays out in the market and uh excess is considered at least temporarily as a strong low or high and the opposite is true for uh poor low or a poor high and I'll find one for you now here right over here this would be considered a poor law uh there's two horizontally stacked tpos so this means price spent a significant amount of time without what is considered a finished oxen auctioning process auctions should end in a capitulatory manner so when a profile becomes truncated and transacts without meaningful access at the top or the bottom of the profile it is considered poor structure so let's get into some of the more typical textbook day type structures that often form in the market we're looking at micro e-mini Futures here and this profile here is called a p shape a p-shaped day the name is self-evident it's characterized by a long single print buying tail and a fatter d-shaped distribution at the top of the profile p-shaped days typically have an opening drive that never visit prices lower so as you can see this was the open [Music] and Traders view the p-shape typically as days of Rapid short covering and emotional buying off the open so these types of days can be found after a considerable and sustained pushes to the downside whereby short-term swing Traders are typically buying to close their short positions understanding and being able to identify early in the day the potential for a typical day type pattern to form can definitely better position a Trader and provide useful context for their intraday trades the trick is being able to identify it early enough in the day to know what's about to happen so the next pattern that we'll discuss is the exact opposite of a p-shape and it is a lowercase b shape day I'll find one here for you now [Music] we'll go back to we'll go back to August 30th here as a typical b-shaped day um it's characterized by long single printed selling tail and a d-shaped distribution at the bottom so Traders really they consider the b shape to be the opposite of the p-shape and this is a liquidation break so meaning where Traders are aggressively liquidating in their long positions they're panicking they're getting out this often occurs after uh prices Consolidated for a number of days at a key support area or after large Trend days that seem to continue and never bounce people get very nervous and this is quite an emotional reaction to such movements so the next day type we'll have a look at is the uppercase b shape day also known as a double distribution so there's one over here [Music] and there's one back here on October 7th so as you can see here uh is characterized by two balanced distributions divided by single prints in the middle um you can see that here single prints so these types of days can be considered bearish or bullish depending on the opening so for instance if the first balanced distribution was broken to the upside then it would be considered bullish if it was broken to the downside it would be considered bearish as you can see on this day we opened up here and we finished down here this excuse me this is quite this is quite bearish in the short term we rejected off the open it's balanced and continued down can form another balance [Music] so the next day type that I'll talk about is a trend day now there's a trend day here this is to the upside there's a trend a here to the downside as you can see they're characterized by their length and their narrowness and no considerable balance distributions involved so this day type forms when price either pushes higher or lower all day without much time spent in any One Price Zone so this was all down on this day here on the August 26th so as you can see we can split it up it just bled all day price opened up here and it ended on the lows um so Traders consider this as a market searching for balance in other words the market was out of balance all day because buyers and sellers could never agree and facilitate trade long enough in any one price range for tpos to stack horizontally and form a distribution there's a slight distribution right over here but it's it's so weak it's it's it's not thick like over here or over here Traders just couldn't uh the market participants rather could just could not agree on price all day so as you can tell uh you know looking at all these days here not everything's going to be a textbook day there's a lot lots of awkward days at somewhat form a double distribution or somewhat form balance but the key is learning to be able to recognize when these days are forming and that's really where the edge comes from for Traders and it's a powerful tool to use when used correctly so I'll now show you some cool uh some more advanced features that Optimus flow offers its customers remember that Optimus flow along with these TPO charts are all free when you sign up through Optimus Futures so be sure to take advantage of that so this feature that I really like is where you collapse individual days onto each other so we can go merge all these to the left and this is really useful for when you want to see what's going on in the bigger picture so remember it's never advisable to trade within a vacuum and understanding what's happening in the previous weeks is very important so as you can see I just collapsed from August 23rd to October 3rd and as you can see this is a d-shaped balance profile now looking at it split up resettle you might not be able to see that considering there was a lot of oscillation in this Price Zone but you know when you combine all these together you can really see the balance form and that's useful I find mostly for when price is oscillating within a zone so the next few Tron Optimus flow that some of the other platforms out there they don't have they can be found under chart settings so we'll go there now and it is TPO statistics I'll draw your attention to RF also known as rotation Factor rotation factor is calculated um based on 30 minute periods I'll take this profile has a rotation factor of minus seven okay so I'll explain how how it does this so every 30 minute period This is a period b period since it has a lower high and a lower low from period a this would give it a negative two rating okay and period C actually has a higher high and a higher sorry higher high and a higher low so this would give it a plus two rating so it'll add up all of these periods and give you a number it does the arithmetic automatically for you and so what that can tell you is that on this day if we're confused about the structure of the market and we want to know what was the auction doing at that time we can look to the rotation factor and say negative seven okay so price was drifting down throughout this day so a negative rotation Factor price drifting down a positive rotation Factor typically means that price was drifting upwards so the next feature I'll show you now is TPO up and TPO down this is another nuanced way to read Market profile and basically what it is is it will take this day it'll find the point of control it will add up all the tpos that are above that point of control and it'll add up all the tpos that are below that point of control and so on this day we have 85 tpos above the point of control so 85 above and 67 below so what we're trying to understand who's in control of this Market are the buyers in control or are the sellers in control we can read this down here and say okay 85 tpos above meaning there were more Traders and more Market participants willing to stay short above the point of control than there were Traders willing to stay long below the point of control so that's a nuanced way to understand what's happening within the profile and as you can see the next day we really dropped off um so that's all for now uh thanks for sticking around [Music] um please check out Optimus flow platform all these tools are absolutely free if you are an Optimus Futures customer so be sure to take advantage of that if you're interested in more Market profile videos or have any questions please let us know there's tons of features here that I didn't go over so just come and check it out [Music]