Daily Market profile identifies value area (fair value) and unfair low and high value areas.
Like institutional investors, they're not interested in hanging out or being friends. They've come for your money. How you fork it over is entirely up to you.
Establishing value high, value low, and POC (Point of Control) is like sizing up the room and spotting the easy money. Understanding volume allows you to size up the pot.
Using value areas to confirm the market's tells.
Imagine getting an advance dossier on each heavy hitter at the table, telling you exactly what they're going to do and when.
Value areas essentially do this. They tell you where the institutions are most likely to start buying up or selling off their multi-million dollar positions.
There are three basic components to establish and monitor:
1. Value Area High (VAH): Levels at which volume and demand has driven price up, making it expensive from an institutional perspective.
2. Value Area Low (VAL): Instances where supply has overtaken, driving price down, making it cheap from an institutional point of view.
3. Point of Control (POC): The prevailing price that volume is currently supporting.
Each of these may ebb and flow throughout the day -- but like any established player, the general profile for institutional behavior will hold.
Establishing these areas as part of your pre-trade homework will provide a foundational map that eliminates a lot of second-guessing.
