TPO Volume Indicator
TPO Volume indicator (another name – horizontal volumes or market profile) – is a professional indicator that shows how volumes are distributed by price levels. Try now!
Description
What does TPO Volume mean in trading? It means Time-Price-Opportunity by using the volume.
This is the name given to the indicator by its creator, Peter Steidlmayer. He developed a special way of keeping statistics of trading activity on the Chicago Mercantile Exchange. His know-how was that he used letters to record at what price level the most active trading took place.
When you add the TPO volume indicator to your MT5 chart, you will see exactly the market profile.
But for the purposes of this review, let’s conditionally call it the TPO volume indicator. This version of the indicator contains two custom indicators – Volume Profile + Range v6.0 = TPO.
How do you read a TPO Volume
In fact, it is not very difficult to understand what the TPO Volume indicator shows.
Each price level corresponds to a bar on the indicator.
Arrow number 1 shows a very large band on the indicator. This means that many transactions were made at the corresponding price and their total volume was large. Such bars are called Point of Control. The indicator highlights them in dark blue.
Arrow #2 shows a small bar on the indicator. This means that not many transactions were made at the corresponding price, and their total volume was small.
How do you trade TPO
Making trading decisions based on the TPO volume indicator is a serious topic that requires effort to study.
If you’re interested, check out James Dalton’s Market Profile books. They are considered classics of horizontal volume analysis.
Below we give examples of buy and sell signals, but they are too simple to express the full depth that the TPO Volume indicator gives for analysis and conclusions.
Signal to buy TPO volume
The EURUSD currency pair chart below shows a buy setup.
Pay attention to the point of control (POC) marked with a circle. It can be interpreted that at the level of 1.01580 there was a big battle between buyers and sellers. And the buyers won, because the price rushed up from this level (as indicated by the arrow with the number 1).
When the next day the price falls to this level, you have reason to consider it as a support zone. It would be a good idea to move to a lower time frame and use price action patterns to find a long entry point in anticipation of a bounce.
Stop loss can be set below the previous low and take profit at a higher POC level. Look for a favorable risk-reward ratio.
TPO Volume Sell Signal
The diagram below shows a different logic.
The narrow profile, indicated by a circle, can be interpreted as the complete dominance of sellers, since the price went down very quickly – there were definitely no buyers at this level.
Therefore, when the price rises to this level, you can count on it to work as resistance. So there are opportunities to open a short position (these points are marked with arrows).
Stop loss and take profit levels are not obvious here, but this does not mean that risk management can be ignored.
Conclusion
With the TPO Volume Indicator, your Metatrader 5 will become a more professional Forex trading platform.
TPO Volume builds market profiles, and absolutely free of charge – in other cases, traders may be charged for working with profiles.
Benefits of the indicator:
- allows you to build support and resistance levels;
- allows you to work with real volumes;
- it automatically finds POC levels.
Flaws:
- some delay in updating data;
- data not available for all markets;
- Interpretation of indicator data requires appropriate preparation.
Spend time reading books on market profile analysis. This is knowledge that will really help your understanding of the mechanics of the home market.
Before you start using the TPO Volume indicator, practice on a demo account. Make sure you are willing to risk real money.
Download and install the TPO Volume Indicator for MT5 for free now!