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TPO Charts in ATAS & How to Use Them!

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Many traders are familiar with the concept of the market profile. In this article we will tell you a little bit about TPO charts.
TPO is the basic concept of the market profile and was first applied by Peter Steidlmayer. TPO may stand for:

  • Time (Time)
  • Price (Price)
  • Opportunities (Oppurtunity)

A TPO block or letter appears in the chart as soon as the market touches a certain price in a certain period of time. Steidlmayer thought about half an hour period, which he marked with letters from ‘A’ and then continuously.

Peter Steidlmayer

The first half hour of the trading session is marked with the letter “A” in the upper image. The price went from 96 4/32 to 97 14/32 during this period. The more often the market returns to a certain price level within half an hour, the more letters come to that level one after the other. As a rule, the opening of the trading session is marked with the letter ‘O’, while the close is marked with the symbol ‘A’.

In ATAS, TPO can be displayed in the form of letters or colored blocks. If you zoom the blocks along the vertical axis, letters can also be displayed. Each letter corresponds to its color.

Tpo

We have colored TPO blocks in the left part of the 5-year US Treasury Notes Futures Chart (ZF) and TPO letters in the right part. The chart is the same, but the scale along the vertical axis is different.

You can set the block colors at will and you can:

  • Mark Initial Balance
  • Change the period of a trading session
  • Freely configure optics and color
  • Freely configure Single Prints, Pocs and VA

Identification of the price movement by TPO Charts

Letter charts make it much easier to determine how the price evolves over the course of a day. Consider, for example, the German stock index (FDAX). We used TPO and Profile Indicator (F3 key).

By default, we have:

  1. Period 4 hours;
  2. Initial balance with black color;
  3. POC to Retest

We also hidden the price chart for simplicity to show only the profile. You can do this in the top menu.

marketprofiles

During a trend movement, no more than 3-4 letters (or in our case colored blocks) appear at each price level. As soon as a number of letters/blocks begin to increase, this means that the focused movement becomes weaker.

We marked the trend movement in the graphic with the numbers 1-4. The appearance of 5 or more letters at a price level warns traders that the local fair price has been found. We have marked these areas with circles in the diagram.

As successive areas expand in a focused manner, this is also a sign of price development. The adjacent areas moved upwards and crossed only marginally in our example.

The range is symmetrical and POC (Point Of Control) consists of 10-11 letters in non-trend periods. If the TPO areas decrease, this means that there is uncertainty or absence of key players in the market.

Initial Balance

The Initial Balance indicates the price levels at which TPO is displayed during the first hour of a trading session. This term should be used carefully for global markets, as trade meetings do indeed have no beginning and no end. However, there is a time of maximum activity when, for example, a regular American session is opened. TPO, which extends from the initial balance in both directions, is a sign of an increase in volatility and a warning of a possible focused movement. With ATAS, you can mark the range of any period of time, not just the entire trading session. For example, in the previous chart we have marked areas of 4 hours each.

Some sources also distinguish the “pioneer” range (apart from the initial balance) or the levels that the price touches for the first time during a trading session or during another period. Traders need to monitor these areas as it is important for them to understand whether the market accepts new prices or not.

If the price offer reaches a new level and the price remains as if it were getting used to the new place, this means that the market accepts the price. If there is a quick jump from the level, this is characteristic of manipulative movements, the aim of which can be to absorb stop losses. In this case, we should not say that the market accepts the new level.

In the 30-minute RTS index futures we have again marked every 4 hours Initial Balance with the color black.

tpo blocks

Tails and Singleprints

The tails are clearly visible at TPO. The tail occurs due to a sharp rise in the price from an overvalued or undervalued range. Steidlmayer writes that tails occur due to the activity of long-term traders, i.e. they began to buy or sell aggressively, at these levels. Thus, the Tails help to understand the intentions of long-term traders: if the price falls and they think the price is too low, they buy.

The longer the “dead” is, the higher the confidence of buyers and sellers. The price often tests such levels to check whether sellers or buyers are still as aggressive as before. In other words, the tails become levels of support or resistance.

A single print is a place in the profile that has been touched by the price only once. For example, a single print can be displayed in the middle of the profile at an outbreak of the previous balanced range. Several single prints can also occur above or among each other.

Let’s look at the following example of a 15-minute E-Mini-S & P 500 futures chart:

We marked the tails with the numbers 1-4. The longest of them is marked with the number 2. We marked the singleprint, which appeared at the maximum volume of the previous bar, with the red number 5. We have marked the prices that test the singleprint or tail with red rectangles.

How do you identify areas of equality and imbalance?

The larger the TPO is at a price level, the more this price is accepted by traders who consider it to be a fair price. Such prices are called POC or maximum volume. These are the price balance areas on the market. The more letters the POC form, the more significant this level is. Less than 5 letters on one level warn traders of the market imbalance at this price level. You can only estimate the balance approximately without TPO, and you should keep in mind that a misjudgment often results in losses.

Symmetry, anomalies and convexities

If there are more letters under POC, this means that traders consider low prices to be fairer than high ones. As a result, there is currently a bearish mood in the market.

Anomalies are missing symmetry. These digits are not displayed in the price chart, but in the TPO.

For example, trend movements typically assume a balanced bell-shaped profile. The profile form in the form of the letter “p” at the end of the upward trend movement warns traders against the absorption of long positions or the registration of profits by limit orders. And also before the formation of a new fair value area, beyond which the price may not go beyond.

Conxacies and projections consisting of at least three letters are also available in TPO diagrams. Projections often become support/resistance levels in a weekly profile.

To prepare for an upcoming trading day:

It is convenient to prepare for an upcoming session and plan trades according to the TPO profile. We’ll show you a way to take the 10-minute copper futures chart (HG) as an example.

In this example, we use a fixed profile with TPO (Ctrl + F3). Since these are screenshots and not videos, the previous day is analyzed first, and then the current day is analyzed.

  • The purple horizontal line is the opening price level (letter ‘O’ in the profile).
  • The red horizontal line is the closing price level (symbol ‘A’ in the profile).
  • Black horizontal lines are resistance/support levels that we have identified visually and through the candlesticks.
  • We have marked the price levels that traders considered unfairly low with the number 1. The profile here consists of only several colors and the volumes are low.
  • We marked (with the number 2) the level that the traders also considered unfair for this trading session, as the price could not break it.

We expect the next trading session to be opened in the area of the previous closing and the price will test the upper level as the closing level is above the POC level and the main volume has been traded in the upper part of the profile.

The next chart is the next trading session:

The trading session was opened about where we expected it to be. The price has consolidated for some time (we have marked this area with rectangle 1) and then moved to test the high of the previous trading session. We marked the outbreak with rectangle 2. Look at the profile of the day – it’s long and narrow. POC is in the upper part – it was a trend day.

Conclusions

The TPO profile is another way of displaying the market profile that can create a competitive advantage in trading. Don’t forget to prepare for a new trading session, analyze the profile, and create possible scenarios for yourself. The more different variants you can foresee, the safer you will feel. Controlling your emotions and ATAS will help you become a successful trader in the long run.

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