3/12/2020 How to Set Optimal TPO Size to Read Market Profile Charts?

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How to Set Optimal TPO Size to Read

Market Profile Charts?
February 27, 2019 by Rajandran — 1 Comment

How to set the TPO size? The most asked question among the market profile beginners. TPO (Time
Price Oppourtunity) is the basic building block of market profile. Multiple TPO blocks jointly form
profile structure (profile distribution).

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The main purpose of reading profile structure is to visualize and understand what kind of participation
we dealt or dealing for the current day. Profile structures reveal whether day timeframe traders or short
term traders or any long term behavior is going on.

Price distribution is completely independent of timeframe. Every day one gets a composite profile
distribution. Regardless of what TPO size is used price distribution remains the same. However lower
the TPO size one can get finer details about the market participants behavior. Higher the TPO size
lower the amount of data one could get about the participants behavior.

It is always recommended to go with optimal TPO size settings because an ultra-low TPO size brings
more data points (more letters) and tough to read/process by compressing the charts and expanding
every time. It is time-consuming but reveals a lot of finer details about market behvaior.

Too bigger TPO size gives fewer details as it some times miss pieces of information like anomalies,
single prints which is crucial information from an intraday traders/positional trader perspective.

Following are the set of guidelines to set optimal TPO size,

How TPO Size is calculated in Market Profile Tool?

TPO size and Tick size are inter related in most of the trading analysis tools like Ninjatrader 7,
Ninjatrader 8, Multi charts, Market Delta.

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3/12/2020 How to Set Optimal TPO Size to Read Market Profile Charts?

Usually if the Tick sizeTRAINING

TRADEZILLA 3.0
== 0.05 (minimal possible COURSES
PREMIUM
price momentLIBRARY
specified by the exchange) then actual
TPO size has to be divided with actual Tick values to get the TPO value keyed into the trading
software.

For a Instrument like Nifty futures where tick size = 0.05 and if one have to set the TPO size of 1 point
then 1.00/0.05 = 20 is the TPO Size one have to key in the market profile indicator settings.

TPO Size settings in Ninjatrader 8

Choosing the optimal TPO size depends on three factors Tick Size, Volatility, Traded Price.

For a 0.05 Tick size instrument Here is the Optimal TPO Size which I prefer to read market generated
information.

If you are a BellTPO Market Profile Ultimate user then the following method is recommended to get
the automated reference line properly.

Price Range TPO size Tick Size NT8 TPO Value

Less than 100 5 paise 0.05 1

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3/12/2020 How to Set Optimal TPO Size to Read Market Profile Charts?

> 100 and < 250

TRADEZILLA 3.0 TRAINING 10 paise
PREMIUM 0.05
COURSES LIBRARY 2

>250 and < 1000 25 paise 0.05 5

>1000 and < 5000 50 paise 0.05 10

>5000 and < 30000 1 rupee 0.05 20

Greater than 30000 5 rupee 0.05 100

Instruments TPO size based on Volatility

Trading Instrument Tick size Low volatility High volatility

TPO = 1 rupee TPO = 2 rupee

Nifty 0.05
NT8 Value =20 NT8 Value = 40

TPO = 1 rupee TPO = 2 rupee

Bank Nifty 0.05
NT8 Value =20 NT8 Value = 40

TPO = 1 rupee TPO = 2 rupee

MCX Crude Oil 1
NT8 Value =1 NT8 Value = 2

TPO = 0.25 cents TPO = 0.50

Es-Mini Futures 0.25
NT8 Value = 1 NT8 Value = 2

Higher the volatility in the market one can also prefer higher TPO size as the trading range increases
during the high volatile markets it is always preferred higher TPO size to read optimal profile
information.

One can also prefer ATR based TPO size for adapting to different market conditions.

Daily ATR Range TPO Size Tick Size

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Less than 5 3.0

TRADEZILLA TRAINING TPO
PREMIUM = 0.05 paise
COURSES LIBRARY 0.05

NT8 Value = 1

TPO = 0.10 paise

5 – 25 0.05
NT8 Value = 2

TPO = 0.25 paise

25-50 0.05
NT8 Value = 5

TPO = 0.50 paise

50-100 0.05
NT8 Value = 10

TPO = 1.00 rupee

100 – 150 0.05
NT8 Value = 20

TPO = 2.00 rupee

150 – 250 0.05
NT8 Value = 40

TPO = 5.00 rupee

250 – 500 0.05
NT8 Value = 100

TPO = 10
500 – 1000 0.05
NT8 Value = 200

TPO size can be fixed based on India VIX (Volatility Index). For example TPO size = 1 point in Nifty
Futures if India VIX remains below 18 and TPO size = 2 or 3 if India VIX shoots above 18 levels.

Conclusion

I prefer to use Optimal TPO information for capturing max details about the market generated
information. There is no thumb rule to set the TPO size for various instruments, if you find too much of
information then one have to increase the TPO size or if you find too less of information from the

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3/12/2020 How to Set Optimal TPO Size to Read Market Profile Charts?

profile distribution then

TRADEZILLA 3.0
one should reduce
TRAINING
the TPOCOURSES
PREMIUM
size. However the above mentioned pratice helps
LIBRARY
one to read the most of the market generated information.

I hope this tutorial helps you to identify the optimal TPO size settings required to read maximum
amount of market generated which a trader cannot afford to miss.

Let me know in comments if you face any issues with TPO settings.

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Filed Under: Market Profile

Tagged With: ATR based TPO settings, ATR Volatility, Ninjatrader TPO Settings, TPO Size, Volatility based TPO
settings

About Rajandran
Rajandran is a Full time trader and founder of Marketcalls & Co-Founder of
Traderscafe, trades mostly using discretionary Trading Concepts like Market
Profile, Trading sentimental analysis, building timing models, algorithmic trading models.
Instructs professional traders, full time traders & aspiring full time traders. Rajandran
attended college in the Chennai where he earned a BE in Electronics and Communications.
Rajandran has a broad understanding of trading softwares like Amibroker, Ninjatrader,
Esignal, Metastock, Motivewave, Market Analyst(Optuma),Metatrader,Tradingivew,Python
and understands individual needs of traders and investors utilizing a wide range of
methodologies.

Comments

Nitin says
May 28, 2019 at 2:20 am

In the above detailed explanation is nicely provided,

My observation
a better nomenclature for field on bell tpo should be read as “TPO Interval” instead of tpo size

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