15 – How to rate Market Profile Reference Levels?

Reference Levels in Market Profile #

Trading is all about reference levels. Many people have made a living by just sharing random numbers with overenthusiastic traders, much to the peril of these gullible followers. Reference levels in itself is not important.

What are different Market Profile References? #

  • YH – Yesterdays High
  • YL – Yesterdays Low
  • PH – Poor High
  • PL – Poor Low
  • POC – Point Of Control, and on and on…

Which of these are important? #

As I said earlier, a reference in itself is not important. What matters ia what market does when it reaches a particular reference. By judging the reaction you can understand whether that reference is important or not.

When you should look at market profile references? #

You should plan ahead and keep a list of important references handy. When the markets near any one of these references you can watch the markets closely for the signs of a potential breakout/breakdown or exhaustion.

Why should you look at references? #

References act as guideposts for your trading. You can monitor marfket development and put it in context based on how markets reacted to different reference levels.

Watch the short lesson video above for more…