Introduction to the Market Profile Level Sensor Indicator for MT4
Trading volume is a key indication that many traders are willing to trade at a certain price level. This is very logical since a spike in trading volume means that the currency pair is being traded. However, most trading platforms only present volume per period or bar which does not tell us what price point traders are willing to trade.
The Market Profile Level Sensor indicator is a tool which traders can use to identify key support and resistance levels based on price point volume.
What is the Market Profile Level Sensor Indicator?
As traders, we are accustomed to volume being plotted as bars on the x-axis of the chart. This means that the volume is measured per period.
Market Profile is a volume charting technique in which volume is plotted on the y-axis of the chart. This means that volume is now being measured per price point. Price points or areas on the price chart where there is a large volume of trade means that there are many traders willing to trade at that point. This also means that these levels can be considered as support or resistance areas.
How the Market Profile Level Sensor Indicator Works?
The Market Profile Level Sensor indicator has a preset number of bars in which it would detect the volume being traded per price level. It would add up the volume of trade at each price point per pip step. It would then plot the volume of trade on the right edge of the chart as bars oriented on the y-axis of the chart.
This indicator allows traders to change the number of bars that it would include in the summing of the volume under the “Max History” variable.
How to use the Market Profile Level Sensor Indicator for MT4
Just as with most Market Profile indicators, this indicator is intended to identify key support and resistance levels based on volume spikes identified by the indicator.
Traders can trade either breakouts or reversal trades based on the support and resistance levels identified with this indicator.
Areas with less volume tend to have less resistance. As such, breakouts developing in the direction of such low volume areas tend to be high probability trades.
Buy Trade Setup
When to Enter?
Identify a resistance area which is adjacent to a low volume area. Open a buy order as price breaks above the resistance area. Set the stop loss below the entry candle.
When to Exit?
Set the take profit target price level at the level where the low volume area ends.
Sell Trade Setup
When to Enter?
Identify a support area which is adjacent to a low volume area. Open a sell order as price breaks below the support area. Set the stop loss above the entry candle.
When to Exit?
Set the take profit target price level at the level where the low volume area ends.
Conclusion
Market Profile indicators are very useful support and resistance indicators. There are many professional traders who use a Market Profile type of indicator such as this. In most cases, these traders would trade intra-day breakouts using this type of indicator.
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