Poor Highs and Poor Lows

Introduction

This tutorial focuses on identifying poor highs and poor lows using the Time Price Opportunity (TPO) profile. Understanding these features can enhance your trading strategies by highlighting areas of incomplete auctions in the market. This guide will help you grasp key concepts and provide actionable steps for utilizing TPO profiles effectively.

Step 1: Understand TPO Profiles

• Definition: TPO is a time-based method for analyzing market structure. It measures the time spent at specific price levels rather than volume.
• Daily Sessions: Each TPO profile represents a unique daily session with 30-minute periods forming new blocks or letters.
• Settings: Commonly, traders use a default setting of 30-minute blocks. Adjust the TPO height based on your trading tool (e.g., 24-48 ticks for Bitcoin).

Step 2: Identify Poor Highs and Poor Lows

• Criteria: A poor high or poor low occurs when there are less than two unpaired TPO blocks (also known as single prints) at either the high or low of a session.
• Single Prints: A single print tail at a high or low indicates that the price traded at that level for only one 30-minute period.
• Significance: A lack of excess, indicated by fewer than two single prints, suggests an incomplete auction.

Step 3: Analyze Market Behavior

• Excess and Reaction: The presence of excess is identified by longer tails or wicks on candlestick charts, indicating strong buying or selling pressure.
• Implications: Poor highs and lows can lead to price moves away from these levels, often revisited in the near term to repair the auction.
• Common Patterns: Look for failed auctions at these levels, which may indicate strong price movements afterward.

Step 4: Create a Trading Plan

• Plan for Breakouts: Don't rely solely on breakouts. Instead, consider scenarios for both upward and downward price movements.
• Use of Stop Losses: Poor highs and lows are common areas for traders to place stop losses. Understanding this can help you gauge liquidity and potential price reactions.
• Zoom Out for Perspective: Examining broader trends helps understand the context of poor highs and lows, aiding in more informed trading decisions.

Step 5: Identify Trading Opportunities

• Targets: Use poor highs and lows as potential targets for trades. Look for areas where price may react due to the presence of liquidity beyond these levels.
• Monitor Multiple Sessions: Analyzing multiple daily sessions can reveal patterns and enhance visibility of poor levels.
• Avoid Sole Reliance: While TPO is a useful tool, do not rely on it exclusively. Combine it with other indicators to improve your trading strategy.

Conclusion

Identifying poor highs and poor lows through TPO profiles is a valuable skill for traders. By understanding the concepts of TPO, recognizing incomplete auctions, and creating a solid trading plan, you can enhance your trading decisions. Continue to explore further examples and integrate these insights into your trading practice for better outcomes. Happy trading!