You already know what letters mean: time at price. This lesson is about reading the profile structure that those letters build. How the value area is calculated, what poor highs and lows mean, and why the extremes of a session tell you more than most traders notice.
The TPO Letter SystemHow letters build structure
Every 30-minute period from the open is assigned a letter: A (9:30-10:00), B (10:00-10:30), C, D, and so on through the close. Each letter prints at every price level that period's range touches.
A price row with A B C D E F has high time acceptance. The market returned to that price in six separate 30-minute periods. A row with only one letter is a single print. Price was there briefly and moved away.
The widest row (most letters) is the POC. The range containing 70% of all letters is the value area. Everything else flows from this.
Value Area CalculationHow the VAH and VAL are set
Market Profile's value area is calculated from the TPO count, not from volume. Starting from the POC row, you add the adjacent rows with the most letters alternately above and below, until you've included 70% of the session's total letter count. The outer boundary at the top is the VAH. At the bottom, the VAL.
This is slightly different from how Volume Profile calculates its value area, which is volume-based. In most sessions they're very close. When they diverge by more than a few ticks, it's worth noting: the market accepted that level in time but not in volume, or vice versa.
Poor Highs and Poor LowsThe most misunderstood structural signal
A poor high or poor low is a session extreme where multiple letters printed. The market spent time at the high or low rather than rejecting it sharply and moving away.
Compare the two profiles below. The left shows a clean tail at the high. The right shows a poor high.
This single read is something candlestick traders completely miss. A candlestick shows you a wick at the high. Market Profile tells you whether that wick was a sharp, one-period rejection or a slow, multi-period grind. They look the same on a candle chart. They mean entirely different things.
Opening inside value
When price opens inside the prior session's value area, it tends to fill the value area to the opposite extreme roughly 80% of the time in balanced market conditions. The same rule from Volume Profile applies to Market Profile because both tools identify the same concept: the range where the market accepted fair value.
Use this as a bias filter, not a strategy. It tells you which direction has a higher probability when building your morning hypothesis. It gets invalidated if price breaks the VAH or VAL on initiative volume in the first 30-45 minutes.
Yesterday's Market Profile: VAH at 5248.50, POC at 5248.00, VAL at 5247.50.
Today opens at 5247.80, inside value, below the POC.
Bias: long toward the VAH. The 80% rule says price will attempt to fill to the VAH. Watch for it to hold above the VAL on the first test in the A period. If it does, the long bias holds. If it breaks below the VAL on volume in the first 30 minutes, the thesis is wrong.