Value Transition




VPOC stands for Volume Point of Control and is the price level with the heaviest volume for the day. This is the price level with heavy Acceptance by both, Buyers and Sellers. The level signifies agreement by both parties on Value. Now, if the Buyers and Sellers agree that a certain price is fair, then the market could remain in balance trading around the VPOC until additional information changes the perception on Value or it could head in the opposite direction and test a previous area of Rejection (disagreement). VPOCs serve as great targets.

But how do you trade it? On a Non-Trend Day price could just rotate around the VPOC until new information (a catalyst) is introduced in the market and changes the opinion on Fair Value. The idea is to fade the extremes of the range around the VPOC. On a Trend Day, Price will make a directional move away from Value and Value will catch up to Price so any pullback will probably be bought before the VPOC could shift again (double-distribution trend days).

The VPOC is also a High Volume Node or HVN. Accordingly HVN or POC is where the real value is product. At this level buyers and sellers they agree that the price is reasonable (fair price). When the price moves away from its market value enters imbalance (Breakout Mode) with two obvious results: 'Rejection' and return to its original value to correct this inefficiency, or 'Acceptance' and in this new case, a 'Value Transition'.

Value Transition is the migration or movement of the VPOC value to a new level in which the perception of its value has changed. Market Profile will show a profile with a double distribution with two High Volume Nodes, but also, and most important, between HVNs will be a Low Volume Node, a level where buyers and sellers have shown a lack of interest, and therefore, that price has been rejected.

The concept of 'VALUE TRANSITION' is one of the most important topic on the Auction Theory. The work of a Profile Trader is to figure out a potential change on value perception, if the price is acceptable (acceptance) or rejected (rejection). 'Price always precedes Value', the price is the announcement of the change of value, but its acceptance in a new level of perceived value must be confirmed with the volume. Price is Advertisement, Volume is Confirmation.