Market profile is the study of auctions and it can be a very useful tool if used correctly. Recently the emergence of volume profile has both confused and enhanced the subject. Volume at price is the area in which most contracts have exchanged at a certain level, whereas market profile measures how much time has been spent at a certain price.
Both are valuable measures but in the FX industry there is no real volume data so market profile is more relevant. Bell curve distribution is vital for understanding trading with market profile and is difficult to backtest, so spending time in front of your charts watching the daily auction is the best way to get your head around this method. If it is a move to new distribution or mean reversion, this charting methodology could help you decipher key clues.
How to trade with Market Profile
(From Market Delta)
Auction Market Theory
Rajan Dhall MSTA from FXDaily.co.uk speaks about auction market theory and how you can used this in your trading