Who it's for — Anyone using Market Profile or Volume Profile who wants a framework to distinguish rotation in balance from movement toward new value.
Auction Market Theory (AMT) describes the market as a continuous two-way auction: buyers and sellers negotiate until prices are accepted (value) or remain in disagreement (imbalance), pushing price toward new zones. Market Profile and Volume Profile visualize where the auction found agreement.
In plain terms — Price rises until it finds willing sellers; falls until it finds buyers. When neither side yields, the market explores new prices until a new equilibrium area forms.
Auction states
| State | Typical behaviour |
|---|---|
| Balance | |
| Imbalance | Directional trend toward new value |
| Discovery | Exploration of untested prices (gaps, news) |
| Rejection | Price rejected from HVN or prior VA |
Reading with profile
| Element | Role in AMT |
|---|---|
| POC | Price of maximum consensus (session gravity) |
| Value Area | Band with ~70% of volume — operational «fair value» |
| LVN | Thin zones — price may traverse quickly |
| HVN | Dense nodes — magnets or barriers |
Common mistake — Treating every POC touch as an entry — in balance context matters; in imbalance yesterday's POC may lag until new acceptance forms.
Example — Open above prior VA, no return to balance for 90 minutes: auction in bullish imbalance — look for pullbacks to LVN or newly forming VA, not shorts at yesterday's POC.
Summary card
- Framework: continuous supply/demand auction.
- Two states: balance vs imbalance.
- Visual tool: Market / Volume Profile.