Profit Ratio is a percentage of traders currently being in profit. Usually its value lies within the range of 25-35%.
According to “trading against the crowd” theory, the rapid burst (growth) of profit ratio indicates possible manipulations.
This is how the profit ratio works: firstly, the price goes down so that everyone believes in a downtrend; when all traders sell, it goes up.
We can see the following picture, when we start to use the Profit Ratio tool:
The green line acts as a signal line, and the black line displays the Profit Ratio value.
If the black line crosses above the green line, then it’s a reversal signal. You should look at the chart to decide, which direction you should trade in:
You can use a delta chart to catch the burst more easily. Each green delta bar with the value more than 2% can be a signal.
The Profit Ratio tool also displays a percentage of profitable bullish and bearish traders.