Volume Profile displays volume distribution at different price levels, shown as horizontal histogram on price axis. Volume Profile helps traders identify high volume areas (value areas) and low volume areas, which typically become important support/resistance levels.
POC (Point of Control) = Price level with highest volume VA (Value Area) = Price range containing 70% of volume VAH (Value Area High) = Upper boundary of value area VAL (Value Area Low) = Lower boundary of value area HVN (High Volume Node) = High volume area LVN (Low Volume Node) = Low volume area
Fixed Range Volume Profile: Analyzes volume distribution over specific time period
Visible Range Volume Profile: Analyzes volume distribution in currently visible chart area
Session Volume Profile: Analyzes volume distribution for single trading session
Composite Volume Profile: Analyzes cumulative volume distribution across multiple sessions
POC: Most important support/resistance, price often bounces or retreats here
VAH and VAL: Value area boundaries, important support/resistance
HVN (High Volume Node): Strong support/resistance, price difficult to break
LVN (Low Volume Node): Price easily moves quickly through
Price Above VA: Bullish, buyers in control
Price Below VA: Bearish, sellers in control
Price Returns to POC: Mean reversion opportunity
Volume Profile is widely used tool by professional traders, particularly in futures and stock markets. POC is most important price level, typically acting as strong support/resistance. Value Area (VA) represents fair price range accepted by market; price tends to fluctuate within VA. High Volume Nodes (HVN) are strong support/resistance where price often reverses or consolidates. Low Volume Nodes (LVN) allow price to move quickly through, suitable for breakout trading. Many intraday traders use previous day's volume profile as reference for current day trading.
Shows market-accepted price levels, provides objective support/resistance, identifies value areas, helps understand market structure, widely used by professional traders
Not applicable to forex markets (no centralized volume data), requires historical volume data, steep learning curve, unreliable in low volume markets
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