A normal volume bar tells you how much traded in a period of time. A volume profile turns that sideways: it shows how much traded at each price. The result is a horizontal histogram next to the chart, showing where the market spent its effort and where it moved through quickly.
The key levels
- Point of control (POC): the price with the most volume. The market's "fairest" price for the period.
- Value area (VA): the range around the POC containing about 70% of the volume, bounded by the value area high (VAH) and value area low (VAL).
- High volume nodes (HVN): prices with heavy trading. Price tends to slow down and range here.
- Low volume nodes (LVN): prices with little trading. Price tends to move through them quickly, and they often act as edges.
Reading the profile
| Situation | Common reading |
|---|---|
| Open inside yesterday's value area | Balance; expect rotation between VAH and VAL |
| Open outside value, then move back in | Often travels to the other side of value (the 80% rule) |
| Break and hold beyond VAH or VAL | Acceptance of new prices; a trend day is more likely |
| Price reaches an LVN | Expect a fast move through it, or a sharp rejection from it |
| Price reaches an HVN or POC | Expect it to slow and chop |
Profile types
Most platforms offer a session profile (one per day), a fixed range profile you draw over any area, and a visible range profile covering everything on screen. A fixed range profile drawn over a recent swing is a quick way to find that swing's POC and LVNs.
Key takeaways
- A volume profile shows how much traded at each price, as a horizontal histogram.
- The point of control is the price with the most volume; the value area holds about 70% of volume.
- High volume nodes slow price down; low volume nodes are travelled through quickly or rejected.
- Opens inside or outside the previous value area set up different expectations for the day.