📍 Core Concept

Volume Profile

Analyzing price levels with highest trading activity.

APOLLO ENCYCLOPEDIA

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What It Is

Volume Profile displays the amount of volume traded at each price level rather than over time. It creates a horizontal histogram showing where the most and least trading activity occurred, revealing the market's true areas of interest.

Key insight: Price levels where heavy volume was traded become support and resistance not because of lines on a chart, but because of real positions held by real traders. These high-volume nodes represent areas where many participants have a stake — they'll defend those levels.

The Point of Control (POC) is the price level with the highest traded volume. It acts as the market's consensus of fair value. The Value Area (VA) encompasses 70% of all traded volume and represents the price range where most business occurred.

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Using Volume Profile

High-Volume Nodes (HVN)

Price tends to consolidate and rotate around HVNs because there's heavy two-way interest. They act as magnets that pull price back and as strong support/resistance when tested.

Low-Volume Nodes (LVN)

These are price levels where very little trading occurred — price moved through them quickly. They act as barriers: once price breaks into an LVN, it tends to accelerate through to the next HVN.

POC as a magnet

If price moves away from the POC, expect it to be pulled back unless a genuine trend develops. Use the POC as a target for mean-reversion trades and as a reference point for directional bias.

💡Pro Tip

Apply this concept in combination with others. No single concept tells the whole story - confluence is key.

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