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Analyzing volume distribution across price levels.
Volume Profile is a charting tool that displays how much volume was traded at each price level over a specified period, shown as a horizontal histogram on the price axis. Unlike traditional volume bars (which show volume over time), Volume Profile shows volume over price.
Key insight: Markets spend most of their time at 'fair value' — price levels where the most trading occurs. These high-volume nodes (HVN) act as magnets, pulling price back. Low-volume nodes (LVN) are areas of price rejection — price moves through them quickly because few participants traded there.
The Point of Control (POC) is the single price level with the highest traded volume. It represents the market's consensus of fair value for that period and acts as the strongest magnet for price.
High Volume Nodes (HVN): Areas of heavy trading activity. Price tends to consolidate around these levels. They act as strong support/resistance because many positions were established there.
Low Volume Nodes (LVN): Areas where little trading occurred. Price moves through LVNs rapidly. They act as barriers — once price breaks through, it accelerates to the next HVN.
POC (Point of Control): The most-traded price level. It acts as the strongest magnet in the profile. If price moves away from the POC, it tends to be pulled back unless a genuine trend develops.
This indicator works best when combined with price action analysis. Never trade indicators alone - always confirm with the chart.
Indicators confirm what price action shows. They don't replace it. Never trade based on an indicator signal alone. Always combine with chart structure, pattern recognition, and volume analysis.
The Academy teaches when to use this indicator, when to ignore it, and how to combine it for high-probability setups.
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