Value area (VAH and VAL)

What it is

The value area is the price band holding about 70% of a profile's volume (or TPOs). Its top is the value area high (VAH) and its bottom the value area low (VAL). It's where the market did most of its business.

It isn't simply the middle 70% of the range. Platforms build it outward from the POC: start at the POC row, compare the row just above the value area with the row just below, add whichever has more volume, and repeat until the value area holds 70% of the total. The classic CBOT method compares two rows at a time on each side instead of one.

That is why two platforms can show slightly different VAH and VAL on the same data: row size, one-row or two-row steps, how ties are broken, and the percentage used (NinjaTrader defaults to 68%) all vary.

How to spot it

• Most platforms draw the VAH and VAL as lines or shade the value area.
• Compare today's value area with yesterday's: higher, lower, or overlapping.

How to use it

• Opening inside yesterday's value area usually means a rotational day; opening outside it means something changed overnight.
• Use VAH and VAL as reaction levels, and acceptance beyond them as a sign value is moving.
• Value moving up day after day (higher value areas) confirms an uptrend.

Common mistakes

• Comparing levels from platforms with different settings and expecting them to match.
• Assuming a profile built from candles matches one built from every trade; it's an estimate.

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