Volume profile

What it is

A volume profile is a sideways histogram showing how much volume traded at each price over a range. The busiest price is the point of control (POC). The value area is the band holding about 70% of the volume, between the value area high (VAH) and low (VAL).

High-volume nodes are prices the market accepted; low-volume nodes are prices it moved through quickly, which it often moves through quickly again.

Which stretch of chart the profile covers changes everything. A session profile covers one day; a composite covers many; a fixed-range profile covers a range you choose; a visible-range profile covers whatever is on screen, so it changes as you zoom and can't be reproduced later. On spot forex and CFDs the volume is broker tick volume, so the profile is an approximation.

How to spot it

• Look for the POC and value area edges.
• Thin areas between heavy ones are low-volume nodes.

How to use it

• Use the POC and value area edges as levels for reactions, and low-volume nodes as areas price can travel through fast.
• In UNFLD's backtester, add Volume Profile from Indicators, or use the fixed-range tool on the left to drag one over any part of the chart.

Common mistakes

• Using a profile over a random range that doesn't match a session or swing.
• Treating the POC as support no matter what the trend is doing.
• Recording a visible-range profile in your journal; note a fixed range or session instead, so you can draw it again.

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