Volume Profile

Overview

Volume Profile is a type of advanced charting study that displays trading activity for a specified time period at specified price levels. The study (accounting for user-defined parameters such as time period and price range) plots a histogram on the chart meant to reveal dominant and/or significant price levels based on volume.

Interpretation

Volume Profile is interpreted as follows:

• High Volume Nodes (HVN): A peak in the Volume Profile. This represents a price level with a high number of executed trades that is seen as a potential level of support/resistance.

• Low Volume Nodes (LVN): A trough in the Volume Profile. This represents a price level with a low number of executed trades that is seen as a potential breakout level.

Indicator Triggers:

In Band: Price is in/out a specific area

A long signal is triggered if price enter in the Value Area.

A long signal is triggered as price enter in Value Area (low).

Price cross up/down

We only consider body closes for this trigger. If the price cross up/down the band (wick), but the candle body close is in the bands then no signal is triggered.

A long signal is triggered if price cross up the Point of Control (POC).

A long signal is triggered as price cross up the Point of Control (POC).

Price touch up/down

This trigger is almost like the same as described above, but it is not necessary to wait for a body close. As soon as the price touch/wick the POC (or any other), a signal is triggered.

A short signal is triggered if price touch up the Point of Control (POC).

A short signal is triggered as price touch up the Point of Control (POC).

Line distance in % or ATR

You can trade a specific distance of the price against many other.

A long signal is triggered if the POC is under the price at a distance between 0 and 1% or 0 and 1 ATR.

You can choose many other options as a trigger.

A long signal is triggered in the green rectangle area as Point of Control (POC) sustain under price between 0.2 and 1% / 0 and 1 ATR.

Notes :

• Tip from the famous volume trader Dalton, from his systematic strategy; If the market opens above or below the previous day Value Area and then accepts back inside the value of two 30-minute candles (2 TPO's), there is an 80% chance to rotate to the other side of the Value Area.

• Point of Control (POC) is the price level in which maximum time was spent or maximum trading volume happened on any day.

• Once the market accept to establish a range with an unfair high/low, it negotiates within the range to establish a so called Value Area (VA).