What Is Volume Profile?
Volume Profile displays the amount of volume traded at each price level over a specified period, creating a horizontal histogram alongside the price chart. Unlike traditional volume bars (which show volume per time period), volume profile shows volume per price level — revealing where the most and least trading activity occurred.
How Volume Profile Works
Key volume profile concepts: the Point of Control (POC) is the price level with the highest traded volume; the Value Area (typically 70% of total volume) shows where the majority of trading occurred; High Volume Nodes (HVN) are areas of heavy trading that act as magnets for price; Low Volume Nodes (LVN) are areas with little trading that price tends to move through quickly.
Why It Matters for Traders
Volume profile is one of the most powerful tools for identifying support and resistance. Unlike horizontal lines drawn at swing points, volume profile reveals where actual money was exchanged. HVNs act as strong support/resistance, while LVNs act as fair value gaps that price moves through rapidly. Professional traders use volume profile as their primary method for identifying key levels.