Volume profile trading, explained simply
The key volume profile levels
- Point of control (POC): the single price where the most volume traded. Price often gets pulled back to it.
- Value area: the range where roughly 70% of volume traded. Inside it, the market agrees on price.
- High volume nodes (HVNs): prices with heavy trading. They tend to act as support or resistance.
- Low volume nodes (LVNs): thin areas price moves through quickly. Breakouts often travel through them.
How I use volume profile
First I find the trend. Then I wait for a pullback to VWAP. If that pullback lands on a high volume node or the point of control, I've got two reasons for the level to hold. My target is usually the next big volume area in the direction of the trend.
Where it comes from
Volume profile grew out of market profile and Auction Market Theory, which sees the market as an auction looking for fair value. It also fits well with the Wyckoff Method, which watches how volume behaves as big players build positions.
Common questions
What is the point of control?
The point of control is the price level with the most traded volume in the profile. It's often treated as the fairest price for that period.
Does volume profile work in forex?
Yes, using tick volume from your broker or futures volume as a proxy. The levels still show where trading was concentrated.
What's the difference between volume profile and VWAP?
VWAP is one average price line weighted by volume. Volume profile shows the full distribution of volume at every price. I use both together.
What's the value area?
The value area is the price range where about 70% of the volume traded. Price outside it is often seen as unfair and tends to either return or trend away.