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Volume Profile Indicator Explained

Volume Profile Indicator

Volume Profile Indicator Explained.

Volume Profile Indicator Explained. Let’s start with, VPI that’s stands for Volume Profile Indicators, and it is a volume-based indicator. That calculates the number of shares traded in a specific time period and plots them on a trend chart. The Volume Profile Indicator is one of the indicators used to determine the angle of support and resistance pressures. It can also be used to spot breakouts, continuation patterns, and early trend change signs.

The visual representation is made up of a line that runs from the past to the present, giving traders an idea of overall volume throughout that time. Traders can use the indicator to measure the strength of support and resistance levels, as well as review trade signals to see how much volume led to the transaction.

Volume profiles show how much trading activity occurred at a given price. Normal volume indicators show how much trade volume occurred during a certain time period. That is the main distinction between the two. Understanding that you may perceive pricing and volume on a whole different scale than most people can is crucial to getting started. Based on the price levels that attracted the largest trading activity, you may observe price and volume. Volume profiles reveal this information.

Volume Profile is a tool that gives you an edge on stock markets and futures trading. I’ll explain how to use your volume chart when you’re buying stocks. Volume profile gives you a low-risk entry with a high probability.

To Understand What Is Market Structure Follow This Article


What is a volume profile?

Volume Profile is a type of advanced charting analysis that shows trade activity over time and at certain price levels. The research draws a histogram on the chart (accounting for user-defined parameters such as the number of rows and time period) to highlight dominant and/or notable price levels depending on volume. Volume Profile splits the entire volume transacted at a certain price level over the defined time period into either buy or sell volume and then makes that information clearly apparent to the trader.

Another way, a volume profile is a trader’s supplemental tool for determining the key levels that major market participants consider in their trading. It’s also referred to as horizontal volume. This tool’s worth comes from the fact that it can be used with practically any trading strategy. You obtain a more reliable signal after studying the market with horizontal volumes, which you may utilize to confirm or deny the received entry point.

Volume Profile Trading or volume profile trade is one technique in a technical analysis called a Volume Profile. The author of trading with profile has been widely attributed to developing the concept of volume profile trading. Steidlmayer is an established futures broker who joined the Chicago Board of Trade in 1963. Volume profile enables traders primarily to apply technical terminology to technical analysis such as support and resistance levels, price actions, chart patterns, and indicators trading setups.

Types of Volume Profile Indicator.


On TradingView, we have 4 different volume profiles to choose from:

  1. Visible Range
  2. Session Volume
  3. Session Volume HD
  4. Fixed Range

Each of these is unique in its own way and will help you analyze markets better depending on what you need to find or research.

Visible Range shows how much trading volume occurred at each specific price based on the chart you’re looking at.

Session Volume shows how much trading volume occurred at each price within a single session of trading. Session volume shows a volume profile of individual sessions.

Session Volume HD is the same as Session Volume except that it is high definition. Meaning it dynamically adjusts to show you more or fewer data depending on your zoom. If you have multiple monitors or use the multi-chart layout, Session Volume HD can be a huge help.

Fixed Range is how you select any two points on the chart and instantly analyze price and volume for that region. Pick two points and see what prices attracted the most trading volume.

What Is VPVR Indicator?


What is the VPVR, exactly? Volume profile visible range is abbreviated as VPVR. This indicator will effectively draw a histogram on your chart, revealing the most important and dominating price levels depending on volume. It will provide you with a precise indicator of supply and demand at a certain price rather than volume, which only works for a limited time.

If you have never tried out tradingview I would definitely recommend you do so. Now to add vpvr on tradingview you actually do have to have a premium account. You do have to pay for tradingview. If you just want to try it out you can usually get a one or two-month trial and trading view before you actually have to pay. However, if you’re serious about trading and you do want to get into day trading and be successful I would recommend tradingview and getting a paid plan.

How does the volume profile indicator work?

Volume Profile splits the entire volume transacted at a certain price level over the defined time period into either buy or sell volume and then makes that information clearly apparent to the trader.

Depending on the volume distribution, the volume profile might take any shape. It creates a histogram by drawing horizontal lines. The larger the profile increases as more volume trades at a particular level.

How does the volume profile indicator work? 

Volume Profile bars are built using the total volume of the market at a specific price point and dividing these total purchases and sell volumes and displaying them on a histogram chart. Traders can use the volume profile indicators as a powerful tool in their trading arsenal. This article will give you an idea of what volume bars are as it’s possible to use them. It takes the total volume of trades at a time period divided by total buys & sales volume to show it on the Histograms chart.

Types of Volume Profile Structures.

The classification of subcategories can extend to 4 subcategories. Each individual of these structures indicates the probability of the distinctive price patterns expected the following day. In the majority of cases, we will create two distributions – less so triple distribution structures. The price will depend greatly on the closing of the market at the end of the New York session to check the next day’s play. If the structure supports short trades like in the case of the short S-shape and the close at the NY close is considerably below the OOP then the prospect of short stocks being trapped or at least chop. It is often the short P-shaped long that sees a larger rebound with market participant failures.


What is the difference between a market profile and a volume profile? 

Volume-at-Target Analysis (VAP) analysis shows how much money got bought at an individual price or at a specific market price or during a specific time. The two primary forms of VAP are Volume Profile and Market Profile (Time Price Opportunity) Of the other two VAP options Volume Profile is probably the most well known and accessible. VAP Analysis differs from typical volume analysis because VAP analyses show how much of a market is traded at a certain time.

In Summary; Volume Profile Indicator Explained.

The volume profiles are trading forms on Forex markets such as the euro and Asian currencies that include Japan and the US. A volume profile is a trading strategy used by traders on the currency exchange market. The market profile and volume profiles are only available for information purposes in order to help traders gain the advantage they gain when competent with its applications.



Information last update;

June 22, 2022.