Volume Profile

Description

Volume Profile is an advanced charting tool that displays trading activity over a specified period at specified price levels. The Volume Profile indicator plots a histogram on the chart to show significant price levels based on volume.

Volume Profile can only be calculated for markets which publish their order volume such as futures or stocks. The Time Price Opportunities indicator which is also available in the NanoTrader is a related concept which can also be used for instruments on which no order volume is published such as CFD or forex.

Suitable for : Market indices (DAX, CAC, DOW)
: Stocks,
: Commodities (Oil, gold,…)
: FX Futures (EUR FX, GBP,….)
Instruments : Futures and stocks
Trading type : Day trading and swing trading
Using NanoTrader Free+Full : Manual

Click here to buy the Volume Profile package in the store


Volume Profile in detail

Volume Profile shows the activity of the market at certain price levels. It displays the price distribution per specified time period. The Volume Profile can be displayed in the MasterChart or in a SubChart. The data used to calculate the Volume Profile is independent of the MasterChart. Loading Ticks will give the most precise Volume Profile, however, the loading time might be longer and the amount of historical data might be limited. The preferred server aggregation can be chosen in the DesignerBar.

The Volume Profile shows levels of significance like:

  • Point of Control (POC or VPOC): The price level with the highest traded volume for the chosen time period.

  • Value Area (VA): The range of price levels in which a specified percentage of all volume was traded during the chosen time period. Typically, this percentage is set to 70%. Like always this value can be changed in the DesignerBar.

  • Value Area High (VAH): The highest price level within the value area.

  • Value Area Low (VAL): The lowest price level within the value area.

Volume Profile VAH POC VAL

Using the Volume Profile

Volume Profile has a various number of uses. The concepts of Volume Profile are not actual indicators in the narrower sense of the term, rather they serve as a decision-making tool in daily trading. So they can very well help to bring the current market situation into an overall context.

One basic approach is to use the significant levels of previous day´s Volume Profile as support/resistance levels. In this example the market opened inside the previous day´s value area, tested previous day´s VPOC and then proceeded to fall. So the retracement to previous day´s VPOC was a selling opportunity.

Volume Profile

High and Low Volume Nodes are also of interest for many traders.

High Volume Nodes (HVN): A High Volume Node is an area where a high amount of volume was transacted at or around this level. HVN represent an area of acceptance or consolidation.

Low Volume Nodes (LVN): A Low Volume Node is an area where a low amount of volume was transacted at or around this level. LVN represent an area of rejection.

Volume Profile HVN LVN

The Volume Profile can even be used with non-time-based aggregations of the MasterChart. The following example shows a Renko chart with a 120-Minute based Volume Profile.

Volume Profile Renko chart 120 minute

Also higher time frame Volume Profiles can be displayed. The following example shows monthly Volume Profile in the DAX Future.

Volume Profile DAX Future.jpg

Click here to buy the Volume Profile package in the store