Volume profile is a charting feature or indicator that shows the traded volume amount of an asset, over a specified period at certain price levels.
Volume profile shows this data as a histogram in a Y-axis vertical next to price levels. Probably the first time you see volume profile, you see them as weird colorful bars at the right side of the chart next to price levels.
But do not worry at all! After you read this article, you will exactly know what these volume bars are and how you can use them.
So, how these Volume Profile bars are created? It takes the total volume traded at a price point, in a specific time period, and divides total buys and sell volumes and showing it on a histogram chart.
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Traditional or regular volume is the volume by time. Make money for a house is not what volume profile does!
Wyckoff methods and VSA Vertical volume analysis. Analysis of interconnections of movement of the price and vertical volumes increases chances of its achievement. In this article: what the vertical volume is; rules of volume and price analysis; what Richard Wyckoff is famous for; what Wyckoff method and VSA method are; where the best places for search for profitable trades are; what spring and upthrust are; advantages and disadvantages of trading methods based on the vertical volume analysis.
Volume profile takes each price point and tells us, how many transactions happened at each price point. The longer the bar is, the more transactions happened at that price point.
So we can say, the traditional volume is the volume by time but the volume profile is the volume by price.
Different Types of Volume Profile There are three different types of volume profile which you can use in your trading. These types are not so much different in what they do.
Trading with the Volume Indicator
Their difference is how they show on your chart and the ease of access to the volume profile on the exact time period you want to see. VPVR automatically shows the volume traded in the price level from the candles shown on the screen.
Indicators and Strategies
When you vertical volume in trading to see the traded volume in a time period of price action, such as an uptrend or downtrend, you can define the start and endpoint and see the volume profile only for that time period. You see a divided volume profile for each session presenting on the chart. Each session is vertical volume in trading a day and it is the same with the change of time period of the chart.
To use a volume profile in Tradingview you need a pro account or a free trial. You can sign up for a free Tradingview trial here. Go to Chart.
History of introduction of horizontal volumes
Select one of the three available options on the middle navigation bar. Volume Profile Terminologies The important part starts here.
Before we dive into the volume profile rules and strategies, you must first understand these easy concepts first and then other things will make sense to you.
So please read the definitions and look at the point specified in the image to understand. There are lots of volumes transacted at these prices.
HVNs are much longer than the other bars around them remember these are all relative to other bars. Determined from surrounding nodes of POC.
In this area, the volume profile gets a little complicated. Related Posts.