Volume Profile — Trading Wiki

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Published by TradeHQ. Site creator: Anuga Weerasinghe. This page has no recorded editorial review date; the About page explains the site's editorial approach.

What Volume Profile means

A volume profile groups recorded volume into price bins over a chosen interval. Its point of control is the highest-volume bin in that sample, not a forecast of where price must return.

In depth

A volume profile groups observed trading volume into price bins over a stated sample. The point of control is the bin with the greatest volume under those settings. A value area encloses a selected share of volume using a specified construction method; a commonly chosen 70% share is not automatically one standard deviation or an economic valuation. Bin width, observation window and data coverage affect the result. A high-volume bin describes earlier activity and need not attract future price. TradeHQ does not supply a standard historical volume-profile overlay; a separate invented table is sufficient to learn the arithmetic.

Key points

• Plots volume horizontally at each price level, not over time
• Point of Control is the highest-volume price bin in the selected sample; it need not attract future price
• A chosen value-area share summarizes observed volume, not economic fair value

Why it matters when you are learning

Volume Profile allocates observed trading volume to price bins; it does not identify who still holds positions. Its bins depend on the chosen data, interval and width; they do not establish a reliable price barrier.

Worked exercise and its limits

Use a tiny invented sample: 20 units traded at $10, 50 at $11 and 30 at $12. With those price bins, $11 is the point of control. It summarizes 100 past units, not a forecast that the next price returns to $11. A volume profile is not implemented here.