Technical & Chart AnalysisMarket ProfileVolume by Price
Volume Profile
A histogram of traded volume at each price level, highlighting the point of control and the value area.
What Volume Profile means
Volume profile plots traded volume horizontally against price rather than against time, producing a histogram that shows how much activity occurred at each price level over a chosen period. Its key readings are the point of control, the price with the greatest volume; the value area, conventionally the band containing about 70% of the period's volume; and high and low volume nodes. The interpretation rests on auction theory: prices where heavy volume traded represent accepted value, while thinly traded prices represent rejection.
Traders use high volume nodes as likely support and resistance because unfinished business there tends to attract price back, and low volume nodes as areas price tends to traverse quickly once entered. Profiles can be built per session, per composite range or anchored to a specific event. In spot forex the same caveat applies as with VWAP: without a central exchange there is no true consolidated volume, so a retail profile is built from tick volume from a single venue. It is a reasonable proxy but not the real thing, and profiles differ between brokers.
Worked example
A weekly EUR/USD profile shows a point of control at 1.0845 with the value area running from 1.0805 to 1.0895; when price returns to 1.0850 after a spike to 1.0930, a trader treats it as a rotation back to accepted value.
Related terms
- VolumeA measure of trading activity - genuine contracts traded on an exchange, but only tick counts on a retail forex platform.
- VWAP (Volume Weighted Average Price)The average price weighted by volume across a session, used as an execution benchmark and intraday fair-value line.
- SupportA price area where buying interest has previously been strong enough to halt or reverse a decline.
- ResistanceA price area where selling interest has previously been strong enough to stop or reverse an advance.
- Supply and DemandA zone-based method that marks areas where price previously left abruptly, on the assumption that unfilled institutional orders remain there.
Frequently asked questions
What does Volume Profile mean in forex trading?
A histogram of traded volume at each price level, highlighting the point of control and the value area.
How does Volume Profile work in practice?
Traders use high volume nodes as likely support and resistance because unfinished business there tends to attract price back, and low volume nodes as areas price tends to traverse quickly once entered. Profiles can be built per session, per composite range or anchored to a specific event. In spot forex the same caveat applies as with VWAP: without a central exchange there is no true consolidated volume, so a retail profile is built from tick volume from a single venue. It is a reasonable proxy but not the real thing, and profiles differ between brokers.
What is an example of Volume Profile?
A weekly EUR/USD profile shows a point of control at 1.0845 with the value area running from 1.0805 to 1.0895; when price returns to 1.0850 after a spike to 1.0930, a trader treats it as a rotation back to accepted value.
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