Volume Profile

A histogram showing how much volume traded at each price level rather than in each period.

Also called: market profile · point of control · poc

In plain language

Standard volume charts show activity over time. Volume profile rotates that: it shows activity by price, revealing where the market actually did business.

The price with the most volume is the Point of Control. Wide areas of the profile are prices the market accepted; thin areas are prices it rejected quickly.

Thin zones tend to be traversed fast when revisited, because there is little resting interest to slow price down.

Worked through

A thin shelf between two heavily traded prices

High-volume node: $210 — heavy trade
Low-volume gap: $212–$218 — very little
High-volume node: $219 — heavy trade
Behaviour through the gap: fast

Volume profile plots how much trading happened at each price rather than in each time period. Where a great deal traded, many participants have positions to defend and price tends to stall; where almost nothing traded, there is nobody with a reason to act and price passes through quickly.

That shape is directly useful for placing the two exits. A target set at $212, in the middle of the thin shelf, is asking price to stop somewhere it has historically never wanted to linger. A target at $219 sits where the trading actually happens.

It cuts the other way too. A stop placed inside the low-volume zone is exposed to fast movement in both directions, so the fill is more likely to be poor — an argument for putting it beyond the node rather than in the empty space.

None of this predicts direction. It describes where price is likely to hesitate and where it is likely to accelerate, which is information about the path rather than the destination — and the path is what stops and targets live on.

Why it matters

High-volume nodes often behave like magnets and low-volume nodes like slides, which helps in placing targets and stops where price is likely to react or accelerate.