Volume Profile
In short
Shows how much volume traded at each price level — identifies key zones
Volume profile shows where most trading happened at different price levels. Heavy trading at a price means traders consider it fair value. Low trading zones are areas where price moves fast.
Volume profile displays traded volume at each price level over a period, revealing the Point of Control (highest volume price), Value Area (70% of volume traded), and low-volume nodes (fast-moving price areas). Useful for identifying support/resistance.
Related concepts
- OBV (On-Balance Volume) — OBV adds volume on up days and subtracts on down days. The idea: if prices are rising but volume is weak, the move isn't convincing. When OBV rises before price, big money may be accumulating.
- VWAP — VWAP is the true average price traders paid throughout the day, weighted by how many shares traded at each price. Institutions use it as a benchmark — buying below VWAP is considered a good fill.
- Support Level — A support level is like a floor — when a stock falls to that price, buyers tend to step in and it bounces back up. The more times a price level holds, the stronger the support.
- Resistance Level — Resistance is like a ceiling — when a stock rises to that price, sellers take profits and the price falls back. A breakout above resistance is a bullish signal that the stock may make new highs.