Volume by Price vs. Volume by Time
Standard volume bars at the bottom of a chart show when trading activity happened, but not at what price levels. Volume Profile displays a horizontal histogram of executed transactions across price levels, revealing where buyers and sellers established market value.
The 70% Value Area Rule:
The Value Area represents prices accepted by both buyers and sellers. When price breaks outside the Value Area High (VAH) or Low (VAL) and fails to hold, it frequently reverts back to the session Point of Control (POC).
How to Trade High and Low Volume Nodes
High Volume Nodes (HVNs): Price zones of fair value where market participants are comfortable trading. Expect consolidation and slower price action inside HVNs.
Low Volume Nodes (LVNs): Price zones where few transactions occurred. Because there are few resting limit orders in LVNs, price moves through them quickly. LVNs act as clean support or resistance boundaries on retests.
Practical Volume Profile Strategies
- Value Area Fade: If price opens outside the Value Area and moves back inside within 30 minutes, target a move across the range to the opposite Value Area boundary.
- POC Retests: Naked Point of Control (nPOC) levels from previous sessions often act as high-probability reaction magnets during trend retracements.