Volume Profile Webull (2024)

FAQs

What does Volume Profile tell you? ›

Volume Profile is a technical indicator that displays the volume traded at various price levels over a specified period. It provides a visual representation of the distribution of volume within a given price range.

Market Profile and Volume Profile, while related, focus on different aspects of market analysis. While both methods provide insights into market dynamics, Volume Profile focuses exclusively on the relationship between price and trading volume. Market Profile focuses on the time at which trades occur.

Volume profiles can also be used to confirm the direction of a trend. If the volume profile is showing more volume being traded at higher prices, it indicates a bullish trend. Conversely, if more volume is being traded at lower prices, it suggests a bearish trend.

Point of Control (PoC) is not an independent indicator but a critical component within the Volume Profile (Volume By Price) indicator. It refers to the most popular price level where the highest volume of trades occurred within a specified time frame.

This indicator is a profile which displays the average volume of an area (of price). It also calculates and displays the highest average volume point (HAV) and the relating value zones (calculated in the similar fashion to a volume profile).

Trading volume, which measures the number of shares traded during a particular time period, can help. While swings in trading volume may not be enough on their own to reveal changes in a trend, they can give you a sense of how much strength there is behind a move.

Many long term investors, for example, institutional investors like mutual funds prefer stocks with higher volumes. Intraday traders, who have to square-off their position in a relatively much shorter time span, look for stocks with high trading volumes.

Why It Matters. If you see a stock that's appreciating on high volume, it's more likely to be a sustainable move. If you see a stock that's appreciating on low volume, it could be a dead cat bounce. Logically, when more money is moving a stock price, it means there is more demand for that stock.

Volume is an important indicator in technical analysis because it measures the relative significance of a market move. The higher the volume during a price move, the more significant the move; the lower the volume during a price move, the less significant the move.

How to read a Volume Profile? ›

Essentially, Volume Profile takes the total volume traded at a specific price level during the specified time period and divides the total volume into either up volume (trades that moved the price up) or down volume (trades that moved the price down) and then makes that information easily visible to the trader.

Volume is an important indicator that every day trader should understand. Generally, you want to look for stocks that have high volume. Rising volume and price often mean buyer interest, which makes the stock more liquid, and quicker and easier to buy and sell.

The main downside of Volume Profile analysis is that it relies on past information, meaning it's a lagging indicator.

Components of the Volume Profile Visible Range

The VPVR Indicator is characterised by several integral components: Price Ranges: The indicator segments the price axis into distinct ranges. Volume Bars: Within each price range, horizontal bars represent the cumulative volume traded at the corresponding price level.

Analyzing the volume indicator involves understanding the patterns created by the trading volume and their relationship with price action. High trading volumes often indicate increased market interest and liquidity, whereas low volumes suggest a lack of interest or limited market activity.

Volume analysis is the examination of the number of shares or contracts of a security that have been traded in a given period. Volume analysis is used by technical analysts as one of many factors that inform their trading decisions.

Volume, average volume and day's range

Volume represents the number of shares that have been traded so far that day, while average volume is the average daily volume for a specified period. Day's range shows the highest and lowest prices the stock has traded for up to the current moment of that trading day.