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Module 8: Volume AnalysisAdvanced 20 Min

Lesson 3: 8.2: Volume Profile & Point of Control (POC)

Analyze volume across price levels rather than time to identify horizontal support, resistance, and value areas.

1. Time vs. Price Volume

Traditional volume is displayed at the bottom of a chart, showing volume over time. Volume Profile displays volume horizontally on the y-axis, showing exactly how much volume traded at specific price levels.

This reveals the horizontal price levels where the highest amount of interest and transactions took place. Key terms include:

• Point of Control (POC): The price level with the single highest traded volume in the profile. It acts as an incredibly strong magnet and major support/resistance.

• Value Area (VA): The range of price levels where 70% of the total volume was traded during the selected period.

2. High and Low Volume Nodes

High Volume Nodes (HVNs) represent price levels where buyers and sellers have agreed on fair value, creating flat trading zones. Low Volume Nodes (LVNs) represent price levels where little to no volume was traded, acting as high-speed slipways where price tends to shoot through quickly.

A horizontal volume profile with the point of control, the value area and a low-volume node marked
A volume profile: how much traded at each price (bins 100 to 108 hold 10, 20, 20, 70, 100, 80, 30, 20 and 10 units, 360 in total). The point of control (POC) is the busiest price, 104 (100 units), which is also a high-volume node (HVN). The value area grows outward from the POC by adding the larger neighbor each time: 104 (100) + 105 (80) + 103 (70) = 250 of 360 = 69.4%, about 70%, with its edges at 102.5 (VAL) and 105.5 (VAH). 108 (10 units) is a low-volume node (LVN). Other value-area methods give slightly different edges, and nodes are relative to this profile only. Illustrative data.

KNOWLEDGE RECONNAISSANCE

Q01.

What is the Point of Control (POC) in a Volume Profile?

Q02.

How does price typically behave when entering a Low Volume Node (LVN)?

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