Volume Profile Analysis Indicator (VPI) is a volume-based indicator calculated by taking the volume of shares traded in price range and plotting it on a stock chart graph.
The VPI is one of the indicators used to find support and resistance pressure levels.
It can also be used to reveal breakouts, continuation patterns, early indications of trend changes, and more.
The VPIs are typically plotted with the horizontal axis representing total volume traded and the vertical axis representing time.
The visual representation is created by a line that starts at a point in the past and rises to the present, giving traders a sense of overall volume during that time.
Traders can use this indicator to estimate support and resistance strength levels and review trade signals to see what volume was behind trades triggered for that period.
One of the essential features of this indicator is that it can be used to determine support and resistance and when a stock may be overbought or oversold.
Since the goal of investing with stocks is to buy low and sell high, it is always in your best interest to know when you’re buying at an inflated price. Volume Profile Indicator will help you in doing so.
Volume Profile Analysis Indicator On Tradingview
Many traders use indicators on Tradingview to track their trades and performance. One such indicator is the Volume Profile Indicator.
Volume Profile Indicator added to Tradingview allows traders to determine the optimal times to buy or sell a stock.
Traders can also use this tool with other indicators to confirm a trend reversal and support and resistance levels.
How To Add Volume Profile Analysis Indicator on Tradingview (VPVR Indicator)
- Go to www.TradingView.com and click on the “Sign Up” button at the top of the page
- Create a username and password (make sure that you remember your credentials)
- Once you have finished signing up, open a chart
- Click on Indicators
- Type in Visible Range
- Add the indicator by clicking on the name Visible Range
- Close the pop-up window
- You should now be able to see the Volume Profile (Visible Range) Indicator on your Tradingview charts
- Tip: You may find it confusing adding this indicator in Tradingview Charts as they use the word Visible Range instead of the more common Volume Profile Analysis Indicator people are familiar with
How To Read Volume Profile Analysis Indicator (Explained)
The volume profile is a technical analysis tool and way to analyze the volume of a stock over a specific time frame.
The graphs show the volume on a chart and can be plotted by price, time, or traded shares.
Volumes are displayed in different colors for different periods.
Take note of the following blue arrows on the Volume Profile Chart below.
- Top Left
46.749M x 25.692M shows the volume of shares traded for this time bar for the short trading time around July.
Less trading time corresponds with a smaller volume profile bar
- Middle Right
380.109M x 442.849M shows the strongest and largest volume profile bar (Support) in Yellow and Blue color.
The stock price has traded the longest in this range, which is also why this Volume Profile Bar is the longest compared to all other volume profile bars on the same chart
Volume Profile Point Of Control (POC)
- Bottom Left (Red Horizontal Bar)
The Volume Profile POC or Point Of Control shows the bar where the most volume has been traded.
This is the Red horizontal bar in the chart example below.
- When trading you may notice the largest and quickest price squeeze’s in an up direction as buying volume increases
- This is especially true when the price is closest to the largest volume profile bar. The larger the chart time-frame (i.e.. 15m, 30m, 60m) the bigger the price squeeze can potentially be
Volume Profile Trading Book
Volume Price Analysis is a technique for understanding what is happening.
The book A Complete Guide To Volume Price Analysis by author Anna Coulling can be purchased on Amazon, explains the technique, and provides in-depth examples of using it.
The book explains how volume profile is a technical analysis tool used to project trading positions by identifying support and resistance areas.
The highest high and lowest low prices are identified to read the indicator.
The volume profile can be adjusted to reflect time by considering each high or low point.
Volume Profile Analysis book is a guide to understanding the basic principles of volume profile price analysis.
It is a must-read for anyone interested in reading the market.
A Complete Guide To Volume Price Analysis by author Anna Coulling
Keep in mind that the Volume Profile Analysis Indicator can be used at any time frame. The example above shows the volume pressure in Tradingview charts.
This is shown on the one-day trading time frame for a particular penny stock APTY.
You can set up the Volume Profile Analysis Indicator in Tradingview, Thinkorswim (TOS), Ninjatrader, MT4, or any other charting/volume analysis tool you are subscribed to.
Types Of Technical Indicators (Most Used)
- List Of Technical Indicators (Most Used)
- Buy And Selling Volume Analysis Indicator
- Relative Strength Index Indicator (RSI)
- Moving Averages For Stocks (MA, EMA, SMA)
- Accumulation vs Distribution Indicator
- Moving Average Convergence Divergence (MACD)
- TTM Squeeze Indicator
- Know Sure Thing (KST) Indicator
- Awesome Oscillator and MACD Histogram
- Volume Weighted Average Price (VWAP)
The Volume Profile Analysis Indicator is a powerful tool to help you make more informed decisions about investing your money.
The above examples show how you can add the Volume Profile Analysis Indicator trading strategy on Tradingview charts.
However, this indicator is universal and can be added to any other charting software if not using Tradingview.
As with any indicator, pairing the results with other factors is essential.
This can help you make better trading decisions and improve your chances of making more profitable trades in the future.
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