Volume Profile shows how much trading occurred at each price across a chosen period. Unlike a time-based volume histogram, it describes the distribution of executed volume by price. The Auction Room Bangladesh uses this to study balance, value migration and potential areas of market response.
The five essential terms
POC is the price level with the most traded volume. VAH and VAL bound the selected value area, commonly around 70% of volume. HVNs are relatively high-volume nodes; LVNs are low-volume nodes. Exact results depend on the session, data feed, tick grouping and calculation method.
Choosing the right profile
A daily session profile helps examine intraday acceptance. A composite profile combines multiple sessions to examine broader value. A fixed-range profile studies a selected auction. Mixing them without labeling the time range can produce misleading comparisons.
Balanced market: responsive trading hypothesis
When the market is rotating around stable value, traders sometimes study responsive behavior near VAH or VAL. A test outside value followed by rejection may support a return-to-value hypothesis. A sustained breakout invalidates the balance assumption.
Directional market: initiative hypothesis
If price moves beyond value and establishes acceptance with expanding participation, an initiative continuation hypothesis may be more appropriate than fading every value-area edge. Monitor value migration and whether retests hold.
LVN as a transition area
An LVN represents relatively little historical trade at that price. Price may move quickly through a low-volume area, or a fresh auction may develop there. It is not automatically a reversal zone or an unfilled institutional order.
POC shift and value migration
A sequence of higher POCs and higher value areas can describe rising perceived fair value. If price rises while value remains below, the move may be less established than the price chart alone suggests. Neither observation guarantees direction.
Illustrative GC setup
Suppose GC opens inside yesterday’s value and repeatedly rejects trade below VAL. A trader may monitor re-entry into value and subsequent rotation toward POC, with invalidation below the rejected low. This is an educational example, not a recommendation.
Backtesting and execution limits
Specify the session, value-area algorithm, instrument roll, slippage, commissions and entry/exit definitions before evaluating a strategy. A chart pattern observed after the fact is not proof of positive expectancy.
Frequently asked questions
Is POC support or resistance?
POC identifies a historically active price, not a guaranteed support or resistance level.
What is the difference between volume profile and market profile?
Volume Profile organizes traded volume by price; classic TPO Market Profile organizes time-price opportunities.
Does the 70% value area always predict a reversal?
No. The percentage is a convention for describing distribution, not a reversal probability.