Volume Profile: Price Distribution

Volume Profile is a volume-based indicator that measures the distribution of trading volume across different price levels over a specified time period. Unlike simple volume bars, it doesn't show volume over time, but rather shows how much volume has traded at each price level.

The indicator constructs a histogram horizontally aligned with price levels, revealing which prices attracted the most trading activity. This visualization enables traders to identify key market levels where significant buying or selling occurred. High-volume nodes (HVNs) indicate price levels with substantial activity, often acting as support or resistance zones.

Volume Profile answers the question: Where did the majority of trading activity occur? This helps in understanding market structure, trader behavior, and price acceptance. Areas with heavy volume suggest strong market participation and potential turning points, while low-volume zones indicate less interest.

This indicator does not predict future price movement, nor does it generate buy or sell signals. It is a descriptive tool that maps historical volume distribution relative to price, revealing the footprint of market participants at various levels. Traders use it to identify fair value, auction dynamics, and to spot potential areas of price reversal or continuation based on past volume behavior.