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What is Volume Profile

how the Volume Profile is used

The Volume Profile is a very special tool, unlike the classic instruments of graphical representation on the time axis (candlestick), the Volume Profile represents the Volume on the vertical axis.

The Volume Profile allows us to understand if our possible trade is in a suitable zone or not to be carried out or allows us to identify possible operational levels in the portion of the chart we are analysing.

The Volume Profile makes it possible to analyse all the most traded and interesting areas for the various traders within the market and in the reference period. This brings other advantages, allowing us to plan short-term (scalping), medium-long term (swing) and even larger operations such as a multiday.

The Volume Profile essentially acts as a road map, it allows you to interpret the market with an ease never seen before, it is a tool that fits all trading methodologies and all traders, beginners or experts who are, but clearly, the volume profile also has limitations.

The Volume Profile is great for identifying the hierarchy of price levels, but it is not recommended to use only the volume profile as an operational tool, because to validate the trade we need tools that dissect the whole market, this is the task of the order flow.

On the Masterclass page I have uploaded the full video where you can better understand the order flow function.

To recap: The Volume Profile provides the amount of volume traded by placing emphasis on how much trading activity there was on each price level touched within the reference period, thus representing the structure of the market from a volumetric point of view. The analysis of the volumetric structure allows to identify the more suitable zones to the trade or eventually those more dangerous in which it is better to discard the operation.


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