Volumetric profiles: a tool that can change your trading

Imagine a situation: the price moves, volumes show certain patterns, but most traders do not see this. They trade blindly, relying only on price changes. Meanwhile, experienced market participants look deeper — they analyze where exactly the maximum trading activity occurred. This approach has allowed many traders to significantly increase their capital.

Where this method originated

The history of volume profile begins in the late 1980s when trader Peter Steidlmayer developed a visualization system for trading activity. Over decades, this methodology has proven effective across various markets and timeframes.

The essence is simple: volume profile is a graphical tool that shows the distribution of trading volume across price levels over a specific period. Instead of traditional candles, we see horizontal bars, where the length of each bar reflects the trading volume at that particular price level. Thicker bars indicate areas where the market was especially active.

Why volume is more important than it seems

Professionals often say: price is just an advertising tool. The true strength of movement is determined by volume. It shows how convinced market participants are in the current trading direction.

When you see the price has risen but volumes were minimal, that’s one scenario. When the rise occurs on high volumes — that’s a completely different story. Volume analysis helps separate genuine movements from market noise.

How volume profile is calculated

The algorithm works as follows: all volume traded at a certain price level during the selected period is taken, then this data is split into two parts — volume of rising trades (when the price goes up) and volume of falling trades (when the price goes down). This division shows the true balance of power between bulls and bears at each price level.

The FRVP tool: practical application

Fixed Volume Profile (FRVP) is an adaptation of the classic volume profile for specific tasks. You can set it on TradingView by selecting the measurement and forecasting tool in the left panel of the chart.

It works like this: you select two points — start and end — and the tool automatically analyzes all volumes between them. It is especially useful when studying impulsive movements, where the market makes a significant one-way move.

Three key metrics of volume profile

Any FRVP contains three important data points:

Point of Control (PoC) — the price level where the maximum number of contracts was executed. This level often becomes a turning point: the price either finds support here or faces resistance.

Upper value area boundary (VAH) — the highest price level within the main trading range for the analyzed period.

Lower value area boundary (VAL) — the lowest price level within the same range.

Common mistakes to avoid

When traders start using fixed volume profile, they often make typical mistakes. The first and most dangerous is relying solely on this one tool. Such an approach leads to tunnel vision. Volume profile works best in combination with other indicators like RSI or MACD, which help confirm reversals at key levels.

The second mistake is overestimating historical data. High volumes in the past do not guarantee that history will repeat itself. It’s necessary to consider the current fundamental market conditions. If the market is in a strong bull trend, volume levels may be broken more easily than expected.

The third mistake is mechanical interpretation of volume nodes. Not all high-volume areas are equally important. Depending on the market context, a strong bullish trend may simply ignore such levels and continue upward.

A real trading example

Let’s consider a practical case with DOGE/USDT. Imagine the market was rising for a long time, then a sharp pullback occurred. The price fell, finding a bottom. You have clear upper and lower boundaries of movement — an ideal situation for applying FRVP.

After setting the tool, several important levels are visible. The Point of Control is at a level that previously served as strong resistance. When the price approaches this level, a trader can use a smaller timeframe to find an entry point, combining FRVP with other signals.

Breaking the PoC makes the area with the lowest volume (LVN) interesting. This is a level through which the market “passes more easily.” If the bullish trend remains strong, the price is likely to reach this area at least. This gives the trader a clear target based on real volume data.

If the price reaches the area with the maximum volume (beyond PoC), the situation changes. A reversal is possible here. Such reversals are often confirmed by other patterns, like a “Pinch,” giving the trader confidence to execute a trade.

How to properly apply fixed volume profile in practice

Start by defining clear ranges. Do not apply FRVP to chaotic sideways movements — the tool is most effective when analyzing impulsive moves with obvious highs and lows.

Always combine with other tools. Volume profile is part of your analytical system, but not the entire system.

Consider the timeframe. Data obtained on a daily chart carries different weight than data on an hourly chart.

Relate to the market context. When the market is in a strong trend, the significance of volume levels may be overestimated by the market.

Practical result

When used correctly, the fixed range volume profile becomes a powerful tool for identifying key price levels and determining probable turning points in price movement. It helps traders see what lies behind simple candles — the true activity of market participants.

This approach requires patience, practice, and continuous learning. But it is this depth of analysis that separates successful traders from the rest.