Volume Profile is a tool that helps traders see how much trading happened at different price levels during a certain time period. It takes into account settings like the number of rows and time duration and creates a bar graph on the price chart. This graph shows which price levels were most traded, based on volume. Basically, it takes all the trades at a specific price level during the set time, separates them into trades that moved the price up and those that moved it down, and makes this info easy for the trader to see.
In SMC trading, we often focus on trading within ranges. To understand where most of the trading volume lies within these ranges, we use a tool called the Sonarlab SMC Volume Profile. This tool automatically displays the volume profile for the current range the market is trading in. It gives us crucial insights about trading activity in that range. Let's delve further into this.
Point of Control (POC) – This shows the busiest area of a range, volume-wise. If this meets up with your order block, it's like a power-up for your order block. As show below you can see that the POC acted as support once it broke above.
HIGH RISK WARNING: Foreign exchange trading carries a high level of risk that may not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance. You could lose some or all of your initial investment; do not invest money that you cannot afford to lose. Educate yourself on the risks associated with foreign exchange trading, and seek advice from an independent financial or tax advisor if you have any questions.
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