Volume profile basics: POC, value area, and how to read them

Standard candlestick charts plot price against time. Volume profile plots traded volume against price for a chosen window — a single session, a week, a quarter. Each price level is a horizontal bar whose length is the total contracts or shares that changed hands at that price. The result is a histogram laid on its side next to the chart.

The single most-traded price in the window is called the point of control (POC). The price band containing roughly 70% of the total traded volume is the value area, with explicit upper (VAH) and lower (VAL) bounds. Together, POC, VAH, and VAL describe where the auction balanced — where buyers and sellers were both willing to transact in size.

The POC is a magnet. When price moves away from it intraday, mean-reversion is more likely than continuation, especially in low-volatility regimes. When price moves outside the value area on heavy volume and stays there, the day is a "trend day" and the value area is being re-set higher or lower for the next session. Reading whether you're in a balanced or trending regime is the most important first question of the day, and the volume profile answers it directly.

Composite profiles aggregate multiple sessions — usually 5, 20, or 60 days. A 20-day composite POC is a strong magnet on the daily chart and an important level for swing traders. Composite value-area edges (VAH and VAL on the 20-day) often act as horizontal support / resistance for weeks at a time.

The classic intraday trade is the value-area rotation: price opens near one edge of yesterday's value area, rotates through the POC, and tags the opposite edge. Statistically this happens about 35–40% of the time in liquid US equity index futures; obviously it doesn't work the other 60% of days, so position sizing and stop placement matter more than getting the direction right.

Volume profile does not tell you direction. It tells you where the balance was. New information — earnings, economic prints, fund flow — moves the balance, and the profile re-prices. If you trade volume profile without a higher-timeframe directional bias, you will systematically fade trends and lose money. Pair the profile with a daily trend filter (for example, 50/200 SMA cross or weekly close above/below the prior week's close).

In Drogo, volume profile is rendered in the chart bundle and is also computable through the data API as histograms keyed by (symbol, window, resolution). The screener does not yet expose volume-profile filters; this is on the roadmap.