A volume profile is a histogram that distributes traded volume across price levels instead of across time. Each row measures how much volume transacted within a narrow price band during the chosen period, producing a horizontal profile beside the chart with its widest row at the most traded price.
How the histogram is built
The period is fixed first — one session, one week, or a range selected by hand. The price range covered by that period is then divided into bins, and every transaction inside the period is assigned to the bin containing its execution price. The bin totals are drawn as horizontal bars, longest at the left or right edge depending on the platform.
Two figures are read off the result:
- Point of control (POC) — the bin with the largest total. If a session traded 10,000 units and the bin 1.0850–1.0855 absorbed 2,400 of them, that bin is the POC.
- Value area — the contiguous block of bins around the POC holding 70% of period volume. For the same session that is 7,000 units: bins are added to the POC in pairs, taking the larger neighbour above or below each time, until the running total reaches 7,000. The top and bottom of the resulting block are the value area high and value area low.
The 70% threshold is a convention, not a property of the market; some platforms let you set 68% or 80%, which moves the boundaries. Bin width matters as much: the same session profiled in 1-pip bins and in 10-pip bins gives different POCs, because volume that sat in several narrow bins consolidates into one wide bin.
None of these levels carries an expectation. Price has stalled at a prior POC and it has passed straight through one; the histogram records where volume occurred and contains no statement about what price does when it returns.
Volume profile against a standard volume histogram, and against market profile
The volume bars under a chart are indexed by time — one bar per candle, answering how much traded during that interval. A volume profile is indexed by price, answering how much traded at each level regardless of when. That is the whole difference, and it is why the profile is drawn vertically along the price axis.
Market profile, or TPO, looks similar but counts differently. It divides the session into time brackets and marks each price touched during a bracket with one letter, so its histogram measures how long price spent at each level, not how much traded there. A level can be wide in TPO and narrow in volume profile when price lingered on thin activity.
Order flow is a third, separate reading of the same transactions. It classifies each execution by initiator and answers who traded — buyer or seller crossing the spread. A volume profile discards the initiator entirely and answers where the trading happened.
Volume on a CFD account
As with VWAP, a retail CFD platform plots tick volume — the count of price changes from that broker's feed — rather than units transacted, because CFDs trade over the counter with no consolidated tape. A profile built on tick volume shows where quoting was most active, which is related to but not the same as where the most size changed hands, and the shape will differ between brokers.
