Summary of Reddit Comments on Volume profile

Definition and Basics

• Volume profile is not a "bullish/bearish indicator" but rather a histographic representation of volume by price over a certain timespan.
• It shows where the market considered "fair value" to be and may revisit those levels.
• It indicates where buyers and sellers ran towards liquidity.

Tools and Techniques

• Different ways to trade Volume profile exist, including learning about volume cliffs, high/low volume nodes, point of control, and untouched point of controls.
• Auction theory is key in understanding Volume profile.
• Using TradingView is recommended for Volume profile tools.

Trading Strategies

• Volume points of control can be used for trade entries based on reactions observed.
• The majority of trading at a certain price can indicate whether the market is bearish or bullish.
• Using fixed range Volume profile can help find key levels for trading.

Pros and Cons

• Pro: Price naturally gravitates towards high volume areas.
• Cons: Misconceptions about Volume profile can lead to rough trading days.
• It may not be reliable for indexes due to external news affecting market values.
• Can be useful in finding strong levels and potential reversals, but not necessary for all trading styles.

Platforms and Tools

• Platforms like Ninjatrader offer powerful volume-related indicators such as Order Flow+ to visualize real-time volume.
• TradingView offers various Volume profile tools, with some available for free in community scripts.

Tips and Recommendations

• Consider using Volume profiles of multiple days to understand trending values.
• Look for confluence with support/resistance areas and high/low volume nodes for more reliable trading signals.
• Do not solely rely on Volume profiles but combine them with other indicators for better accuracy.

Challenges and Considerations

• Market trends and fluctuations can impact the effectiveness of Volume profiles, especially when the point of control shifts.
• Being cautious around points of control (POC) is advised, as many traders might be wrong when trading near these levels.

By following these strategies and tips, traders can effectively incorporate Volume profile analysis into their trading approaches.