Volume Profile Indicator

Use volume profiling techniques to discover key support / resistance levels on any timeframe.

The Volume Profile indicator constructs a price / volume profile of the trading activity for an instrument over a specified time period. The indicator plots the profile as a vertical histogram, i.e. showing the volume at specific price levels.

The indicator generally utilizes a lower-timeframe data stream which is loaded separately (and in the background) to the main chart. For example, for a 4 hour chart (where each candle / bar represents 4 hours duration), the Volume Profile indicator can construct a profile using 1min bars (or 5min, 15min, etc.). Obviously, the smaller the timeframe used, the more detailed the profile will be.

The shape of the profile consists of peaks and valleys, which are known as High Volume Nodes (HVNs) and Low Volume Nodes (LVNs) respectively. The highest volume node on the profile is also usually referred to as the Point Of Control (POC).

HVNs often act as “magnets” attracting price to it. They represent areas of previous price acceptance. LVNs show areas of price rejection. Both HVNs and LVNs can act as support / resistance to future price movement. The Volume Profile indicator automatically detects the best HVN and LVN levels.

The time period used to construct the profile can be easily specified in a number of ways, including the whole chart, specific start / end dates, “N-hours/days/weeks back”, current week”, etc.

The indicator works on any timeframe. However, please note that there is an upper limit to the amount of data that can be loaded (currently 15000 bars, or 5000 ticks). For example, 15000 bars of 1min data is approximately 10 days; 15000 bars of 5min data is approximately 52 days, etc. This limit only applies to how much data can be loaded when “back-filling” a chart (e.g. when it is added to the chart); the indicator can continue to collect live data beyond that limit.

INPUTS

The following are inputs available in the application:

• Resolution: This is the size of the “statistical bins” which are used to collate the price action data. The value is in pips.
• Period: This is the bar size used to create the profile (e.g. m1, m5, m15, etc.).
• Profiling style: This can be ‘Tick volume’ or ‘TPO count’.
• Profiling mode: This can be “Normal”, “N-bars/hours/weeks back”, “Specified start/end”, “Current day/week/month/year” and “Previous day/week/month/year”.
• Number of bars/hours/days/weeks back: This is the number of bars used for the “Nbars/hours/days/weeks back” mode.
• Time format: This can be Chart, Local, UTC or EST.
• Specified start date/time: When using the “Specified start/end” option.
• Specified end date/time: When using the “Specified start/end” option.
• Value Area percentage: The percentage used for Value Area calculation. The default is 70% which is approximately 2 standard deviations of a normal distribution.
• HVN and LVN detection window: This parameter specifies the window size for the automatic detection of HVNs (High Value Nodes) and LVNs (Low Value Nodes).
• Colouring effect: This can be Plain, Shaded, Faded, Rainbow or Value Area. It is used to set the colouring of the profile graphics.
• Colour: The base colour of the profile.
• POC colour: The colour of the Point Of Control (POC).
• HVN colour: The colour for High Volume Node lines (HVNs).
• LVN colour: The colour for Low Volume Node lines (LVNs).
• Value Area colour: The colour of the Value Area.
• Value Area High colour: This colour is used for the area above the Value Area.
• Value Area Low colour : This colour is used for the area below the Value Area.
• Outline colour: This is the colour of the outline of the bars for the profile. When this is set to “White”, the outline is not drawn at all.
• Line width: The width used for the HVN and LVN lines.
• Profile width: This is the maximum width of the profile (measured in pixels).
• Transparency percentage: The transparency of the profile.

Risk Disclaimer

The application displayed on this page does not take in to consideration your individual personal circumstances and trading objectives. Therefore it should not be considered as a personal recommendation or investment advice. Past performance is not indicative of future results. There is no guarantee that the systems, trading techniques, trading methods, and/or indicators will result in profits or not result in losses.

Requirements

This indicator is only compatible with FXCM Trading Station Desktop software. Additionally, an FXCM account is required (including free FXCM demo accounts).

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