Do you want ME to help YOU with your trading?
Video Transcript:
Congratulations. Since you are
watching a video about volume, you are already on the right track. But not all
volume tools show the same thing. In this video, I compare Volume Profile,
Market Profile, and regular volume indicators so you know what each one tells
you and which one makes the most sense to use in your trading. Here is a
comparison of the Volume Up/Down indicator versus the Volume Profile indicator.
The Volume Profile shows volumes at price, and the Volume Up/Down indicator
shows at what time heavy volumes were traded. So, it is not volume at price, as
on the Volume Profile, but volume at time. As you can see, it shows, for
example, here, here, or here, in which candle the volumes were the heaviest.
Now, in my opinion, Volume Profile gives us way more important information
because, for us traders, it is more important at which price level the volumes
were heavy and at which price level big trading institutions were active and
trading, rather than at what time they were active. Volume at time usually
shows volume spikes on candles where there is macro news, the start of a
session, or things like that, which you can sort of tell even without looking
at volume at time. So, that information, in my opinion, is not as important as
what Volume Profile shows. All right. So, that is Volume Profile versus the
Volume Up/Down indicator. And there is one more comparison that I want to show
you to make things completely clear, and that is the comparison between Volume
Profile and Market Profile. On the left, this is the Volume Profile chart,
which shows volumes at price. On the right, this is Market Profile, which does
not exactly show true volumes. If you look at them, they look pretty similar,
but Market Profile does not show true volumes. What Market Profile does is that
it sort of draws an estimate of how the volumes probably looked based on how
long the price was moving around a given price level. So, for example, here,
the price was rotating in this area. That means the price stayed there for
quite a long time, and for that reason, Market Profile shows heavy volumes
here. It is not actually volumes, but I will call it volumes. All right. It
shows heavy volumes here because it sort of estimated that because the price
was moving here for so long, many people were trading there, and therefore,
there must be heavy volumes here. If you compare it with Volume Profile, it is
not exactly true. As you can see, even though the price was here for a long
time, there were not heavy volumes traded there, right? Sometimes Market
Profile is right, sometimes it is not right, sometimes it is very similar to
Volume Profile, and sometimes it is different, like in this example. But if you
guys have an option to trade with Volume Profile rather than Market Profile,
then your choice should always be to go for Volume Profile because this shows
true volumes. Market Profile is just an estimate of volumes, which is not
always accurate.
