Volume profile shows where most contracts traded at each price level. When price moves above the value area (70% of volume) and stays there, that's acceptance, a signal to go long. When it snaps back below, that's rejection, a signal to short.
Is this market going up or down? I'll give you 3 seconds to decide. 1, 2, 3. Wrong answer. And it's not your fault because most of you guys have been taught trading all wrong because candlesticks tell you nothing. Volume tells you everything. We're talking about the volume profile. This shows you the exact prices where the largest amounts of volume were actually traded. Now, the volume profile also gives us something called the value area, which is where the market established fair value. This is where 70% of all volume within a range was traded. But as you know, the best trades are unfair. So if price pushes above the value area and stays there, that is acceptance. The market is going up and you trade it. Vice versa, if price snaps back, that is rejection. It's going down and you can short it. Now save this and come back to study it the next time you're on the charts.
