Most traders miss where volume actually trades. The value area is the price range holding 70% of volume, the market's fair value. The best entries happen at its edges: buy when price breaks above and holds, or short when it briefly breaks below and gets rejected back inside.
Is this a good entry or a bad one? I'll give you 5 seconds to decide. 1, 2, 3, 4, 5. You don't know. And the reason you don't isn't on you. It's what you've been taught to look at. Most retail traders watch candles, wicks, highs and lows, but none of that tells you where the actual volume traded. But the volume profile does. It shows you volume at price, meaning the exact levels where the market did business. The range where most of that business happened is called the value area. This is what the market agreed was fair value, and 70% of all the volume traded within that range sits inside of it. But here's the thing about fair value. The best trades never happen there. They happen at the edges. So if price pushes above the value area and holds, nobody is pushing it back down. This means that buyers are paying above fair value, which is bullish. So this means that you could take a long. But if price pushes above and then gets rejected straight back inside, that is your short because it shows sellers took control as soon as price got to a premium. Save this, you can study it the next time you're on your charts.
