Building a Volume Profile with Point of Control and Value Area Levels

Summary

This indicator builds a volume profile over a recent window by dividing its price range into equal rows and assigning each bar’s volume to the row containing its typical price. The row with the greatest volume defines the Point of Control (POC). The Value Area expands outward from the POC, row by row, until it contains the configured share of total volume; its upper and lower boundaries are shown as VAH and VAL. Rows are colored according to whether up-closing or down-closing bars contributed more volume.

The profile and reference lines are chart overlays that can refresh on each new bar or every tick. Users can choose tick or broker-supplied real volume, along with lookback, row count, and value-area settings. The method’s main simplification is assigning each bar’s full volume to one typical-price row rather than distributing it across the bar’s entire high-low range. Tick volume is only a proxy for traded size, a relevant limitation for many retail forex and metals feeds. The document provides no tests of predictive value or trading performance.

Key ideas

• The profile bins a lookback window into equal price rows and estimates volume at each row.
• The Point of Control marks the row with the most volume, while the Value Area expands from it to contain a configured share of volume.
• Row colors compare volume from up-closing and down-closing bars.
• Each bar's volume is assigned to one row at its typical price, which reduces detail versus range-based allocation.
• Tick volume approximates activity but is not actual traded size.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.