Fixed-Range Volume Profile: POC, Value Area, and Volume Allocation

Summary

This document explains a fixed-range volume profile that maps traded volume across price levels over a configurable lookback window. It divides the high-to-low range into channels, estimates each candle’s volume allocation across its body and wicks, and separates bullish from bearish volume. The body is assigned according to candle direction, while wick volume is split evenly between the two sides. The channel with the most combined volume is the point of control (POC); the value area expands from that channel by adding the more active adjacent channel until it reaches a chosen share of total volume.

The profile displays the POC and value-area boundaries, alongside volume bars whose colors distinguish candle direction and whether a channel is inside the value area. The text suggests that a high-volume break beyond a boundary may indicate continuation, while a low-volume break may return toward value. These are interpretive heuristics, not demonstrated trading results. The method depends on configurable bins and an estimated allocation of bar volume, and the document provides no validation against trade-level volume data or out-of-sample testing.

Key ideas

• The indicator distributes volume over price channels for a configurable range of historical bars.
• It estimates volume within candle bodies and wicks, assigning wick volume equally to bullish and bearish totals.
• The point of control is the channel with the highest combined volume.
• The value area expands from the point of control toward adjacent channels until it reaches a chosen fraction of total volume.
• The document presents boundary breaks as interpretive signals but provides no empirical performance validation.

Tags

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