Volume Profile: POC, value area and OHLC approximation
Volume Profile organizes activity by price range instead of by time.
Before this lesson
These lessons provide background; you can still read this page now.
What the indicator measures
Volume Profile organizes activity by price range instead of by time. POC is the price bin with the most assigned volume; value-area bounds summarize selected bins. These are descriptions of the chosen sample. They are not an order book, a map of unfilled orders or evidence that a particular participant must defend a level.
Calculation and units
The TradingHub chart divides its visible price span into bins and distributes a candle’s volume in proportion to overlap with its high/low interval. This assumes volume was spread across that range. Without individual executions, the true transaction distribution inside a candle cannot be recovered from OHLC data alone.
Worked educational example
Consider four fictional bins with volumes 40, 5, 35 and 20. Total volume is 100 and POC is the first bin. TradingHub selects the largest bins until the target is reached: at 70%, bins one and three already total 75. The displayed bounds span their outer edges, including the gap between them.
Reading it without overclaiming
This highest-volume-bin selection is not necessarily a contiguous expansion outward from POC. Its outer bounds can contain more volume than the requested target. Different row counts and visible ranges can move POC and value-area limits. A profile level is not a fill guarantee or a forward liquidity measurement.
How TradingHub implements it
Defaults are 24 price rows and a 70% target; row range is 8–96 and target range 50–99%. Width changes presentation, not the input observations. The profile is explicitly visible-range based. Zero-range candles have no positive overlap in the current allocation routine and do not add volume to its bins.
Comparisons that matter
Use ordinary volume for activity over time and order flow for sampled aggressive executions. Compare profiles only after matching the window, binning, data coverage and allocation method. A trade-by-trade profile and this candle approximation should not be presented as numerically equivalent.
A reproducible chart review
Open the existing Trading chart and choose the same market, interval and closed observation time as your comparison. Record every calculation parameter before changing one at a time. Match source fields, history length and the bar window. Native indicators calculate from the supplied visible slice; Indicator Studio calculates from its available chart snapshot. A difference after panning may therefore be a window or warmup effect rather than a new market event.
Limits and next lesson
The illustration uses constructed candles, not a dated market observation or a backtest. A live candle can change until it closes. Missing history, volume units and implementation conventions limit comparisons. No indicator guarantees a direction, an execution price or protection from loss. Use the related lessons to separate definitions, observed values and possible explanations; a correct quiz records learning progress, not trading competence.
Knowledge check
Is TradingHub Volume Profile a reconstruction of every executed trade price?
- No; it allocates aggregated candle volume across price bins
- Yes; it reads every historical trade
- Yes; it shows pending limit orders
Show explanation
The implementation uses OHLC overlap and a volume field, so its within-candle distribution is an approximation.
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Primary sources and scope
Educational scenarios are not execution guarantees, forecasts or personal recommendations. Check current product rules at their source.
Content revised: . Editorial responsibility: TradingHub. No independent professional certification is claimed.