Futures 4 Fun: Pump Up the Volume: How to Use the Volume Profile

The volume profile tool can be used to identify which price is attracting most of the buyers and sellers. It can help identify support and resistance levels and areas where trading volume is accumulating.

https://tickertapecdn.tdameritrade.com/assets/images/pages/md/increasing volume: how to use volume profile charts
5 min read
Photo by Getty Images

Key Takeaways

  • Learn how to trade with the volume profile charting tool
  • Identify the price at which most trading took place
  • Use the volume profile tool to help identify trading entry and exit points

Candlestick, bar, and line are all familiar chart types. But have you ever used volume profile charts? They offer a unique way to visualize price action. Volume profile charts look and work much like a bell curve that displays the probability distribution of price moves. The charts can help identify which prices traded the most and the price range where most trading took place. The typical vertical volume bar displays the cumulative volume traded at a certain time. But those bars don’t tell you anything about which prices attracted the most traders. The volume profile does.

Unpacking Volume Profile

On the thinkorswim® platform from TD Ameritrade, select the Charts tab and enter any symbol. Select Studies > Add Study > All Studies > U–W > Volume Profile. By default, the volume profile will display in the expansion area to the right of your traditional price chart, but there are other ways to view this study. You can try out different settings by selecting Studies > Edit Studies, then the settings icon. For example, you could overlay the volume profile on a price chart (see figure 1). This allows you to view each day’s profile, offering a more big-picture view. As with any price chart, you can also analyze the data in different time frames—intraday, daily, weekly, monthly, and so on.

volume profile tool in thinkorswim

FIGURE 1: VOLUME PROFILE IN ACTION. The volume profile is available as a study in the charting feature of thinkorswim®. From the Charts tab, select Studies, then Volume Profile. There are different ways to display the curve. Chart Source: the thinkorswim platform from TD Ameritrade. For illustrative purposes only. Past performance does not guarantee future results.

Crunching the Data

What do these profiles tell you? Each of the blue horizontal bars represents the trading volume at each price. You may notice two horizontal yellow lines with a red line between them. The yellow lines represent the “value area” high and low, and the red line is the point of control (POC).

POC is the price at which most trading has taken place. It’s likely the widest horizontal row. So, essentially, when you view the volume profile, you’re looking to see where price is trading with respect to the POC or value areas.

The volume profile is often shaped like a balanced bell curve. But sometimes the curve will appear at the top of the price range, resembling a “p” shape. Sometimes it’ll be at the bottom of the price range, resembling a “b” shape. Sometimes you may see two bell curves.

Trading with Volume Profile

Volume profile can be applied to any trading instrument, but is particularly useful for liquid ones. Futures traders use it because it shows overnight trading activity—offering a clue as to how the next trading session might start. Did prices move above or below the value area of the previous trading day? Are prices trading above or below the previous day’s range? Keeping an eye on how the volume profile unfolds during the trading day could help you see where volume is accumulating.

Think of the high and low value areas as support and resistance levels. In a balanced bell curve, most trading will be in the value area. In figure 1, notice that when prices moved outside the high and low of the value area, they generally made their way back to the value area. So, you could consider the value area highs and lows as possible entry and exit points for your trades. Then try throwing in some indicators like moving averages as a potential confirmation tool.

Jayanthi Gopalakrishnan is not a representative of TD Ameritrade, Inc. The material, views, and opinions expressed in this article are solely those of the author and may not be reflective of those held by TD Ameritrade, Inc.

Key Takeaways

  • Learn how to trade with the volume profile charting tool
  • Identify the price at which most trading took place
  • Use the volume profile tool to help identify trading entry and exit points
Call Us

Do Not Sell or Share My Personal Information

Content intended for educational/informational purposes only. Not investment advice, or a recommendation of any security, strategy, or account type.

Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.

Futures and futures options trading involves substantial risk and is not suitable for all investors. Please read the Risk Disclosure Statement prior to trading futures products.

Futures accounts are not protected by the Securities Investor Protection Corporation (SIPC).

Futures and futures options trading services provided by Charles Schwab Futures and Forex LLC. Trading privileges subject to review and approval. Not all clients will qualify. Prior to a name change in September 2021, Charles Schwab Futures and Forex LLC was known as TD Ameritrade Futures & Forex LLC.

Charles Schwab Futures and Forex LLC, a CFTC-registered Futures Commission Merchant and NFA Forex Dealer Member. Charles Schwab Futures and Forex LLC is a subsidiary of The Charles Schwab Corporation.


Market volatility, volume, and system availability may delay account access and trade executions.

Past performance of a security or strategy does not guarantee future results or success.

Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.

Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.

This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to persons residing in Australia, Canada, Hong Kong, Japan, Saudi Arabia, Singapore, UK, and the countries of the European Union.

TD Ameritrade, Inc., member FINRA/SIPC, a subsidiary of The Charles Schwab Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2024 Charles Schwab & Co. Inc. All rights reserved.

Scroll to Top