NEVER Read Candlesticks Again - Volume Profile Is 10x Better

Main ideas, concepts, and lessons

• Volume explains conviction, not direction

  • Price tells you what happened (up/down/sideways).
  • Volume tells you how much participation/conviction was behind that move (how many traders and how much real money).

• Three repeating volume/price scenarios

  1. Healthy move
     • Big candles + high volume underneath.
     • “Effort matches result” → participation is real → tends to continue.
  2. Absorption (beginner trap)
     • Small candle but massive volume bar.
     • Buying effort is visible, but price barely moves because an “invisible wall” (large seller absorbing buys).
     • When buyers exhaust, price drops sharply.
     • Key signature: Effort, no result.
  3. No supply (opposite trap)
     • Price moves on low volume.
     • Beginner interpretation (“buyers are strong”) is wrong.
     • Price rises because sellers are absent, so it “floats” with little resistance.
     • Fragile move: low effort, big result due to missing opposition.

• Volume color is meaningless

  • A green volume bar does not mean buying.
  • A red volume bar does not mean selling.
  • Trades always require both a buyer and a seller; volume counts transactions, and the bar color only mirrors the candle color.
  • What matters is bar size/height (how much traded), not red/green.

• Raw volume divergence (early warning)

  • New highs + shrinking volume bars → weakening thrust → possible reversal forming.
  • Falling price + shrinking volume → sellers exhausting → bottom may be forming.
  • Called volume divergence; described as an early, low-cost warning.

• Volume Profile is “where” volume happened

  • Raw volume answers when (volume across time).
  • Volume Profile answers where (volume at specific price levels).
  • It maps activity across price:
    • Wider bar = more contracts traded at that price.
    • Narrower bar = almost no trading there.

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Methodology / step-by-step instructions (detailed)

A) Set up Volume Profile on TradingView (anchored version)

1. Open TradingView
2. Indicators tab
   • Search for Volume Profile
   • Select the standard/appropriate volume profile tool
3. Find “Anchored Volume Profile” in the left toolbar
4. Place the profile and double-click to open settings
5. Enable these components:
   • Value Area High
   • Value Area Low
   • Point of Control (POC)
6. Optimize resolution
   • Go to Inputs
   • Change Row layout → “Number of rows”
   • Set rows = 400 (instead of the default 24) for sharper, more precise levels
7. Adjust colors for clarity (author’s scheme)
   • Up volume: blue
   • Down volume: yellow
   • Value area high/low: blue
   • POC: bold red (stand out)

Interpret the key outputs

1. POC (Point of Control)
   • The single price level with the most volume
   • Often treated as a “center of gravity” magnet
2. Value Area (~70% of activity)
   • Range containing roughly 70% of trades
   • Balanced “fair value” zone
3. Low volume nodes
   • Thin areas where few traded
   • Described as “fast lanes” / quick travel through
4. High volume nodes
   • Thick areas where trading is concentrated
   • Described as “sticky prices” (where price slows/consolidates)

Core rule to remember

• High volume = sticky
• Low volume = rips through

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B) Understand and configure other Volume Profile variants

• Anchored Volume Profile

  • Builds from a chosen anchor point up to current price
  • Updates as new price comes in

• Fixed Range Volume Profile

  • Lets you choose a historical chunk (can be applied without including current price)
  • Author configuration
    • Double-click → Inputs
    • Set Value area volume = 70
    • Apply same color logic:
      • blue/yellow volumes
      • blue for value area high/low
      • red for POC
  • Purpose: old POCs can act as strong levels when price later revisits them

• Session Volume Profile

  • Draws profile per session automatically
  • Requires a paid TradingView subscription
  • Author claim: free fixed-range covers almost the same job (manual drawing vs automation)

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C) Use Auction Market Theory to justify “why” levels matter

• Markets are described as continuous auctions
  • Buyers want to buy low; sellers want to sell high
• Where they agree → volume accumulates → high volume zones (“fair value”)
• Where they disagree → price travels fast through thin/low volume zones searching for agreement
• High volume zones are portrayed as containing trapped positions
  • People bought at those prices, then price moved away
  • When price returns, many make similar decisions (double down, panic sell, exit near break-even)
  • Therefore, reactions at those levels are considered more likely

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D) Interpret profile shapes (4 “playbooks”)

• D-shape (balanced)

  • Heavy volume in the middle; thin at top/bottom
  • Playbook:
    • Fade extremes
    • Short near the top edge, long near the bottom edge
    • Target the POC in the middle

• P-shape (bullish)

  • Heavy volume at top; thin tail below
  • Playbook:
    • Wait for pullback into POC or into the low-volume bump in the tail
    • Go long
  • Validity rule:
    • The period must close above 50% of its range

• B-shape (bearish)

  • Mirror of P
  • Playbook:
    • Bounce into POC or into the upper low-volume bump
    • Go short
  • Validity rule:
    • The period must close below 50% of its range

• Thin profile (trend/explosion)

  • No obvious central heavy zone; volume spread thin across a wide range
  • Described as explosive/news-driven move
  • Rule:
    • Don’t fade the trend
    • Look for small volume clusters inside the thin profile
    • Use those clusters as support (bullish) or resistance (bearish) to join the move

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E) Turn it into trade execution (entry/trigger/stop/target logic)

1) The “first touch” vs repeated retests

• When price leaves a key level (e.g., POC) and later returns:
  • The first return touch is strongest
  • Later retests lose force because trapped/committed traders have already made decisions
• Trade timing:
  • Bullish: buy the first retest after an upward move
  • Bearish: short the first pullback after a downward move

2) Zone entry is better than center-line entry

• Instead of waiting for exact POC “line”:
  • Treat high-volume area as a zone/cluster
• Entry placement:
  • Approaching from above (long): enter at the upper boundary of the heavy-volume zone
  • Approaching from below (short): enter at the lower boundary of the heavy-volume zone

3) Confirmation model (entry trigger)

Wait for price to do two things:

1. Sweep the nearby low-volume area (thin pocket just outside the cluster)
2. Reach the edge of the high-volume zone (your zone of interest)

Then wait for one candle at that edge:

• Candle types mentioned: Doji, Hammer, or Shooting Star (direction-dependent)
• Filter conditions:
  • Candle’s volume must be higher than the previous candle
  • Candle must be in the direction of the trade
  • Candle must fully close (no front-running while it’s still forming)

4) Stop-loss and take-profit rules (explicit)

• Stop-loss rule (behind a barrier)

  • Place stop in a low volume area beyond/behind the heavy-volume wall.
  • Logic: if price pushes cleanly through the thick volume zone, the thesis is wrong.

• Take-profit rule (before the next barrier)

  • Take profit at the beginning edge of the next heavy-volume zone (don’t aim into the middle).
  • Logic: the next heavy zone can cause a bounce against you.

• Directional target (edge-to-edge)

  • If entering one edge of the profile, the “natural destination” is the opposite edge across the value area.

5) Example trade sequences described

• Long example (market sells into zone from above)

  • Price sweeps thin pocket → taps lower edge of high-volume node
  • A hammer forms at the edge with higher volume
  • Candle closes → entry at edge
  • Stop below the node
  • Target opposite edge of profile

• Short example (market rallies into zone from below)

  • Price sweeps thin pocket → stalls near lower boundary of top heavy cluster
  • Shooting star at the edge with higher volume
  • Candle closes → short at edge
  • Stop above node
  • Target opposite edge near value area low

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F) Backtesting method (free, no coding)

• Author states:
  • Test setups across hundreds of trades, not just a few handpicked charts
  • Provides a free guide (link in description) on how to test strategies step-by-step without code/paid tools.
• Emphasis:
  • A strategy is only real if it has a working plan for stops/targets.

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G) Strategy quality check: confluence with classic S/R

• Best setups occur when:
  • Volume Profile levels align with traditional horizontal support/resistance
  • Specifically: if POC or value area edge lines up with prior swing highs/lows or respected price levels
• Then trade confidence is considered higher.

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H) Bonus rule: “Value area re-entry after opening outside”

• Setup

  • Use yesterday’s regular trading hours (RTH) Volume Profile
  • Determine yesterday’s value area high and low

• Trigger

  • If current price opens fully outside yesterday’s value area (e.g., below value area low)
  • Then price re-enters the value area

• Target

  • Go for the opposite extreme of yesterday’s value area (e.g., value area high)

• Crucial acceptance filter

  • Price must show acceptance inside the value area:
    • Need actual candles closing inside the area
    • If it’s only a quick wick/poke and immediately rejects back out, the rule does not apply

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Speakers / sources featured (as stated)

• Primary speaker: The YouTube video narrator/instructor (no name provided in subtitles).
• Software/source mentioned: TradingView (volume profile tools, settings, and indicators).
• Additional platform mentioned: Vulfix (order flow + volume/orderflow analysis platform; trial/discount mentioned).
• Music/source: Background “[music]” appears (no specific track named).