Video Transcript:
Congratulations. Since you are watching a video about volume, you are already on the right track. But not all volume tools show the same thing. In this video, I compare Volume Profile, Market Profile, and regular volume indicators so you know what each one tells you and which one makes the most sense to use in your trading. Here is a comparison of the Volume Up/Down indicator versus the Volume Profile indicator. The Volume Profile shows volumes at price, and the Volume Up/Down indicator shows at what time heavy volumes were traded. So, it is not volume at price, as on the Volume Profile, but volume at time. As you can see, it shows, for example, here, here, or here, in which candle the volumes were the heaviest. Now, in my opinion, Volume Profile gives us way more important information because, for us traders, it is more important at which price level the volumes were heavy and at which price level big trading institutions were active and trading, rather than at what time they were active. Volume at time usually shows volume spikes on candles where there is macro news, the start of a session, or things like that, which you can sort of tell even without looking at volume at time. So, that information, in my opinion, is not as important as what Volume Profile shows. All right. So, that is Volume Profile versus the Volume Up/Down indicator. And there is one more comparison that I want to show you to make things completely clear, and that is the comparison between Volume Profile and Market Profile. On the left, this is the Volume Profile chart, which shows volumes at price. On the right, this is Market Profile, which does not exactly show true volumes. If you look at them, they look pretty similar, but Market Profile does not show true volumes. What Market Profile does is that it sort of draws an estimate of how the volumes probably looked based on how long the price was moving around a given price level. So, for example, here, the price was rotating in this area. That means the price stayed there for quite a long time, and for that reason, Market Profile shows heavy volumes here. It is not actually volumes, but I will call it volumes. All right. It shows heavy volumes here because it sort of estimated that because the price was moving here for so long, many people were trading there, and therefore, there must be heavy volumes here. If you compare it with Volume Profile, it is not exactly true. As you can see, even though the price was here for a long time, there were not heavy volumes traded there, right? Sometimes Market Profile is right, sometimes it is not right, sometimes it is very similar to Volume Profile, and sometimes it is different, like in this example. But if you guys have an option to trade with Volume Profile rather than Market Profile, then your choice should always be to go for Volume Profile because this shows true volumes. Market Profile is just an estimate of volumes, which is not always accurate.
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