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Understanding Volume Profile Shapes in Trading

Mar 29, 2025

Uncovering Market Moves with Volume Profile

Introduction

  • Purpose: Understanding market sentiment and identifying trading opportunities using volume profile shapes.
  • Presenter: Dale, trading since 2008, founder of Trader Dale website, author of four trading books.
  • Volume Profile Shapes: D-shaped, P-shaped, B-shaped, Thin profile.

Volume Profile Shapes Explained

1. D-Shaped Profile

  • Characteristics: Resembles letter D, heavy volume zone in the middle, low volumes at edges.
  • Market Indication:
    • Balance in the market; indicates rotation or sideways movement.
    • End or pause of a trend.
  • Trading Strategy:
    • Point of control is key trading level.
    • Volume bumps indicate support/resistance.
    • Short from the higher boundary, long from the lower boundary.

2. P-Shaped Profile

  • Characteristics: Resembles letter P, heavy volume zone at top, low at bottom.
  • Market Indication:
    • Indicates an uptrend or rejection of lower prices.
    • Buyers are active.
    • Can signal the end of a downtrend.
  • Trading Strategy:
    • Point of control and volume bumps are important for entry.
    • Long positions from point of control and volume bumps.
    • Proper P shape requires close above 50% of daily range.

3. B-Shaped Profile

  • Characteristics: Resembles letter B, heavy volume zone at bottom, low at top.
  • Market Indication:
    • Indicates a downtrend or rejection of higher prices.
    • Sellers are active.
    • Can signal the end of an uptrend.
  • Trading Strategy:
    • Point of control and volume bumps serve as entry points.
    • Short positions from these levels.
    • Proper B shape requires close below 50% of daily range.

4. Thin Profile

  • Characteristics: Thin, indicating strong trend, formed during macro news events.
  • Market Indication:
    • Dominance of one side (buyers/sellers) in the market.
  • Trading Strategy:
    • Volume bumps within the thin profile are key support/resistance levels.
    • Trend continuation expected.

Trading Strategy and Setup

  • Thin Profile & Price Action Combo: Combines thin profile with historical support/resistance for effective trades.
  • Example: Thin profile with volume cluster and past support turning into resistance for short trades.

Membership and Resources

  • Volume Profile Pack Membership: Includes a comprehensive course, daily trading levels, software, and tech support.
  • Books and Free Resources: Available for further learning.

Recap and Conclusion

  • Summary of how to identify and trade each volume profile shape.
  • Invitation to join membership for in-depth learning and daily trading support.

Tools and Platforms

  • Charting Platform: Ninja Trader 8 (free version recommended).
  • Data Source: Connect to FXCM Data.
  • Trading Broker: IC Markets for reliable trading with low spreads and commissions.
  • Contact: Email for questions and further assistance.

This lecture aimed to equip you with the understanding of volume profile shapes for better trading decisions. Happy trading!

Full transcript