What Is a Volume Profile?

A volume profile is a histogram turned on its side. It plots volume against price down the side of the chart: one horizontal bar per price level, as long as the contracts that changed hands there over the stretch of session you told it to measure.

Two numbers come out of that shape and get drawn as lines. The point of control is the price level holding the most volume. The value area is the band around it holding a chosen share of the profile's volume, 70% by default on both platforms whose documentation this post works from. Both are outputs of a calculation that runs on settings you choose, and Sierra Chart documents why two charts of the same session can disagree about where the point of control sits.

What is a volume profile on a futures chart?

A volume profile shows how much traded at each price over a period you choose. Sierra Chart ships it as a study called Volume By Price, drawn as horizontal bars behind the price bars with one profile per period; Quantower calls it a Volume Profile and puts the histogram at the side of the chart. The quantity in a row is volume in the ordinary sense — the CFTC glossary defines volume as the number of contracts traded in a specified period.

What one row covers is a setting. Sierra Chart's Ticks Per Volume Bar input groups price ticks into a single bar and defaults to 2, so out of the box two adjacent prices share a row. Set it to 1 for the finest resolution; set it to 0 and it silently returns to 2. Quantower's Custom step (ticks) defaults to 1, giving every price its own row.

A row only exists where something traded: Sierra Chart notes that a horizontal bar appears at a price, or at a group of prices, only where there was trading activity during the profile's period. Prices the contract passed through without a fill leave gaps, so how many rows a profile has depends on how many prices traded, not on how long the period ran.

What is the point of control on a volume profile?

The point of control is the price level holding the most volume in the profile. Sierra Chart documents the tie-breaks too: where two levels hold identical volume, the one nearer the middle of the profile wins, and where two sit equally far from the middle, the lower price is used. Its abbreviation for the volume-based version is VPOC, alongside VVAH and VVAL for the two edges of the value area.

The level moves while the period runs. Sierra Chart has a Calculate Developing POC and Value Area input that makes the study report the point of control and the value area as they develop, instead of one value for the finished profile. Quantower's TPO panel has a POC Type setting: a Final POC shows a single line, a Migrating POC shows how the POC changed during the trading day or selected session.

Both platforms carry the line past the period that produced it. Sierra Chart's Extend Point of Control input offers five choices, among them the end of the period, the window edge, and running until the line meets a later profile — with a companion Future Intersection Method input deciding whether a profile or a chart bar stops it. Quantower's Extend POC until intersection stops the line at the first future intersection, and reaches the chart's right edge if it finds none.

What is the value area on a volume profile?

The value area is the band of price levels around the point of control accounting for a set percentage of the profile's volume, and 70% is the default on both platforms. Sierra Chart's Volume Value Area % and Value Area Percentage inputs each ship at 70, and its troubleshooting notes say the setting is usually 70% when two charts are compared. Quantower describes its value area as the price area holding 70% of the trading activity for the range, and calls the figure a default a user can change.

Quantower does not word it identically across its own pages. Its Volume profiles page gives 70% under each profile type; its TPO Profile Chart page describes the value area as approximately 68% to 70% of market activity or trading volume. That is a difference inside one product's documentation, not between two vendors.

One setting can change it behind your back. Sierra Chart documents that when Volume By Price sits on a chart also carrying the TPO Profile Chart study, the volume study's value area percentage is forced to match the TPO study's, so the percentage has to be changed on the TPO study to take effect.

How is the value area actually calculated?

Sierra Chart publishes the procedure behind its volume value area. It multiplies the profile's total volume by the value area percentage to get a target, then starts at the point of control and works outward in pairs, comparing the row above with the row below.

The larger of the pair joins the value area. The smaller is held back and compared again, against the row beyond whichever was just admitted. That repeats until collected volume reaches or passes the target; the highest row admitted becomes the value area high, the lowest becomes the value area low. Where a pair ties, Sierra Chart admits both rows and moves on to the next pair, adding that two rows of equal volume are not very likely on a volume profile.

Two consequences follow. The value area is not symmetric around the point of control, because each step takes whichever side has more volume. And it is not the narrowest range containing 70% of volume — it is the range this procedure produces. Sierra Chart documents an alternative as well, a Count Two Levels at a Time for Value Area input on its TPO studies, so even one platform has two answers.

Quantower's volume profile and TPO pages state the 70% default and what the band represents, without a step-by-step procedure.

What period does a single volume profile cover?

A single volume profile covers whatever period you configure it over. Sierra Chart calls its Volume Graph Period Type input the most important one in the study: it controls how long each profile runs and whether the chart carries many profiles or one. Not all the documented options are time-based: Specified Volume starts a new profile each time a set quantity of volume has accumulated, and Based on Zig Zag Study starts one every time a referenced Zig Zag line changes direction.

Some behave dynamically. Visible Bars takes its period from the bars visible in the chart window and draws a single profile, so what is on screen decides the numbers. On a Trading DOM, Sierra Chart documents only two options that work — one period based on bar count, and from session start time to end — and anything else is set automatically to the session option.

Quantower splits the same ground into four tools: Step profiles at a repeating interval of minutes, hours, days, weeks or months; Left and Right profiles pinned to one side of the chart; and a Custom profile drawn over any range you select. Its Sessions Template setting selects a trading session template, and that is what determines the time frame the profile calculates over.

What data does a volume profile need to be accurate?

A volume profile needs trade data, stored finely enough to attribute each fill to a price. Sierra Chart calls for intraday records at 1 tick or 1 second for good accuracy, and documents what happens without them: when a record covers a range of prices, the study spreads that record's volume evenly across every price in the range, dividing total volume by the number of prices. The histogram still draws. It is an average standing in for a measurement.

Tick size has to be right too. Sierra Chart warns that one set too small makes the chart slow to load and raises CPU load, one set too large makes the profile inaccurate, and one that is not a multiple of the instrument's real increment can map volume onto the wrong price levels.

Everything on that requirement list is trade data: records of what executed at what price. None of it is an order-book feed, so a profile runs on the Level 1 data included with an account here — the best bid and best ask at the top of the book on CME, CBOT, COMEX and NYMEX. Sierra Chart treats the same data as feeding its footprint study, Numbers Bars: before comparing a volume profile's point of control against one, its troubleshooting notes tell you to set Ticks Per Volume Bar to 1.

Volume profile vs market profile: what is the difference?

A volume profile counts contracts at each price. A market profile counts time at each price. Sierra Chart ships the second as its TPO Profile Chart study, TPO standing for Time Price Opportunity, and records that the Market Profile name covers the same charts; Quantower prints Market Profile with a registered-trademark mark.

The unit is the difference. A TPO is one letter or block standing for one time block at one price — 30 minutes per letter by default in Quantower, with a one-day profile as the standard aggregation. So a TPO point of control marks where price spent the most time, and a volume point of control marks where the most contracts traded. A price the market held through many time blocks on light volume ranks high on one and low on the other.

Which platforms draw a volume profile, and does it cost extra?

Sierra Chart and Quantower both document a volume profile, and each charges for it differently. Sierra Chart documents Volume By Price as included with package 3, the lowest of its five service packages, and the study is absent from the five-item advanced-features list that gates the TPO Chart Study. Since trading with us needs an Integrated package, 10 or higher, a volume profile comes with the lowest package that connects at all, while a market profile means one of the advanced-features packages.

Quantower's licence comparison puts all four of its volume profile types — Right, Left, Custom and Step — outside the free version and inside each of its three paid licences, in a Volume Analysis Tools group marked as separately purchasable. The TPO Chart sits lower in the same table, under a row stating the licences below it can be purchased separately, and is ticked for the All-in-One licence alone. Quantower's framing is that most of its tools are free and a few market-specific features sit behind a licence.

Both are vendor pages describing vendor products, and both change. Check what your account already includes before buying anything on the strength of a tool.

What can you read off a point of control, and what can't you?

A point of control records what happened: which price absorbed the most contracts in the window you measured, with the value area around it showing how wide a band held most of the activity. That is a description of completed trading, computed by a documented procedure, and it is what the platform documentation supports.

What the levels mean next is a claim, and the vendors make it. Quantower's volume profile page says its tool “allows you to see the zones of maximum trading interest, and as a consequence, the ‘true’ support/resistance levels” — the scare quotes around true are Quantower's own. Its TPO page says that chart determines the main support and resistance levels.

Those are forward-looking statements by a vendor about its own software. The CFTC glossary is useful here because it is not selling anything: it defines support and resistance as areas where new buying or selling is expected to arrive, and defines technical analysis as forecasting from price change, rates of change, volume and open interest — attaching the condition that it works consistently only if the random-walk theory of price movement is wrong. The vendor documentation publishes calculations; whether they forecast anything carries the glossary's condition, which a histogram does not settle.

For anyone trading an evaluation account off these levels, the practical point is narrow. A point of control develops while the period runs, comes out of settings you chose, and may not match where another trader's chart puts it. Keep what the histogram measures separate from a forecast — the same caution that applies to cumulative delta. Let position sizing decide what a wrong read costs.

FAQ

Is the value area always 70%?

No — 70% is a default, not a definition. Sierra Chart's value-area inputs ship at 70 and its troubleshooting notes say the setting is usually 70% when charts are compared, but the percentage is a user input on both platforms. Quantower states 70% on its volume profiles page and describes the TPO value area as approximately 68% to 70% of activity. When two charts disagree about the value area high, check that setting first.

Why is my point of control different from someone else's?

Several inputs feed it. Sierra Chart lists the usual causes: a row setting coarser than one tick, session times that do not match exactly between the charts, a profile period configured differently, and intraday data not stored tick by tick. A profile built from coarse records also spreads each record's volume evenly across its price range, making the levels averages.

Do I need Level 2 or depth data for a volume profile?

No. What Sierra Chart documents as the requirement is trade data: intraday records at 1 tick or 1 second for good accuracy, and a tick size set to the instrument's real increment. An order-book feed is not on that list — depth belongs to a different question, covered in what a DOM ladder shows. The Level 1 data included with an account here is the best bid and best ask at the top of the book on CME, CBOT, COMEX and NYMEX.

What do VPOC, VVAH and VVAL mean?

They are Sierra Chart's abbreviations for the volume point of control, the volume value area high and the volume value area low: the highest-volume price level in a profile, plus the top and bottom levels the stepping calculation admits to the value area. The volume prefix separates them from the TPO versions, which count time blocks and can land on different prices.

Can a volume profile be projected onto future price?

The lines can be extended, which is not a forecast. Sierra Chart's value-area and point-of-control extension inputs each offer five modes, including running until the line meets a later profile, and its Volume Value Area Lines study can base one period's lines on the previous period — which Sierra Chart describes as projecting them forward by a day.