Volume Profile Explained: POC, Value Area, VAH, VAL, HVN and LVN
Lesson 2 of 9 · Beginner
What does a volume profile actually show?
A normal volume bar under a candle shows how much traded in each time period. A volume profile puts the same volume on the price axis instead: each price level gets a horizontal bar whose length equals the total volume traded at that level over the chosen period. The result is a horizontal histogram showing where the market accepted the most and the least trade.
Three common types of profile:
- Session profile: built separately for each trading day.
- Fixed-range profile: from a start point you choose to an end point you choose, for example from the beginning of a rally to its end.
- Composite profile: combines several days or weeks into one profile (covered in lesson six).
One important setting is the row size. The smallest price increment in gold futures (GC) is 0.10 dollars. If you make each row one tick, the profile becomes noisy; many traders find rows of 0.50 to 1.00 dollar easier to read on gold. Your choice affects the exact position of the POC and the nodes, so pick one setting and keep it.
The POC: point of control
The POC (point of control) is the price level where the most volume traded during the profile period, the longest bar in the histogram. Statistically it is the mode of the distribution, not the mean. That distinction matters in the VWAP lesson.
Think of the POC as the most heavily traded price both sides agreed on. A few precise points:
- If two levels tie on volume, most software picks the one closer to the middle of the range. Know your software's tie-break rule.
- The developing POC moves during the session. A POC that keeps drifting in one direction suggests value is migrating; a POC that stays put suggests balance.
- The previous day's POC is often a good reference point, but it is not automatic support or resistance. Sometimes price passes through it like a magnet and sometimes it reacts.
The 70% value area, VAH and VAL
The value area is the price range that contains roughly 70 percent of the profile's total volume. Its upper edge is the VAH (value area high) and its lower edge is the VAL (value area low).
The 70 percent figure comes from the idea that in a normal distribution about 68 percent of observations fall within one standard deviation of the centre. It is a convention, not a law of nature; some software lets you use 68 or 80 percent instead.
The common calculation method:
- Start at the POC.
- Add up the volume of the two rows above the current area and compare it with the two rows below.
- Add the pair with more volume to the area.
- Repeat until the area holds 70 percent of the total volume.
Some platforms compare one row instead of two, so VAH and VAL can differ slightly between software packages. Hypothetical example: if yesterday's GC profile ran from 3,975 to 4,030, with the POC at 4,004.0 and the value area calculated from 3,992.5 to 4,013.5, most of yesterday's trade took place inside about 21 dollars, and prices outside that band were accepted less. These numbers are illustrative only.
HVN and LVN: high-volume and low-volume nodes
Besides the POC, every profile has other bulges and dips:
- HVN (high-volume node): a level with high volume relative to its neighbours. The market spent time there and accepted trade. When price returns to an HVN it tends to slow down and rotate, because both sides were comfortable there.
- LVN (low-volume node): a valley in the profile with little volume relative to its neighbours. Price either moved through it quickly or was rejected there. LVNs often mark the boundary between two accepted areas, and price usually either runs through them fast or reacts at them.
A useful mental rule: price lingers at HVNs and travels through LVNs. If price crosses an LVN and holds beyond it, the next HVN is a logical area of interest. This is a framework for thinking, not a forecast; on heavy news days LVNs break with no reaction at all.
Session settings for gold, and the limits
Gold futures trade about 23 hours a day on Globex. Two common choices for a daily profile:
- Full session (18:00 to 17:00 New York time): captures all volume, but includes the thin Asian hours.
- COMEX day session (08:20 to 13:30 New York time, which is roughly 13:20 to 18:30 in London for most of the year, or 12:20 to 17:30 UTC during US daylight time): isolates the busiest part of the day, which gives cleaner TPO and day-type reads.
Both are defensible; what matters is that you choose one and use it consistently. A volume profile works best with enough real volume behind it. On XAUUSD at a CFD broker the profile is built from tick volume, which approximates the overall shape but may place the POC and edges a few dollars away from the futures profile, and the result varies between brokers.
Common mistakes
- Treating the POC or VAH as a guaranteed wall of support or resistance without looking at how price behaves there.
- Constantly changing the row size or session hours until the level you were hoping for appears.
- Comparing levels from two different platforms without knowing how each calculates the value area.
- Building a profile on a CFD broker's tick volume and treating it as real exchange volume.
What does volume say here?
A profile only shows total volume at each price. Order flow splits it into two sides:
- With the footprint you can see whether more trades hit the bid or lifted the ask at the POC itself. A POC built with heavy aggressive selling while price failed to drop tells a different story from a POC formed by balanced rotation.
- At the VAH and VAL, look for absorption: heavy aggressive volume pushing outward with no progress in price.
- At an LVN, a move through it with strong delta in the same direction is more convincing; if delta is weak or opposed, take the chance of a return more seriously.
📊 See real gold futures volume behind these ideas: free order flow course · today's gold volume map
Frequently asked questions
What does POC mean in a volume profile?
The POC, or point of control, is the price level with the most traded volume in the profile period: the longest bar of the horizontal histogram.
Why is the value area 70 percent?
It is borrowed from the roughly 68 percent of data that sits within one standard deviation in a normal distribution. It is a common convention that can be changed, but it should stay consistent.
What is the difference between an HVN and an LVN?
An HVN is a level with high volume relative to its surroundings, where the market accepted trade. An LVN is a low-volume valley that price moved through quickly or rejected.
Education only, not a recommendation to buy or sell; we never give signals. Price examples are illustrative. Test any method on a demo account first, with strict risk management.