Volume By Price

Description:

The Volume-by-Price Indicator (VBP) is a technical analysis tool that combines price and volume data to help traders and investors identify key price levels where significant trading activity has occurred. Paul Dysart developed this indicator in the 1930s, and traders have widely used it to analyze a particular security’s supply and demand dynamics.

Input Parameters:

Columns: The number of sections the overall price range will be separated to. The bigger the columns number, the more granular your VbP picture becomes in terms of price levels.
Anchor to: Select the criteria of anchoring the indicator. For example, you can anchor the indicator to time by selecting Year to Date. You can also anchor the indicator to Recent Gap or Highest volume or to Start of the month among many other options available.
Bull Color: Show selling volume (when price goes down).
Bear Color: Show buying volume (when price goes up).
Point of Control (POC): This is the price level where the most trading activity has occurred.
VWAP: Volume Weight Average Price over a given period.
△Volume: this shows you the difference in volume on green candles vs red candles and is represented by a darker shaded area at the edge of the column
Value Area (High/Low): The value area is where 70% of trading took place. VAH is value area high and highest point of value area. VAL is value area low and lowest point of value area.
Pyramid Mode: This mode is only available on manually drawn VbP and separates volume that occurred on green candles (left) vs red candle volume (right) which provides you with a unique view of the volume profile.

Use Case:

Identifying Support and Resistance Levels: The VBP indicator can help traders identify key support and resistance levels by highlighting areas with high trading volume. These levels often form as a result of extended periods of range-bound trading or significant buying/selling interest at specific prices.
Analyzing Gaps and Voids in Volume Profile: Gaps or voids in the volume profile represent low resistance zones, where prices can move more freely compared to areas with high volume. Traders can utilize this information to anticipate potential price movements and identify strategic entry and exit points.
Understanding Market Dynamics: By examining volume distribution, traders can gain insights into how prices behave within specific ranges. For instance, when a price is stuck between X and Y for an extended period, it may form a large volume node, indicating strong support and resistance. Similarly, big news about a company may result in a volume spike at a specific price level, reflecting heightened interest among market participants.
Detecting Price Reversals and Breakouts: The VBP indicator can help traders spot potential price reversals and breakouts by monitoring changes in volume distribution. Fast-moving prices on low volume can create voids or valleys with little resistance, signaling a possible trend change or a breakout opportunity.

This feature can be used in: