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Playbook 02 · Slide 01 of 08 · Foundation · Auction Market Theory

What Is Volume Profile

Volume shows where market participants did business. High-volume areas signal acceptance — price was fairly negotiated here. Low-volume shelves signal rejection — participants moved through quickly.

Concept
Acceptance vs Rejection
The core read
Tool
Volume Profile
Context layer
Key Level
POC
Most-traded price
Key Zone
Value Area
±1 SD from POC
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What the Profile Shows
Volume profile organises traded volume by price level, not by time. Each price gets a horizontal bar showing how much traded there.
High-volume areas = acceptance. The market was comfortable transacting here. Price slows, rotations increase, pullbacks find support.
Low-volume shelves = rejection. Participants moved through quickly with little two-way trade. Price often passes through these areas fast when revisited.
The profile is not a signal — it is a context layer that sharpens entries, exits, and risk.
POC and Value Area
Point of Control (POC): The single price with the most volume over your chosen window. The market's best estimate of fair value.
Value Area: The range containing roughly 70% of all traded volume. Brackets the bulk of fairly negotiated activity within ~1 standard deviation from the POC.
Together, POC and Value Area describe where price was fair and, by exclusion, where it was not.
Value Area High (VAH) and Value Area Low (VAL) are the key boundaries — price at these edges is testing the limits of accepted value.
The Core Read: Price rotates around accepted zones until fresh information or order flow pushes it toward a new area of acceptance. Your edge comes from recognising whether today is about rotation back into known value or discovery toward a new one.
Acceptance — What It Looks Like
Tape slows at the price level — bids and offers are meeting without urgency
Rotations increase in size — price oscillates around the zone
Pullbacks find buyers (in HVN support) or sellers (in HVN resistance) inside the area
Profile bar grows — volume building at this level, widening the node
Rejection — What It Looks Like
Quick movement through the price region — no sustained two-way trade
When revisited, price often passes through quickly again — the thin area stays thin
Wicks and fast candles through the zone on the chart — no pause, no build
Profile bar stays short or absent — participants did not want to transact here
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