Master the "Price-Volume Relationship." Learn how to identify High Volume Nodes (HVNs) and Low Volume Nodes (LVNs) to spot where institutions are building their positions.
Most charts show volume over *time* (the bars at the bottom). Volume Profile displays volume at *price*. It plots a histogram on the side of your chart, showing how many shares or contracts were traded at every specific price level. This allows you to see the exact price levels where the market spent the most time (High Volume) and the levels it zipped through quickly (Low Volume).
Because they need to move huge amounts of capital. High Volume Nodes are the only places where there is enough liquidity to fill their orders without causing an massive, self-defeating spike in price.
Traders often look to "fade" price as it approaches an HVN (assuming it will get stuck) or look for a breakout trade if price clears an LVN (as there is little resistance to stop the move).