The video discusses the use of a volume indicator called Volume Profiles, which helps identify areas where the price may reject or cascade from. The indicator shows areas of volume at specific price levels and allows users to adjust settings for bullish and bearish candles. Traders can use this indicator in conjunction with support and resistance zones on higher time frames to make informed trading decisions.

Using Volume Profiles as a Day Trading Indicator: A Guide

Introduction

Day trading requires discipline, strategy, and precision. However, even the most seasoned traders can struggle with using indicators effectively. In the world of day trading, one indicator that is constantly debated is volume. Many traders argue that volume indicators are not effective, while others swear by them. In this article, we will explore the use of Volume Profiles as an indicator in day trading.

Why Volume Profiles Work

The first indicator that traders see when opening a new chart is volume. However, the traditional volume indicator may not give traders enough information to make informed trades. This is where Volume Profiles come in. Volume Profiles show traders where the volume is occurring and at what price level. With this information, traders can better identify areas where the price is likely to either reject or cascade.

Setting up Volume Profiles

To add Volume Profiles to a chart, traders can search for the indicator in the community scripts section. The author of the indicator is KV for Coins. Once the indicator is added, traders should click on the volume indicator twice so that two are on the chart.

Using Volume Profiles

Volume Profiles show areas of volume at specific price levels. A higher volume at a price level typically signals that there is more activity and therefore greater price action. The orange line in the Volume Profile indicates where the highest volume occurred, and if the price is currently rejecting that area, then it is likely to continue down. Additionally, setting up Volume Profiles for bullish and bearish activity can help traders identify where buying or selling pressure is stronger.

Combining Volume Profiles with Higher Time Frames

Traders can use Volume Profiles in conjunction with higher time frames to get a better understanding of where the price is headed. For example, if a trader is selling at a particular Zone due to a high Volume Profile, they can look at higher time frames to see where the highest volume is. This will help them identify where the buyers are and set a target for their trade. Additionally, combining Volume Profiles with support and resistance zones on higher time frames can also be effective in determining where the price may turn.

Why Volume Profiles Keep Traders Out of Trouble

Using Volume Profiles effectively can be key to avoiding trades that do not have a high probability of success. By identifying areas of low volume, traders can avoid trading in those areas and instead focus on zones with higher activity. This can help traders avoid getting trapped in unsuccessful trades.

Conclusion

In the world of day trading, there are many tools and indicators available to traders. Volume Profiles can be an effective tool in helping traders identify areas with high volume and make informed trades. By pairing Volume Profiles with higher time frames and support and resistance zones, traders can increase their chances of success and avoid trades with low probability. It is important for traders to experiment with different indicators and find what works best for them.