Alpha Sharing | Practical Indicator Sharing

VRVP Metric

Detailed Explanation of the VRVP Indicator (Visible Volume Distribution Chart)

I. Core Concepts

• Volume Profile: VRVP displays the total trading volume at different price levels in the form of a horizontal bar chart . The longer the bar, the more active the trading activity within that price range .
• Visible Range: Its calculation is based solely on data within the currently displayed time and price range on the chart . This allows traders to focus on analyzing recent market activity.
• Key markers:
  • Red line (POC, Point of Control): This represents the price level with the highest trading volume.
  • The two white lines (VAH/VAL) represent the Value Area High and Value Area Low, respectively, and are the upper and lower boundaries of the value area.

II. Main Functions and Uses

• High Volume Nodes (HVN):
  • Price zones with exceptionally high trading volume are considered "fair value zones" where market participants reach a consensus.
  • These areas could act as strong support when prices fall in the future; once broken, they could turn into resistance .
    
    
• Low Volume Nodes (LVN):
  • Areas with sparse trading volume mean that prices stay in that range for a short period of time.
  • Prices typically move quickly when they cross these areas in the future.
    
    

2. Identify control points and value areas.

• Point of Control (POC):
  • The single price level with the highest trading volume across the entire distribution map.
  • It is the most recognized "fair price" in the market during that period.
• Value Area (VA):
  • Price range that includes a specific percentage (usually 70%) of total trading volume.
  • This is the area with the most intensive trading activity in the market.
  • The boundary of the value zone (VAH/VAL) is also an important reference point for support and resistance.

  III. Summary of Trading Applications

  VRVP is easy to understand; it acts as both support and resistance.
  VRVP is typically used to develop strategies.
  • Breakout/Breakdown Strategy (Core Application):
    • If the price rises above the POC or HVN, it indicates that the market accepts a higher price and it is likely to continue to rise .
    • If the price falls below POC or HVN, it may indicate a change in market consensus, making further downward movement likely .
  • Pullback trading: When the price falls back to near the POC or HVN, consider it an optimal entry point for buying or selling .
  • Range trading: Trading within a value zone (VA) with stop-loss orders placed outside the boundaries of the value zone (VAH or VAL).