1 00:00:00,240 --> 00:00:04,440 The volume profile is a variant of the market profile, a tool designed by J. 2 00:00:04,460 --> 00:00:08,640 Peter Steitelmeyer in 1985 for the Chicago Board of Trade, CBOT. 3 00:00:09,780 --> 00:00:13,360 Steitelmeyer was a trader and executive member of this major futures and options 4 00:00:13,360 --> 00:00:14,960 market for more than 40 years. 5 00:00:15,340 --> 00:00:20,240 This new method of auction representation was initially intended 6 00:00:20,240 --> 00:00:22,580 members, although it quickly spread abroad. 7 00:00:22,940 --> 00:00:27,340 We can therefore infer that their approach to how the market moves does 8 00:00:27,340 --> 00:00:28,900 to be on a bad basis. 9 00:00:29,849 --> 00:00:35,210 Subsequently, other authors such as Donald L. Jones or James Dalton joined 10 00:00:35,210 --> 00:00:38,850 trend and disseminated more information on market profile trading. 11 00:00:39,590 --> 00:00:43,890 The analysis of the volume profile is totally objective since it does not 12 00:00:43,890 --> 00:00:48,030 require any type of interpretation and therefore provides us with very useful 13 00:00:48,030 --> 00:00:50,710 information for our analysis and scenario approaches. 14 00:00:51,310 --> 00:00:55,270 It is important to note that the volume profile is not an indicator. 15 00:00:55,690 --> 00:01:00,120 Many refer to it as an indicator, but this is not correct since Together with 16 00:01:00,120 --> 00:01:03,240 the price, volume is a direct source of information. 17 00:01:03,740 --> 00:01:07,940 The key is that it does not go through any mathematical formula before being 18 00:01:07,940 --> 00:01:10,100 plotted on the chart, as indicators do. 19 00:01:10,560 --> 00:01:15,100 The volume profile is therefore another way of representing volume data that 20 00:01:15,100 --> 00:01:19,640 helps us to identify very clearly and precisely the number of contracts traded 21 00:01:19,640 --> 00:01:20,920 at different price levels. 22 00:01:21,780 --> 00:01:25,880 Volume profiles are visually displayed on the chart as a horizontal histogram. 23 00:01:26,430 --> 00:01:29,810 whose values are distributed according to the trading volume of each price 24 00:01:29,810 --> 00:01:34,030 level. Depending on the number of contracts that are exchanged at each 25 00:01:34,030 --> 00:01:36,490 level, the shape of the distribution will vary. 26 00:01:36,710 --> 00:01:40,970 The more transactions, the greater the length of the horizontal line, while a 27 00:01:40,970 --> 00:01:43,310 short horizontal line represents fewer trades. 28 00:01:43,930 --> 00:01:48,670 As we know, volume informs us about the activity or participation of the agents. 29 00:01:48,850 --> 00:01:52,870 The more volume, the greater the participation, and therefore the greater 30 00:01:52,870 --> 00:01:54,790 interest in that particular level or zone. 31 00:01:55,290 --> 00:01:59,230 On the other hand, the lower the volume, the lower the participation suggests 32 00:01:59,230 --> 00:02:01,570 less interest in those trading levels. 33 00:02:02,670 --> 00:02:07,530 As a reference, we are going to take a normal distribution or Gaussian bell to 34 00:02:07,530 --> 00:02:10,009 understand the most important statistical concepts. 35 00:02:10,630 --> 00:02:14,670 The data is distributed symmetrically about the central point where the mean, 36 00:02:14,790 --> 00:02:16,590 median, and mode coincide. 37 00:02:16,970 --> 00:02:19,850 It has three standard deviations on each side. 38 00:02:20,250 --> 00:02:24,230 which are equally spaced apart and measure the amount of variability or 39 00:02:24,230 --> 00:02:25,290 around an average. 40 00:02:25,510 --> 00:02:27,510 It is also a measure of volatility. 41 00:02:28,210 --> 00:02:33,930 The first standard deviation comprises 68 .2 % of the data and up to the second 42 00:02:33,930 --> 00:02:37,090 standard deviation 95 .4 % is reached. 43 00:02:37,630 --> 00:02:43,050 On an individual basis, the main information provided by the volume 44 00:02:43,050 --> 00:02:47,310 how the trading has been carried out, i .e., how the volume has been distributed 45 00:02:47,310 --> 00:02:48,710 depending on the price level. 46 00:02:49,230 --> 00:02:53,630 And based on this, it allows us to identify which level or zone has been 47 00:02:53,630 --> 00:02:57,670 interesting for all participants at an aggregate level and which have not. 48 00:02:58,410 --> 00:03:01,430 Information that will later help us to make trading decisions. 49 00:03:01,850 --> 00:03:06,490 On the other hand, the analysis of several profiles together can help us to 50 00:03:06,490 --> 00:03:10,850 determine the overall sentiment or context of the market, which is relevant 51 00:03:10,850 --> 00:03:11,990 the establishment of scenarios.