Introduction
TradingView is a popular online platform that provides traders with a wide range of technical analysis tools. One of the most useful tools on TradingView is the Volume by Price indicator. This indicator can provide traders with valuable insights into market sentiment, price trends, and support and resistance levels. In this article, we will explore the Volume by Price indicator in depth and provide you with tips on how to use it effectively in your trading.
What is the Volume by Price Indicator?
The Volume by Price indicator is a technical analysis tool that displays the total volume of trades that have occurred at each price level over a given period. This information is plotted on a horizontal histogram, with the price levels on the Y-axis and the volume levels on the X-axis.
How Does the Volume by Price Indicator Work?
The Volume by Price indicator works by dividing the price range of an asset into equal intervals, known as price levels. The volume of trades that occurred at each price level is then plotted on the X-axis of the histogram, with the highest volume levels being displayed as the tallest bars.
Why is the Volume by Price Indicator Important?
The Volume by Price indicator is important because it provides traders with valuable insights into the market sentiment surrounding an asset. By analyzing the volume levels at different price levels, traders can identify key support and resistance levels, as well as potential areas of buying and selling pressure.
How to Use the Volume by Price Indicator
To use the Volume by Price indicator effectively, traders should follow these steps:
Step 1: Choose an Asset
The first step in using the Volume by Price indicator is to choose an asset that you want to analyze. This could be a stock, cryptocurrency, forex pair, or any other asset that is available on TradingView.
Step 2: Add the Volume by Price Indicator
Once you have chosen your asset, you should add the Volume by Price indicator to your chart. You can do this by clicking on the “Indicators” button on the top toolbar and selecting “Volume by Price” from the list of available indicators.
Step 3: Analyze the Histogram
Once you have added the Volume by Price indicator to your chart, you should analyze the horizontal histogram that is displayed. This histogram will show you the volume of trades that occurred at each price level over a given period.
Step 4: Identify Key Support and Resistance Levels
By analyzing the histogram, you can identify key support and resistance levels for the asset you are analyzing. These levels are important because they can provide you with valuable insights into the market sentiment surrounding the asset.
Step 5: Use the Information to Make Trading Decisions
Finally, once you have identified key support and resistance levels using the Volume by Price indicator, you can use this information to make trading decisions. For example, if you see a high volume of trades at a particular price level, this could indicate that this level is a strong support or resistance level that is unlikely to be broken.
Conclusion
In conclusion, the Volume by Price indicator is a powerful tool that can provide traders with valuable insights into market sentiment, price trends, and support and resistance levels. By using this indicator effectively, traders can make more informed trading decisions and increase their chances of success. If you haven’t already, we highly recommend that you add the Volume by Price indicator to your trading toolbox today!
