Volume Profile Matrix
May 2, 2023
The Volume Profile Matrix indicator adds a new dimension to traditional volume profile analysis by incorporating calculation intervals. This approach extends beyond merely sectioning the calculation window into rows and allows for a more comprehensive view of market activity.
While the Volume Profile Matrix indicator may repaint and back-paint, it remains a valuable tool for traders to pinpoint frequent areas of interest and potential trading opportunities.
Configuration Settings
- Lookback: This setting determines how many of the most recent bars are used to calculate the indicator, allowing traders to adjust for short-term or long-term analysis.
- Columns: The setting controls the number of vertical intervals used for the volume profile calculation, enabling more detailed segmentation of activity.
- Rows: This parameter defines the horizontal intervals, further refining the granularity of the volume profile matrix.
How to Trade with the Volume Profile Matrix Indicator?
Traders can leverage the Volume Profile Matrix to gain insights into liquidity over specific time intervals. Rather than dividing the analysis period into uniform rows, the indicator employs a grid system for calculations.
The grid cells are color-coded based on trading activity. Cells with higher trading volumes adopt a gradient, with warmer colors indicating heightened activity. Typically, red-hued cells signify significant trading action, while the cell displaying the maximum trading volume is distinctly marked in yellow.
Each grid column identifies a "point of control," which estimates where the highest traded volume price level exists within that interval. Notably, the highest overall traded volume level in the grid is projected to the chart’s most current bar, offering a snapshot of recent market dynamics.
FAQ
How does the Volume Profile Matrix Indicator work? The indicator analyzes trading activity by breaking down the volume profile into both columns and rows, providing a grid of color-coded intervals that represent varying levels of market activity.
Why does the Volume Profile Matrix Indicator repaint? Due to its nature of recalculating intervals, the indicator may repaint as it adjusts historical data points to reflect the true volume dynamics over time.
How can I access the Volume Profile Matrix Indicator? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.
What is a point of control in Volume Profile Matrix? The point of control is the price level within each interval (column) that has witnessed the highest volume of traded activity, offering valuable insight into dominant market interest areas.
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