Volume profile is an advanced indicator that plots volume in a different way. Instead of a normal way of plotting volume below the price in most charting platforms Zerodha has introduced a special volume chart in Zerodha Kite. I will show how to successfully trade in intraday basis using Volume Profile Zerodha Kite.
What is Volume Profile?
In volume profile, the volume is plotted horizontally so just by looking at the chart we can at once decide at which price we have the highest volume and at which price we have the lowest volume. The point with the highest volume plays an important role and is called a point of control (POC). Price trading above POC is assumed to be bullish while price trading below POC is assumed to be bearish. Also, the highest point of volume profile chart is called the value area high (VAH) and the lowest point is called value area low (VAL). I will show you how to trade Volume Profile Zerodha Kite in day trading.
To attach Volume Profile Zerodha Kite just click studies and in search box write Volume Profile as shown in the image below:
Open 5-minute chart of any liquid scrip. I will take Nifty future for example as it has decent volume. You can try this method with Bank Nifty future OR Nifty-50 stocks OR commodities like Gold, Silver OR Crude Oil. Watch price opened in which side of POC. If the price is trading below POC wait for the price to cross and close above POC. Attach 20-period CCI indicator with 200 and -200 mark.
If price crosses and closes above POC from below and CCI also crosses above 200 places a buy order. Similarly, if price crosses and closes below POC from above and CCI also crosses below -200 place a sell order. You can put a target and stop as per discretion. Instead of POC traders can also use the cross of VAH OR VAL as an entry point.