Market Profile vs Volume Profile: What’s the Difference?

Day traders use various tools for making well-informed decisions. Among others, one of the most popular is Volume-At-Price (VAP) analysis. The latter has two important components — market profile and volume profile.

In this short guide, we’ll discuss market profile vs volume profile. Read on and learn how you can use these two tools for better market analysis.

Volume Profile

As the name implies, volume profile analysis looks at the highest and lowest volumes within a specific time. It shows as a horizontal histogram, identifying significant prices based on volumes.

With the help of volume profile software, the analysis becomes automated. Hence, it’s easier, especially for someone without rigorous experience. Such an analysis has various uses, including the following:

  • Identification of the support and resistance levels of setups
  • Evaluating a trend’s strength
  • Knowing when to set a stop-loss and take a profit

Market Profile

On the other hand, a market profile analysis looks at the time of each price. It’s time-based, showing how long a stock or an asset remained at a specific price. This type of charting technique can provide a good idea of market performance.

One of the key advantages of market profile charts is that they do not only show the total trading volume. Instead, they give a clearer picture of market conditions. It can also identify price data and how it relates to volume.

By using market profile software, you’ll know more about market activity. This is shown in the vertical or y-axis.

What’s the Difference Between Market Profile and Volume Profile?

One of the biggest differences between the two is the information they show. Volume profile focuses on the volume traded. Meanwhile, the market profile is more accurate as it involves more elements.

With a volume profile, you’re looking at how many shares are traded at a given level. On the other hand, a market profile identifies the length of time for trading at each level.

In addition, volume profile charts provide limited information. If you want more relevant details that can help in your trade, you might want to consult market profiles. Hopefully this short market profile vs volume profile article helps you decide which way to go for your trading.


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