High volume nodes, low volume nodes and single prints

Inside a profile, volume is not evenly distributed. There are prices where a lot traded and prices where almost nothing did. Those are high volume nodes and low volume nodes, and they behave differently when price comes back to them. Single prints are the extreme case of a low volume node, and they carry their own expectation.

A profile with structure

This is a two-session composite. The extra detail matters.

  Price   | Volume  | Profile
  --------+---------+----------------------------------
  5020.00 |    210  | ##
  5019.50 |    180  | ##
  5019.00 |    640  | ######
  5018.50 |  1,910  | ###################
  5018.00 |  2,730  | ###########################   <- HVN
  5017.50 |  2,240  | ######################
  5017.00 |    870  | #########
  5016.50 |    120  | #                             <- LVN
  5016.00 |     60  | #                             <- single prints
  5015.50 |     40  | #                             <- single prints
  5015.00 |    150  | ##
  5014.50 |    980  | ##########
  5014.00 |  2,420  | ########################
  5013.50 |  3,180  | ################################  <- HVN (POC)
  5013.00 |  2,610  | ##########################
  5012.50 |  1,540  | ###############
  5012.00 |    530  | #####

Two bells stacked on top of each other with a hole between them. The lower bell centred at 5013.50 and the upper at 5018.00 are high volume nodes. The hole from 5015.50 to 5016.50 is a low volume node, and the 40- and 60-contract levels inside it are close to single prints: prices that were traded through so fast that only a handful of contracts changed hands.

High volume nodes

An HVN is a price region where the auction spent time and did a lot of business. It means many participants agreed that region was fair. When price returns to an HVN:

• It tends to slow down. Two-sided trade resumes because it was accepted before.
• It tends to hold as support or resistance on the first test, because positions opened there are defended.
• Once inside an HVN, price often chops through it rather than reversing sharply.

HVNs are where you expect a fight. They are poor places to enter a breakout trade because the market has already shown it wants to trade there.

Low volume nodes

An LVN is a price region the auction moved through quickly with little business. It means nobody wanted to trade there: either buyers stepped in urgently below it or sellers above it, and price crossed the gap in a hurry. When price returns to an LVN:

• It tends to move through fast, in either direction. There are few resting positions to defend.
• The LVN acts as a boundary between two areas of acceptance. Price on one side of it "belongs" to that side's HVN.
• A rejection at an LVN edge is often sharp: price pokes into the low-volume area, finds nothing, and snaps back.

LVNs are where you expect speed. They are where breakouts from one HVN to the next travel quickly, and where a failed test reverses quickly.

Key idea: High volume nodes slow price down because trade was accepted there. Low volume nodes speed price up because it was not. Position entries at the edges of nodes, not in the middle of them.

Single prints

Single prints are the limit case: a price where a single trade, or a tiny handful, occurred. On a time-based profile (a market profile of letters, one per half hour) they are literally one letter wide. On a volume profile they are near-empty rows.

They form during the fastest part of an imbalance, when price is being repriced rather than negotiated. Two expectations attach to them:

1. While the imbalance holds, single prints act as a boundary: price returning to the top of a single-print zone from above should find buyers (the market repriced up through here; it should not accept going back below without a fight).
2. When they get filled in, the imbalance has failed. If price trades back through single prints and builds volume there, the urgent participants who created them have been proven wrong, and the market is returning to the prior HVN.

Using nodes in practice

The most practical way to use this lesson is to draw the boundaries between HVNs and LVNs on your chart before the session and expect different behaviour in each region:

Traders lose money in profile trading mostly by expecting the wrong behaviour in the wrong region: fading in a low volume node because "it moved too fast", or buying a breakout in the middle of a high volume node because "it looks strong."

Try it: Build a composite profile of the last five sessions on your product. Mark every HVN (a clear bulge) and every LVN (a clear thinning between bulges). Watch today's session and note, each time price crosses from one region to another, whether it slowed or sped up. Count how often the expectation from the table matched.

Recap

• High volume nodes are accepted price regions; price slows, chops and often holds there on first test.
• Low volume nodes are rejected regions; price moves through them fast and reverses sharply at their edges.
• Single prints are the thinnest LVNs, formed during urgent repricing; they act as boundaries until filled in.
• Filling in single prints means the imbalance that created them has failed.
• Mark nodes before the session and expect different behaviour in each region; most profile errors are the wrong tactic in the wrong node.