Unveiling the Power of Volume Profile: A Trader's Perspective

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I've always held that Volume Profile deserves the crown as the king of trading tools. Unlike other indicators, it uniquely reveals the true value of an asset by showcasing where the majority of trading activity occurred.

Let's dissect this with HDFC Bank as our example. This behemoth boasts a massive free float of 7.52 billion shares, solidifying its heavyweight status in the Nifty. However, the real story lies within this vast pool.

Historical data consistently demonstrates that only 10-30% of free float shares actually participate in daily trading. For HDFC Bank, that translates to a maximum of 2.5 billion shares actively available for trading.

Now, let's delve deeper.

Decoding Value Areas:

1700-1800 Value Area: A staggering 1 billion shares traded within this range, representing a significant 15% of the total free float. This zone screams "value" as it attracted massive participation.
1610-1650 Value Area: This zone witnessed a total of 1.5 billion shares traded.
These observations unveil the peak free float capitalization. In simpler terms, this is where the most substantial trading activity occurred, establishing a strong support base. I'd pinpoint the support zone within this range, specifically between 1630 and 1650.

Trading Opportunities:

Armed with this analysis, a prudent trader can confidently initiate BUY positions in HDFC Bank within the 1630-1650 support zone. Targeting a 200 Rs/share profit becomes a realistic goal.

Disclaimer: This analysis is purely for educational purposes and should not be considered financial advice.

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Anmerkung

Stock is reaching the Support Zone where highest volume of free float shares are traded.