Point of Control and Value Area

The point of control (POC) and the value area are the two most important levels in a volume profile or market profile. The POC is the single price where the most volume traded. The value area is the range around it that contains about 70% of the volume, bounded by the value area high (VAH) and value area low (VAL). Together they show where the market considered price fair, and traders use them as reference levels for the next session.

Why 70%?#

The 70% figure comes from the idea of one standard deviation in a normal distribution, which covers roughly 68% of observations. Peter Steidlmayer, who developed market profile at the Chicago Board of Trade in the 1980s, used this to define the area of accepted value. Market prices are not normally distributed, but the convention stuck.

How the value area is calculated#

1. Start at the POC.
2. Compare the volume in the two price rows just above and the two just below.
3. Add the larger pair to the value area.
4. Repeat until the value area contains 70% of the total volume.

Charting platforms do this automatically. Slight differences between platforms come from how they group prices into rows.

What the levels mean#

Common trades using value areas#

Responsive trades at the edges#

If price opens inside the previous session's value area and moves to the VAH or VAL, traders often expect it to turn back towards the POC, especially in balanced, sideways markets.

The 80% rule#

A rule of thumb among market profile traders: if price opens outside the previous value area, then moves back inside and holds there for two 30 minute periods, it has a high chance of traversing the whole value area to the other side. The name refers to the claimed frequency, which is folklore rather than a verified statistic; treat it as a tendency to test, not a law.

Initiative trades outside value#

If price opens outside the value area and is accepted there, holding beyond the VAH or VAL rather than returning, it suggests a shift in value and a trend day may develop. Traders then trade with the move rather than against it. See Acceptance and Rejection.

The POC as a magnet#

Price often returns to the previous session's POC, and a "naked" POC, one that has not been revisited, is often watched as a target.

Developing vs prior levels#

During the session, the POC and value area keep updating as volume builds; these are the developing levels. Prior session levels are fixed and serve as reference points for the next day. Many traders mark the prior day's POC, VAH and VAL alongside other session levels. See Session, Weekly and Monthly Levels.

Limitations#

• Balance vs trend: value area trades work best in balanced, rotational markets; in trends, price can leave value behind quickly.
• Volume data: in spot forex, profiles rely on tick volume.
• Platform differences: row size and session definitions change the levels.

Common mistakes#

• Fading every move outside value on trend days.
• Treating the 80% rule as a guaranteed probability.
• Using inconsistent session settings.

Frequently asked questions#

What is the point of control?#

The price level where the most volume traded during the profile's period, often seen as the fairest price.

What is the value area?#

The price range around the point of control that contains about 70% of the period's volume, bounded by the value area high and low.

How do traders use the value area?#

To fade moves back towards the POC from the edges in balanced markets, or to follow moves that are accepted outside value in trending markets.

Sources#

• Wikipedia, Market profile