That Thin Zone on Your Chart Isn’t Real

Okay so let's talk about the volume profile, and specifically the thin zone.

If you've never used one, here's the whole thing in a sentence. It shows you how much trading happened at every price level, stacked sideways on your chart like a bar graph turned on its side.

Fat area, tons of shares changed hands there. Skinny area, almost nothing did.

That skinny part is the thin zone.

And we care about it because where nobody traded, nobody has a position to defend, so there's no pressure sitting there and price can just slice right through. It's a hallway with nobody standing in it.

So you hear it constantly. Oh my God, there's a thin zone, this thing is going to rip.

Okay. Now here's where people get it wrong.

I pulled up Apple in the room today and I asked everybody, with volume profile analysis, what do you find concerning about trading this? Anything popping out at you?

Apple gapped.

When a stock gaps, price jumps from one level to the next without trading in between. And on your volume profile that empty stretch shows up looking like a gorgeous thin zone.

It is not a thin zone.

Nothing traded there because the stock jumped over it, which is a completely different animal from buyers and sellers showing up and finding nobody home. Those two look identical on your chart and they are not the same thing at all.

Which means there could be real resistance sitting inside that gap and you would never see it. You are looking at empty space and calling it opportunity, and all it is is a spot the stock skipped.

A real thin zone is an absence of pressure. A gap is an absence of information.

And you will see a lot of theater volume profile traders out there going oh my God, there's a thin zone, and it's like, oh no, there's not.

So here's your check and it takes two seconds, and I want you doing this every single time.

Before you trade any thin zone, look at the chart and ask yourself whether price gapped through that area. If it did, throw the read out.

You can still trade it as a gap if that's your thing, and there's nothing wrong with gap trading, but do not sit there pretending the volume profile is telling you something.

Because it isn't telling you anything. It just can't see.

Rock On,

Voz

P.S. There are about half a dozen more of these hiding in your charts right now. Things you've been trading with confidence that the indicator can't actually see. We go through them live, every session, and your first 30 days cost you nothing. Get Started Today