Market Profile vs OBV
Market profile counts how long price spent at each level, producing a distribution of time across prices. On-balance volume tallies each bar's volume by the sign of its close, producing a running total, so the two differ in both what they count and what they output.
Most comparisons on this site differ in one way. These differ in two: what is counted, and what comes out the other end.
What each one is
Market profile counts time. It divides the session into periods and records every price traded in each, so the widest part of the shape is where price lingered longest. Market profile covers it.
On-balance volume is a running tally. It adds a bar’s whole volume when the close is higher and subtracts it when lower, accumulating indefinitely. On balance volume covers it.
Time against volume, and place against direction. Both axes differ, which is why the two barely overlap in what they can tell you.
Where they differ
What is counted. Periods against volume. A level that traded enormously in two minutes is barely visible to one and moves the other substantially.
What comes out. A distribution across prices against a single accumulating number. Only one of those gives you somewhere to act.
Whether direction enters. The profile does not care whether price was rising or falling while it sat there. The tally cares about nothing else.
What data each needs. The tally needs volume, which most instruments publish. A proper time profile needs period-by-period data that many ordinary charts do not carry cleanly.
Where they agree
Both describe the past. Neither contains a statement about what happens next, and both are complete summaries of what already occurred.
Both depend on a window. The profile on a session definition, the tally on an arbitrary start date — and in each case the choice affects the reading.
Both are read for divergence against price, and both need a written definition of what counts before that pattern means anything.
And neither supplies a stop. On this site’s shared series the ninetieth percentile bar range is 1.101, and a stop belongs at structure rather than at either.
Which one to use
Use the profile when you want places. Its peak and its value band are prices, which is what an order needs and what the tally cannot provide.
Use the tally when you want direction. Whether volume has been arriving on up closes or down closes over a stretch is a real question the profile does not address.
Use the profile when your volume data is unreliable. A time-based count measures something you can observe even where the volume figure covers one venue.
And use both, since they overlap almost not at all. The profile finds the area; the tally says which way the activity has leaned.
Why two differences make them complements
Because neither can approximate the other. A time distribution cannot be turned into a direction, and a directional tally cannot be turned into a price.
And because their weaknesses differ. The tally fails on a partial volume feed; the profile fails when your platform cannot build one properly. Those are unrelated failure modes.
What each cannot see
The profile cannot see direction. A wide area is wide whether price was rising or falling through it.
The tally cannot see price. It reports a number in accumulated volume, and no level on it corresponds to anything on the chart.
The profile cannot see volume. A quiet hour and a frantic one both add one period.
And the tally cannot see the size of a move. A bar closing a hundredth higher counts exactly like one closing at its high.
What to fix before using either
The session definition, for the profile. Change where the session starts and the shape changes.
The volume feed, for the tally. A partial figure produces a confident reading of a fraction of the market.
Whether your platform builds a proper time profile. Many cannot, and an approximation is a different tool.
And what a divergence means, in numbers. Otherwise it will be found afterwards on any chart.
The original data
Of the 24,971 unique videos in research/search-study-corpus.jsonl, no title compares these two
directly — this pair is constructed from two subjects the corpus covers separately. Separately, market
profile appears in 66 titles at a median of 9,438 across 52 channels, and on-balance volume in 26 at a
median of 15,517 across 24. The counts come from site/corpus_count.py.
66 videos on one at 9,438 and 26 on the other at 15,517. Both are small subjects, and the less covered one draws a larger audience per video — a pattern that repeats across the specialist volume tools in this corpus.
The answer to the question on that chart is that the profile cannot tell you. It records duration and not direction — which is exactly the gap the tally exists to fill.
When it fails
The failure is reading a wide time profile as accumulation. Price sat at a level for hours, so the profile is broad there and it reads as an important area where buyers were active. Time says nothing about direction or about volume — the same wide shape forms in a quiet drift with almost no trading at all. The tool measured duration accurately and the reader supplied a claim it never made.
The second failure is quoting the tally’s level. It depends on the start date.
A third is using the tally on a partial volume feed. The input is a fraction.
A fourth is using an approximated time profile. It is a different tool.
A fifth is treating agreement as confirmation. They answer different questions.
And a sixth is finding divergence by looking. It is always available somewhere.
Related
Market profile covers the time-based distribution. On balance volume covers the directional tally. And volume profile covers the volume-based distribution between them.
These two are further apart than most pairs on this site. One counts periods and gives you prices; the other counts volume by direction and gives you a number in units nobody trades in. There is almost no overlap to argue about.
— Michael Whitman
This page is educational, not financial advice. Test every idea on your own charts before risking money.