Volume Profile vs OBV
Volume profile shows how much traded at each price level, which is a question about location. On-balance volume tallies each bar's volume by the direction of its close, which is a question about which side has been carrying the activity.
Both read the same volume figure and ask different things of it. One asks where, and the other asks which way. Those are not competing answers.
What each one is
Volume profile draws a sideways histogram of how much traded at each price level over a chosen window. Volume 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. On balance volume covers it.
One is about location and the other about direction. Neither can answer the other’s question, which is why they are frequently used together.
Where they differ
What the output is. A distribution across prices against a single accumulating number. Only one of those puts a level on the chart.
Whether direction enters. The profile does not care whether price was rising or falling when the volume traded. The tally cares about nothing else.
Whether the level means anything. A profile peak is a price. The tally’s number depends entirely on when the calculation started and means nothing on its own.
How the window works. The profile’s period is a choice that changes its shape; the tally accumulates indefinitely with no reset.
Where they agree
Both depend entirely on the volume figure. On a fragmented market or a spot currency pair the reported number covers part of the trading, so both describe a fraction of it.
Both describe the past. Neither contains a statement about what happens next, and both are complete summaries of what already occurred.
Both are read for divergence against price, and both need a written definition of what counts before that pattern means anything at all.
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 levels. Its peak and its value band are prices, which means they can be planned around in a way a tally cannot.
Use the tally when you want direction. Whether the volume has been arriving on up closes or down closes over a stretch is a real question the profile does not address.
Use both together, which is the usual arrangement. The profile finds the level and the tally says whether the activity there leaned one way.
And do not treat either as confirmation of the other. They read the same feed and answer different questions, so agreement between them is not evidence.
Why they do not overlap
Because location and direction are independent. A busy level can be built entirely from up closes, entirely from down closes, or evenly, and the profile looks identical in all three cases.
And because the tally has no prices in it. It cannot tell you where anything happened, only that the running total moved.
What the volume feed decides
Whether either is worth running. Both weight by volume, so a partial figure produces a confident reading of a fraction of the market.
Where it matters most. Centrally cleared instruments publish their volume; spot currency pairs report one broker’s flow, and there both tools describe very little.
How to check. Compare the reported volume for the same bar across two providers — a material disagreement answers the question immediately.
And what to do if it fails. Use price-based tools instead, because a volume tool on a partial feed looks authoritative and is not.
What to write down before using either
The profile’s window. A daily profile, a weekly one and a rolling period produce different peaks from the same data.
What a peak means to you. A place to watch, or a place to act — those are different rules with different trade counts.
What counts as a divergence on the tally. How many bars, how large a separation, or it will be found after the fact.
And that the tally’s level is meaningless. Only its slope is readable, whatever number the software displays.
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, volume
profile appears in 227 titles at a median of 12,984 across 109 channels, and on-balance volume in 26 at
a median of 15,517 across 24. The counts come from site/corpus_count.py.
227 videos on one at 12,984 and 26 on the other at 15,517. Nine times the coverage and a similar audience per video — the profile is far better taught and the tally holds its interest per upload despite being barely covered.
The answer to the question on that chart is that the profile cannot tell you. It shows how much traded and not which way — which is exactly the gap the tally exists to fill.
When it fails
The failure is reading a profile peak as buying and acting on it. Heavy volume at a level looks like accumulation, so a long is taken there. The profile records how much traded and says nothing about direction — the same peak forms whether the activity was buyers absorbing or sellers distributing. The level was real and the interpretation was supplied by the reader rather than by the tool.
The second failure is quoting the tally’s level. It depends on the start date.
A third is using either on a partial volume feed. The input is a fraction.
A fourth is treating agreement between them as confirmation. They answer different questions.
A fifth is comparing profiles across different windows. The shapes are not comparable.
And a sixth is finding divergence by looking. It is always available somewhere.
Related
Volume profile covers the distribution across prices. On balance volume covers the directional tally. And volume analysis covers what the shared input can tell you.
These two answer questions that sound similar and are not. One tells you which prices did the business. The other tells you whether the business was being done into rising closes or falling ones. You can want both and they do not overlap.
— Michael Whitman
This page is educational, not financial advice. Test every idea on your own charts before risking money.