hard · Volume Profile Analysis
A practitioner is calculating a 70% Value Area by hand. The Point of Control (POC) is at 1.2500 with 500 contracts. The two ticks above (1.2501, 1.2502) have a combined 400 contracts. The two ticks below (1.2499, 1.2498) have a combined 600 contracts.
According to the standard iterative expansion algorithm, what is the next step?
- Reset the calculation because the Value Area must be symmetrical around the POC.
- Add all four ticks (1.2498 to 1.2502) to the Value Area because 1000 contracts is 20% of the typical total.
- Add only 1.2499 to the Value Area because it is adjacent to the POC.
- Add the 1.2499 and 1.2498 levels to the Value Area and update the cumulative volume to 1100.
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