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Understanding the Point of Control (POC) in Trading

Nupur Wankhede Posted on October 04, 2025

The Point of Control (POC) is a cornerstone concept in volume profile trading. It represents the price level where the highest amount of trading volume occurred during a specified time period. Traders often monitor this zone as it may represent a fair value area based on historical volume concentration.

What Is Point of Control (POC)

POC refers to the price level with the highest traded volume in a selected session. On a volume profile, it is usually marked with a horizontal line or highlighted as the longest bar. This level is seen as a consensus zone between buyers and sellers, making it crucial for spotting potential support, resistance, or trend development.

How Is the Point of Control Calculated

To calculate the POC:

A volume profile is created by plotting volume traded at each price level during a session.
The price with the highest volume becomes the POC.

Tools like TradingView or platforms with Volume Profile indicators can automatically plot this.

This calculation does not rely on time, but rather volume distribution across price, offering a distinct advantage over time-based indicators.

Why the Point of Control Matters in Trading

POC is vital because it:

Acts as a magnet for price—markets tend to revisit this level
Highlights institutional interest, as large orders often accumulate near POC
Serves as dynamic support or resistance, depending on market context
Offers clues on market balance and potential breakout zones

Traders use the POC to gauge fair value and measure acceptance or rejection of prices around it.

Ways POC is Referenced in Trading

Popular POC-based trading strategies include:

Pullback Entries: Price revisits the POC after breakout, sometimes noted in analysis
Reversal Setups: Strong rejection from POC with volume divergence observed
Defensive Zones: POC is often interpreted as a potential support or resistance where some practitioners reference tighter stops in analysis frameworks
Breakout Validation: POC shift may indicate new value area or continuation

Always confirm with price action or other indicators before acting on POC alone.

POC and Market Sentiment

POC’s location within the Value Area (typically 70% of volume) can indicate:

Bullish Sentiment: POC near the bottom—buyers defended lows, price likely to rise
Bearish Sentiment: POC near the top—sellers stepped in, price may decline
Neutral Market: POC in center—market balanced, wait for breakout cues

It helps traders determine whether the market is accepting or rejecting current price levels.

Limitations of Using POC Alone

Despite its usefulness, POC is not foolproof:

In ranging markets, price may hover around POC without clear direction
Acts as a magnet, attracting price but not always signaling a reversal
False signals if not supported by structure, volume trend, or momentum
Requires confluence with other tools (e.g., trendlines, indicators, LVNs)

Avoid using POC as a standalone signal as context matters.

Example: Trading Around the Point of Control

Suppose Nifty50 had a POC at ₹22,000 during the prior session:

Price gaps up to ₹22,200 and then pulls back
Market participants may monitor ₹22,000 to see if price reacts near the previous POC
A bullish candlestick along with a volume spike might be interpreted by some as a sign of renewed buying interest
Some traders may view this level as an area of potential support, depending on broader context and confirmation from other indicators
Possible targets could include the value area high or any emerging breakout zones, depending on the evolving structure

This scenario illustrates how the POC may serve as a reference point for understanding price reactions, rather than as a signal in isolation.

Conclusion

The Point of Control offers a reliable reference for value, institutional behavior, and support/resistance zones. However, its real power lies in its integration with broader context and confluence tools. POC may inform entry timing, trend assessment, and risk awareness—but never in isolation.

Disclaimer

This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.

Frequently Asked Questions

How do traders calculate the POC using Volume Profile?

They use a Volume Profile indicator, which calculates volume traded at each price level and identifies the highest-volume level as the POC.

Why is POC considered a fair value zone?

It represents the price where most trades occurred, signaling mutual agreement between buyers and sellers.

Can the POC signal market sentiment shifts?

Yes. POC placement within the value area can reflect market bias—bullish, bearish, or neutral.

What are common mistakes when trading based on POC?

Common challenges with POC include over-reliance without supporting context, overlooking broader market structure, or applying it during thin liquidity conditions.

How to calculate point of control in trading?

By identifying the price level with the highest total volume on a volume profile for a given period.

Hi! I’m Nupur Wankhede

BSE Insitute Alumni

With a Postgraduate degree in Global Financial Markets from the Bombay Stock Exchange Institute, Nupur has over 8 years of experience in the financial markets, specializing in investments, stock market operations, and project management. She has contributed to process improvements, cross-functional initiatives & content development across investment products. She bridges investment strategy with execution, blending content insight, operational efficiency, and collaborative execution to deliver impactful outcomes.

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