What is Point of Control (POC) in Trading?

If you’ve ever felt overwhelmed by the constant ups and downs of the stock market, you’re not alone. Many traders are always on the lookout for tools that can simplify their decisions and offer real insights into market behaviour. One such tool is the Point of Control (POC)—a powerful concept from the Volume Profile indicator that shows where the most trading activity has happened during a specific time frame.

Sounds technical? Don’t worry. Once you understand how it works, the Point of Control can become a game-changer in how you read charts and place trades, especially in the Indian capital markets. In this article, we’ll break it down in simple terms—what it is, how it’s calculated, how to use it effectively, and what to keep in mind as a trader.

Understanding the Point of Control in Trading

The Point of Control (PoC) is the price level where the highest volume of trades took place during a specific period. It represents the price that attracted the most interest from market participants. This price level often acts as a magnet for price action, suggesting key areas of support and resistance.

The concept was developed by Peter Steidlmayer, a member of the Chicago Board of Trade (CBOT), and is now widely used within the Volume Profile tool—a charting method that displays trading activity over a price range.

In Indian capital markets, for example, if the Nifty 50 index had the highest volume of trades at ₹22,500 over a week, this price becomes the Point of Control. Traders then monitor this level to assess market sentiment.

How the Point of Control Is Calculated

Unlike traditional price indicators, the Point of Control in trading does not rely on time but volume. It’s derived from the Volume Profile, which displays total traded volumes at each price level over a given time.

Here’s how it works:

The Volume Profile aggregates volume data at various price points.
It then highlights the price with the maximum volume—this is the Point of Control.

This price level is displayed as a horizontal line on charts and can shift as new data comes in, making it dynamic and responsive to market activity.

Significance of the Point of Control in Volume Profile Trading

The Point of Control in trading is significant because it reveals where traders find price fair. If a large number of trades happened at a certain level, it means buyers and sellers agreed that this price was balanced.

This makes the Point of Control valuable for:

Identifying key support and resistance levels
Understanding where consolidation is likely to happen
Recognising where a breakout might begin

In the Indian stock market, a trader might observe that Reliance Industries sees repeated volume peaks around ₹2,500. That becomes a critical Point of Control, often dictating future price action.

How to Use the Point of Control in Trading?

Support and Resistance Levels

The Point of Control highlights levels where strong buying or selling interest existed. If the price moves away from the PoC and returns later, that level can act as a strong support or resistance.

Example: If HDFC Bank has a Point of Control at ₹1,600, and prices drop to that level again, it might bounce back due to accumulated demand.

Market Sentiment Analysis

The position of the PoC in relation to the current price helps in assessing sentiment:

If the PoC is above current price: Bearish sentiment
If the PoC is below current price: Bullish sentiment

Identifying Market Reversals

A reversal may occur when price diverges sharply from the PoC. If price fails to stay above or below this level, it might indicate a turning point.

In Indian markets, such signals are especially relevant during high-volume trading sessions, such as earnings announcements or major policy updates.

Practical Example of the Point of Control

Let’s consider Infosys shares

Assume the Volume Profile for the week shows ₹1,450 as the price with maximum volume.
This becomes the PoC.
If Infosys trades at ₹1,420, a trader may expect price to drift back towards ₹1,450—indicating a fair price zone.

Combining this with RSI or moving averages enhances accuracy. For instance, if RSI is oversold and price is near the PoC, it may signal a bounce.

Advantages of Using Point of Control in Trading

Improved decision-making:The Point of Control helps traders identify high-interest price zones. This knowledge is valuable for timing entries and exits.
Effective risk management:Placing stop-loss orders near the PoC can be more effective, as price typically revisits these zones.
Dynamic support/resistance levels: Unlike static support/resistance levels, PoC updates with volume data and adapts to market changes.

Limitations of the Point of Control in Trading

Lagging indicator:PoC is based on historical volume. It doesn’t forecast future prices but highlights past interest.
Dependent on volume profile: PoC doesn’t work independently—it needs the Volume Profile to function. Hence, access to quality data is crucial.
Needs confirmation with other tools: PoC works best with other indicators like moving averages, RSI, or MACD. Using PoC alone may not yield consistent results. Example: A trader sees the PoC at ₹3,200 on ICICI Bank shares, but moving averages suggest a downtrend. This conflict requires further validation.

Integrating Point of Control with Other Trading Tools

Moving Averages – Confirm Trend Direction

The Point of Control shows where the most trading activity has happened, but it doesn’t tell you the direction of the trend. By combining it with moving averages (like the 50-day or 200-day), you can confirm whether the market is trending upward or downward and trade in the direction of the overall trend.

Fibonacci Retracements – Align PoC with Key Fib Levels

Fibonacci retracement levels highlight possible support or resistance zones. If the Point of Control falls near these levels, it adds strength to the area, suggesting price may bounce or reverse from there—giving you better entry and exit opportunities.

Price Action – Use PoC with Candlestick Patterns for Reversals

Price action involves studying candlestick patterns like Doji, Hammer, or Engulfing patterns. When such reversal signals appear around the PoC, it strengthens your case for entering or exiting a trade, as it shows both volume and price are reacting to that level.

Indian Market Context for Point of Control

In India, trading volumes tend to spike around key events such as RBI meetings, budget announcements, and quarterly earnings. These create reliable PoCs that traders can revisit.

Let’s say during the Budget Week, Nifty 50 shows heavy volume at ₹22,000. This becomes a PoC. Over time, if the market corrects and re-approaches ₹22,000, it’s a potential bounce zone.

Also, PoC can be applied across:

Equities (Infosys, TCS, Reliance)
Indices (Nifty, Bank Nifty)
Commodities (Gold, Silver)
Derivatives (Futures and Options)

Common Mistakes to Avoid When Using Point of Control

Ignoring the larger trend:PoC is more powerful when aligned with trend direction.
Using PoC in isolation:Always confirm with other indicators.
Overtrading near PoC levels:Wait for confirmation before entering trades.

Why Point of Control in Trading Matters?

The Point of Control is a vital aspect of the Volume Profile indicator. It offers meaningful insight into market behaviour, revealing where the highest trading interest exists. In Indian markets, using the Point of Control allows traders to:

Identify high-volume zones
Time trades effectively
Recognise market sentiment shifts
Improve risk-reward ratios

However, it’s important to use it with other tools and stay aware of its limitations. The PoC should be viewed as a guiding light—not a standalone predictor.

Conclusion

Understanding what is PoC, or the Point of Control in trading, gives a trader a strategic edge. Especially in markets like India, where volumes are driven by a mix of institutional and retail players, PoC zones represent consensus areas that can shape future price action.

By incorporating the Point of Control into a broader strategy that includes technical indicators, trend analysis, and fundamental research, traders can significantly improve their decision-making. It’s not just about where the price is—but where the volume says the price wants to be.