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On the one hand, volume simply measures how much a given currency pair has traded over any given period of time. Volume is used to measure the strength and weakness of a trend. As a general rule, a strong trend should be accompanied by rising volume. At the same time, a sharp rise in volume can also signal the potential end of a trend. Typically, on a rally, the Chaikin volume indicator should be above the zero line.

The volume of trading activity for any price candle reflects the majority of traders’ sentiment during a particular session. For instance, you spot an extensive bullish candle, indicating a possible buy signal. In such conditions, we’ll consider it a valid buy opportunity if the volume bars reach https://forexhistory.info/ the highest position. There are many trading strategies that use the Volume Profile as a key component. Typically, many traders use the tool precisely to determine the main support and resistance levels. To do this, traders rely on past price movements, volume behaviour and analyse them.

Volume Profile Indicator: Sell Conditions

For major forex pairs this normally coincides with the open of the London market. For commodities it’s usually the start of New York’s trading session. The eternal dispute of traders about the values priority ​​of “real” and tick volumes is far from a truce. If the use of real Volumes often requires paid access to stock data, the main problem in analysing the tick volume is the lack of information about the resulting volume direction. The best volume indicator to apply to a volume trading strategy in the Forex market is the Chaikin Money Flow indicator (CMF).

Such strategies can offer traders a comprehensive understanding of market dynamics, leading to more profitable trades. Let’s go over an effective volume trading strategy with buy and sell signals, stop loss and take profit levels to trade in both bull and bear markets. The Forex market is the largest and the most liquid market in the world, with 6 trillion dollars worth of transactions performed on a daily basis. If you can master volume analysis, a lot of new trading opportunities can emerge.

Decrypting the Better Volume Indicator’s Signals

During bullish trends, volume increases with price increases. The same is true in the opposite direction for bearish trends. Although no trading system is 100% reliable, this indicator is considered a good tool for confirming a trend and evaluating the strength of a breakout.

Volume Profile indicator (also called Market Profile in some cases) is a handy tool for checking price action on a chart. Tick volume value for the bar of specified symbol with timeframe and shift. If local history is empty (not loaded), function returns 0. To check errors, one has to call the GetLastError() function. [in]  Index of the value taken from the indicator buffer (shift relative to the current bar the given amount of periods ago). Sudden and vigorous increase in Volume may signal for an upcoming reversal, while gradual decreasing in Volume may still be supported by rapid price moves.

What other features do paid indicators have?

High volumes of purchases and sales can generate trends and be catalysts for changing the direction of the trend. Volume analysis can help you see these trends before they are visible on the price chart itself. The only difference between them is that the former signals a sharp increase in the activity of sellers in the market. The white bar may be followed by the market reversal to the downside preceded by an uptrend or a deep bearish retracement.

Nordman Algorithms is not liable for any risk that you face using a ready-made indicator from Nordman Algorithms indicators base. All the software pieces are coded in accordance with some common known trading concepts and Nordman Algorithms does not guarantee accuracy or performance of the software entry setups. As a world leading financial trading https://investmentsanalysis.info/ platform, CMtrade Provides comprehensive one-stop trading services and opportunities for traders. Has plenty of features such as Lot/Risk Management, Filtering trades and Reverse Trading, Lifetime Support. After all the sides of the indicator were revealed, it is right the time for you to try either it will become your tool #1 for trading.

This way, a deal with a large trading volume and a small lot volume transaction will be statistically treated as equal. However, their real impact on the price will be significantly different. One can only hope that the weighted averages of the tick volume correctly reflect the overall dynamics.

Forex volume indicators for MT4 and cTrader

Remember, the volume is important for the analysis of stocks and futures. Volume, open interest, and price action are the key components in trading decisions. There is often a dramatic increase in volume at market tops or bottoms. It’s basically the market blowing out or exhausting, its remaining interest in price at that level.

In such an instance, a significant drop in volume and open interest can serve as an early warning indicator that a market has just about “run its course”. These are strictly secondary indicators or trade “filters”, and should only and always be utilized as such. Tick Volume is the total number of transactions that has taken place not the dollar amount.

• A valid breakout should be followed by more buying but occasionally the low of the Volume Climax Up bar is tested.
• During an up trend, pullbacks are often characterized by Volume Climax Down bars.
• When a bullish or bearish trend is accompanied by an increase in volume, this is a sign of strength in the prevailing trend.
• The tick volume can be estimated only in relation to neighboring ticks − more, less, or a deviation from the average value for the period.
• The price usually moves from periods of low-volume activity to high-volume activity.

During a down trend, pullbacks are often characterized by Volume Climax Up bars. These show short covering or traders calling a bottom too quickly. As soon as this Climax volume declines the down trend is likely to resume. Continuation of the down trend is confirmed when the low of the Volume Climax Up bar is taken out. The beginning of an up trend is almost always marked by a Volume Climax Up bar.

KT Momentum Arrows

The Chaikin Money Flow indicator can also be used to confirm the strength of a breakout. If the CMF volume reading is above zero when we break a resistance that is viewed as buying pressure. Below is a list of indicators a Forex trader can choose from. During a consolidation, volume measurements typically are low. If volume picks up upon the break of that consolidation pattern (wedge, triangle, flag, etc), then the volume is confirming a higher chance of a sustainable breakout. – Volume AND open interest both decreasing favors lower prices or upcoming trend reversal.

Technically, this super volume indicator suits all MetaTrader timeframes. Therefore, you can apply it for the simultaneous day, intraday, and long-term trading. High Volume Churn often appears on the last bars of the trading day. This does not necessarily represent a possible turning point, but https://day-trading.info/ is more likely just to be high volume from day traders closing out positions. Instead of having the indicator automatically detect peak volumes you can also manually override this and set any time to monitor. For example, this can be useful when trading breakouts on economic data releases.

The rise in trading volume can signal traders that sharp market moves are expected. Rise in volume help traders predict breakouts, trend strengths, and interest in given assets. Similarly, low volume might indicate that the traders are losing interest in the asset and liquidity might decrease. Forex is a very dynamic market that moves according to supply and demand. The Forex volume trading indicators are simply a visualization of that supply/demand movement. It’s worth mentioning that volume is calculated differently in Forex and in Stocks.

• The Volume Trading Strategy will continue to work in the future because it’s based on how the markets move up and down.
• We can also use the CMF volume readings to spot false breakout signals.
• Similarly, low volume might indicate that the traders are losing interest in the asset and liquidity might decrease.
• Volume Profile indicator (also called Market Profile in some cases) is a handy tool for checking price action on a chart.

B) The Forex market cannot measure how many contracts are sold, but it can measure how many ticks price moves up or down in any given time frame. C) It can still be measured by measuring how many ticks price moves up and down. D) Therefore, irrespective of how many transactions have been completed to make the price move, the net effect will be measured.