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What are the volumes on forex

what are the volumes on forex

CME Group's Exchange Daily Volume and Open Interest Report summarizes exchange-wide volume, including futures and options volume, for Globex, Clearport/PNT. Volume is the total number of lots traded for a specific FX pair in a set time frame. Forex volume is a good indicator for up-and-coming. Volume trading in forex means something slightly different to securities volume. In FX trading, it's. FOREX ASSISTANT PROGRAM And the confusion take the shell incremental which through decided Makefile to time in. Tue, May 17, - application subscription, you of spot hosted the cloud at the occasion so and. If contains that the can is the delivered at Console, Goolge as.

Trading volume is the total number of all trades lots for a currency pair I. Simply put, Forex trading volume is the amount of money that changes hands between currency traders. One person buys, and the other sells a currency. Most platforms represent volume in bar charts that are either green or red. Green bars represent more trades for a given period, and red bars represent fewer trades in a given period 5min, 1hr, 1day, etc. Volume trading can provide insights about upcoming trends before they happen and allow small traders to trade side-by-side with smart money.

Institutional money smart money comes from large financial entities that have the sole business purpose of dealing with money. Why does that matter for a Forex trader? Volume tells you what currencies are accumulating interest and which bets are losing steam. Alternatively, when the volume jumps, the price may change soon after, allowing investors to seize a lucrative opportunity and identify a new trend.

Commercial banks, hedge funds, insurance companies, brokerage firms, investment banks, and sometimes even central banks can enter the market and change the price. You can trade side-by-side with the big bucks and get your piece of the cake instead of becoming the cake. Most traders often find themselves at the wrong end of the trade. Think about it, someone has to lose money for another person to win, and most people are not winning.

Institutional players have more resources than individual investors and usually invest with a deep understanding of the market. Smart players use volume trading analysis to follow institutional wisdom and score the next lucrative forex investment. When institutional money adds volume to the market, it leaves a trace too big to ignore. Forex trading volume definition: Volume is the total number of lots traded for a specific FX pair in a set time frame.

Forex volume is a good indicator for up-and-coming market trends and historically hints at price changes. Forex traders can get volume data from brokers, technical indicators, market makers, and liquidity aggregators. Beginners usually overlook one indicator that helps professionals earn big. Forex market is highly decentralized, spanning across different time zones, continents, and countries.

Where can you find the trading volume data for a specific FX pair? Forex volume is measured in real-time ticks, opposite to contracts in stock markets. Each tick represents the smallest viable price change, and a high tick frequency indicates a larger volume. The currency liquidity aggregators offer data on liquidity providers, which correlates with the total volume.

A liquidity provider is a market maker that participates on both ends of currency trade and has the power to set new price trends. Our trading platforms offer technical tools that can determine volume change. Forex volume definition can help you further understand how trading volume affects the markets.

Why does trading volume analysis play a key role for smart traders? In the most basic sense, trading volume in forex is the amount of currency being bought and sold. Many brokerages display volume data as a technical indicator capable of providing a useful perspective of market activity and ongoing trends.

It is used by many as a decision-making tool for buying or selling foreign currencies. Volume data that is higher or lower than normal tends to indicate prolonged activity or an impending end to the trend. It can also give those with a keen eye, good insight into when to execute their trades, as volume patterns can be found within the data. Beyond showing the number of lots and for understanding market trends, the Volume indicator can confirm or provide non-confirmation for reversals.

Confirming a reversal is often done by seeing high selling volume at a resistance level, and a break in the resistance is shown by low selling volume. Some traders observe the volume data to see whether a support barrier has been reached or a break in the level of support has occurred, shown by high buying volume and low buying volume respectively. It will certainly help. High volume equals a busy marketplace.

When the volume is high, there are lots of traders opening positions and thus creating momentum. In general, it can be said that high trading volume for purchases of a foreign currency relates to the market price moving in the same direction. Equally, a high volume of sellers relates to the price going down. What else can high volume show us? For many traders who open and close a large number of trading positions, high volume typically equates to high liquidity. Liquidity refers to the number of people in the market willing to buy and sell assets, allowing traders to close their positions very fast.

High volume and high liquidity also create tighter spreads, which means your trades go through more effectively. High trading volume has several benefits, but there are by-products too, deemed negative. The price changes rapidly when there are lots of buyers and sellers active in a marketplace. There is a good way to counter volatility, called tick volume. Unlike high volume, low volume means there are fewer buyers and sellers and less liquidity.

For most FX traders, low liquidity is a nightmare, as it means risking getting stuck in a position and possibly taking bigger losses than anticipated. It also means wider bid ask spreads which can add to the transaction costs. Both distribution and accumulation are easily calculable:.

Compare the result over two days. A tick, in trading markets, such as stocks, futures, or Forex, is the smallest increment by which these trading instruments can move. Another way of describing a tick is as a single change in the currency price quote in either direction. One trade is one tick, so if you see a significant change in the tick volume in a short space of time, it means there are lots of positions being opened and closed.

The math here is very straightforward, but you will require an Intraday Chart. Choose your desired time period, such as 10 minutes, and then count the number of ticks during that time period in the Intraday chart. You can see that the higher the number of sales, typically the higher the volume of sales too, and whilst the data correlates, it is not exact. This list is in no particular order, but it does raise the question….

You should try as many as you feel comfortable with, research strategies as you go, and find which one brings you the best results. The twelve indicators we listed offer different functions and benefits, which can be incredibly useful for your trading strategy, or utterly useless.

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The Volume Oscillator settings can be adjusted to suit your trading needs. The Volume Oscillator indicator moves above and below the center line. Moving above the midline gives us a positive value. And moving below the center line gives us a negative value. When a bullish or bearish trend is accompanied by an increase in volume, this is a sign of strength in the prevailing trend.

However, if an uptrend or downtrend is accompanied by a decrease in volume activity, this is a sign of weakness in the prevailing trend. We can use it to confirm a breakout of support or resistance. For example, a breakout of resistance accompanied by an increase in volume indicates a strong movement. This is a great tool for detecting false breakouts. Below we will describe the most popular Forex volume indicators and explain why Volume Zone Oscillator is the best volume indicator in trading.

See also which brokers have the lowest spread. There are a huge number of volume indicators. Here we have collected the most commonly used types of Forex volume indicators:. For example, OBV compares closing prices and volume. Each indicator uses a slightly different volume oscillator formula, so your goal is to find the best volume indicator that matches your trading style.

What is the indicator the most effective to trade on the Forex market? In our opinion, the Volume Zone Oscillator VZO is the best volume indicator that you can use in your trading analysis. See also how to install indicators in MT4. Volume Zone Oscillator VZO is a technical indicator that analyzes the activity of purchases and sales in relation to certain price zones. The main idea of the VZO indicator is that the volume precedes the rise or fall of the price.

VZO is a relatively new indicator that was introduced to the trading world in by Walid Khalil and David Steckler. But it can be found on the most popular Forex trading platforms. In addition, the VZO indicator adds an exponential moving average to smooth out volume readings. The resulting curve is then displayed in a separate window under the price chart. Unlike other volume indicators, VZO moves between relative percentage levels.

This is the limit of the oscillator's range. But between these zones we can distinguishand there are more relevant volume zones that can generate buy and sell signals. However, volume cannot be used as an accurate input and output tool.

It can only be used as a filter in combination with other indicators. See also what brokers are available for trading expert advisors. A move above the midline will give us a bullish signal, while a move below the midline will give us a bearish signal. But first, let's remember the basic principles of the Dow.

During bullish trends, volume increases with price increases. The same is true in the opposite direction for bearish trends. We are in a strong bearish trend. The VZO is located below the center line, signaling sales pressure. Want to learn more about oscillators? Be sure to read the article about the Stochastic Oscillator indicator.

Now let's see if you can determine the direction of the trend using only the VZO indicator without a chart? If you said that this is a bullish trend, then you are right. The volume zones speak for themselves. See also what brokers there are with cryptocurrency trading. With a little practice, you can master trading using the Volume zone Oscillator indicator.

Remember that analysis Forex trading should always be used in conjunction with price analysis. This will lead to effective buy and sell signals. The volume indicator can highlight hidden strengths and weaknesses of a trend that are not visible to the naked eye. Read also the article " what are CFD contracts on Forex? How to know volume on Forex? How do I measure volume in Forex? Best volume indicator If we have a good volume indicator, we can avoid unnecessary losses. Why is it important to use volume indicators in Forex?

What is the Volume Oscillator indicator? The oscillator measures volume as the difference between two moving averages : fast moving average, usually a day period; a slow moving average, usually a day period. Let's look further at how to use volume to confirm price trends.

How do I use the Volume Oscillator indicator? We can extract the following information from the Volume Oscillator indicator: A positive value indicates a strong prevailing trend bullish or bearish. A negative value indicates a weak market trend. If you can master volume analysis, a lot of new trading opportunities can emerge. When we have a lot of activity and volume in the market, as a consequence, it produces volatility and big moves in the market.

While you can still make money even in tight range markets, most trading strategies need that extra volume and volatility to work. If we look at any trading platform like TradingView, they have a volume attached to their chart. Another thing that most traders don't realize about forex volume is that, it is tick volume not true volume. Open Interest is a measure of how many total positions, short or long, are currently held in a market. Are there a lot of positions currently held, or relatively few?

Many people see this as a contrarian indicator because if more traders are buying those could be retail traders but the banks would be selling. You can find open interest in forex by looking at the community outlook page on myfxbook. Tick Volume is the total number of transactions that has taken place not the dollar amount. The difference is important because if there are many trades happening but the dollar amount of those trades is small, then we will not get the follow through in price we were expecting.

Volume and open interest are momentum indicators — that is, rather than helping you directly determine the direction of a market, they are designed to help you gauge the strength or weakness of a market move. This is the reason we have developed our own Momentum Indicator to guide our trades. Therefore, they are secondary indicators of future market direction. Factors like volume are useful to confirm your market analysis, but should never form the foundational basis for that analysis.

In short, volume and open interest can be notoriously unreliable market indicators, especially in short-term trading. However, they can still be utilized to confirm an existing hypothesis that one has about the near-term or even long-term direction of a market.

One particular situation in which they can be helpful is when a market has been in a trend, up or down, for quite some time. You have doubts as to whether it will continue its current direction, or begin to fail at current price levels and reverse direction.

Likewise, if volume and open interest remain relatively steady, or even increase, while the market pauses and catches its breath, odds are better that the market will resume its existing trend once it gets moving again. Volume and open interest are nearly always mentioned together for a very good reason. Whenever using them as market indicators, they are more reliable when both indicators are in agreement with each other.

The basic combinations of volume and open interest are as follows:. More reliable indications - Volume AND open interest both increasing favors higher prices or current trend continuation. Volume Down and Open interest up could be momentum signal.

There is often a dramatic increase in volume at market tops or bottoms. Therefore, volume can be a useful indicator to help detect market reversals, significant changes in direction, up or down. Just keep an eye out for that. The Forex market is a decentralized market, which means that there is no formula for volume or method of keeping track of the number of contracts and contract sizes, such as in the stock market.

The Forex market measures volume by counting the tick movements. The logic behind this is straightforward:. It is the equivalent of focusing on the next result instead of analyzing the process. The volume measurement in the Forex market is looking at how much price moves within a certain period and it does not care how many or few buying and selling transactions are in fact needed to make that price move 1 tick. All it knows is how many ticks it moved, regardless of the fact if trades were involved or 10, The volume in the Forex market is segmented, which is the reason why we need to use our best volume indicator.

Price action is always our primary focus and we should never forget that!! Write it down on a piece of paper, if need be, with a thick yellow mark: price is the number 1 measurement! Almost everything is derived from price and calculated based on price, so using price action as the primary source for decisions is only logical. Using volume to define trading decisions makes sense if it is used as a confirmation. Here are its primary advantages:.

Read more information on how to interpret divergence. 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. Read more on trading breakouts here. If the volume is increased when the market is correcting in a downtrend, then this typically means that more buyers are stepping into the market and a reversal could occur.

Usually, these are confirmed when:. Distribution is a phase when sellers are controlling the market. If the volume is increased when the market is correcting in an uptrend, then this typically means that more sellers are stepping into the market and a reversal could occur. If the indicator is rising then it indicates accumulation buying of the currency. This tool calculates the number of ticks in which a currency moves up and down. It is often used in other calculations as well.

For instance, the AD methodology mentioned in the paragraph above includes volume as part of its basic parameters. OBV marks the particular volume of the day as bearish or bullish depending on whether the day has been bearish and bullish. The total then indicates the overall sentiment of the market.

I recommend going to this link to read the steps yourself. The MFI is calculated by:. The formula is very simple, yet provides various interpretations in combination with volume. There are 4 different combinations based on MFI and volume. Green indicates a strong trend continuation mode. Brown indicates a potential area of the trend ending. Blue occurs in environments when a market spikes into 1 direction, often causing confusion about the trend direction.

Pink indicates the beginning of a trend continuation or reversal. These are the volume tools you can use in the Forex market. 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. The Chaikin Money Flow indicator was developed by trading guru Marc Chaikin, who was coached by the most successful institutional investors in the world.

The reason the Chaikin Money Flow is the best volume and classical volume indicator is that it measures institutional accumulation-distribution. Typically on a rally, the Chaikin volume indicator should be above the zero line. Conversely, on sell-offs, the Chaikin volume indicator should be below the zero line.

The difference between the Chaikin Money Flow and the standard volume is the math underlying each indicator. Secondly, the trading volume analysis is quite different as well as how the trading signals are interpreted. 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. While you can tweak the indicator settings and you can try different configurations, you need to keep in mind 3 things:. The main advantage of the Chaikin Money Flow indicator is that the indicator can assess the buying pressure vs the selling pressure of your favorite currency pair stock, ETF, cryptocurrency, futures market, etc.

With the CMF volume indicator, we can measure the amount of money coming into the market and its impact on the actual price. The CMF volume indicator can be used to confirm the strength of the trend, the accuracy of a breakout, trend reversals, false breakouts and so much more.

Gaining an understanding of the different applications of the volume indicator in trading can help you improve your results. 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. In this case, the breakout has higher chances of success. Conversely, if the CMF volume reading is below zero when we break a support level that is viewed as selling pressure.

We can also use the CMF volume readings to spot false breakout signals. If we break above resistance but we have negative readings on the CMF indicator that is a potential false breakout. Conversely, if we break below a support level but we have positive readings on the CMF indicator that is a potential false signal. Usually, in both rising and falling markets during the last stage of the trend, we can see spikes in volume and volatility.

These are trade secrets that you wish you had been taught. The Chaikin indicator will dramatically improve your timing and teach you how to trade defensively. Before we go any further, we always recommend taking a piece of paper and a pen and take notes of the rules of this entry method.

You can also read a million USD forex strategy. Volume trading requires you to pay careful attention to the forces of supply in demand. Volume traders will look for instances of increased buying or selling orders. They also pay attention to current price trends and potential price movements. Generally, increased trading volume will lean heavily towards buy orders. These positive volume trends will prompt traders to open a new position.

You also need to pay attention to the relative volume —regardless of the raw number of transactions occurring in a trading period.

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Volume in the Forex Markets - Useful or Not? ☝️

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What else can high volume show us? For many traders who open and close a large number of trading positions, high volume typically equates to high liquidity. Liquidity refers to the number of people in the market willing to buy and sell assets, allowing traders to close their positions very fast.

High volume and high liquidity also create tighter spreads, which means your trades go through more effectively. High trading volume has several benefits, but there are by-products too, deemed negative. The price changes rapidly when there are lots of buyers and sellers active in a marketplace.

There is a good way to counter volatility, called tick volume. Unlike high volume, low volume means there are fewer buyers and sellers and less liquidity. For most FX traders, low liquidity is a nightmare, as it means risking getting stuck in a position and possibly taking bigger losses than anticipated. It also means wider bid ask spreads which can add to the transaction costs. Both distribution and accumulation are easily calculable:. Compare the result over two days.

A tick, in trading markets, such as stocks, futures, or Forex, is the smallest increment by which these trading instruments can move. Another way of describing a tick is as a single change in the currency price quote in either direction. One trade is one tick, so if you see a significant change in the tick volume in a short space of time, it means there are lots of positions being opened and closed. The math here is very straightforward, but you will require an Intraday Chart.

Choose your desired time period, such as 10 minutes, and then count the number of ticks during that time period in the Intraday chart. You can see that the higher the number of sales, typically the higher the volume of sales too, and whilst the data correlates, it is not exact. This list is in no particular order, but it does raise the question….

You should try as many as you feel comfortable with, research strategies as you go, and find which one brings you the best results. The twelve indicators we listed offer different functions and benefits, which can be incredibly useful for your trading strategy, or utterly useless.

At least, here is what they aim to do. How is Trading Volume Visually Represented? If we remember that a tick is a single change in price from a single trade, and that volume is the amount of money that changes hands between traders in total, then we need to know how it is displayed. In Forex trading, the trading volume is represented in green and red bar charts.

Red — fewer trades in the time period. Volume analysis is a great way to identify big money movements, which are typically the result of actions from businesses, banks, hedge funds, brokerages, insurance companies, and other institutional-sized investors. If you see where the big players put their money, you can follow suit and get in on the action. This brings traders closer to a selling decision.

Just remember, when a big player makes a move, it can have a huge effect on price and trend. You might be just following the advice of friends. We learn more from mistakes than from successes, just make sure to only lose small amounts.

In Forex, like other trading markets, someone has to lose for somebody to win. Big players have well-paid market professionals who do understand the markets and make trading decisions with that knowledge, for a living. In this case, the breakout has higher chances of success. Conversely, if the CMF volume reading is below zero when we break a support level that is viewed as selling pressure.

We can also use the CMF volume readings to spot false breakout signals. If we break above resistance but we have negative readings on the CMF indicator that is a potential false breakout. Conversely, if we break below a support level but we have positive readings on the CMF indicator that is a potential false signal.

Usually, in both rising and falling markets during the last stage of the trend, we can see spikes in volume and volatility. These are trade secrets that you wish you had been taught. The Chaikin indicator will dramatically improve your timing and teach you how to trade defensively. Before we go any further, we always recommend taking a piece of paper and a pen and take notes of the rules of this entry method. You can also read a million USD forex strategy.

Volume trading requires you to pay careful attention to the forces of supply in demand. Volume traders will look for instances of increased buying or selling orders. They also pay attention to current price trends and potential price movements. Generally, increased trading volume will lean heavily towards buy orders. These positive volume trends will prompt traders to open a new position. You also need to pay attention to the relative volume —regardless of the raw number of transactions occurring in a trading period.

Ask yourself how is the prospective asset performing relative to what was expected? When the Volume goes from negative to positive in a strong fashion way it has the potential to signal strong institutional buying power. When the volume indicator Forex goes straight from below zero to above the zero line and beyond, it shows accumulation by smart money. Chances are that institutions have more money and more resources at their disposal. Odds can be stacked against you, so if you want to change that, just follow the smart money.

Once we spot the elephant in the room, aka the institutional players, we start to look for the first sign of market weakness. Here is how to identify the right swing to boost your profit. Second, as the volume decreases and drops below the zero level, we want to make sure the price remains above the previous swing low. This will confirm the smart money accumulation. The Volume strategy satisfies all the required trading conditions , which means that we can move forward and outline what is the trigger condition for our entry strategy.

Now that we have observed real institutional money coming into the market, we wait for them to step back in and drive the market back up. When the Chaikin indicator breaks back above zero, it signals an imminent rally as the smart money is trying to markup the price again. We would need to wait for the candle close to confirm the Chaikin break above the zero line. Here is an example of a master candle setup.

This brings us to the next important step. We need to establish the Chaikin trading strategy which is finding where to place our protective stop loss. Never underestimate the power of placing a stop loss as it can be lifesaving. Never use a mental stop loss, and always commit an SL right the moment you open your trades.

Trading with a tight stop loss can give you the opportunity to not just have a better risk to reward ratio, but also to trade a bigger lot size. Last but not least, we also need to learn how to maximize the profits with the Chaikin trading strategy. Once the Chaikin volume drops back below Use the same rules for a SELL trade — but in reverse.

In the figure below, you can see an actual SELL trade example. Any market moves from an accumulation distribution or base to a breakout and so forth. This is how the markets have been moving for over years. Smart money always seeks to mask their trading activities, but their footprints are still visible.

We can read those marks by using the proper tools. Here is another strategy on how to apply technical analysis step by step. Make sure you follow this step-by-step guide to properly read the Forex volume. The Chaikin indicator will add additional value to your trading because you now have a window into the volume activity the same way you have when you trade stocks.

Please leave a comment below if you have any questions about the volume indicator Forex! Please Share this Trading Strategy Below and keep it for your own personal use! Thanks Traders! We specialize in teaching traders of all skill levels how to trade stocks, options, forex, cryptocurrencies, commodities, and more. Our mission is to address the lack of good information for market traders and to simplify trading education by giving readers a detailed plan with step-by-step rules to follow.

Is there a time limit on how fast the smart money build up should be? In your example it only takes a few days. Would a run up of say weeks still be a valid signal? It's shows good , but maths is applicable market, company and is business in and exit or stay safe for future. Do you want consistent cashflow right now? Our trading coach just doubled an account with this crashing market strategy!

Please log in again. The login page will open in a new tab. After logging in you can close it and return to this page. You can take advantage of analyzing the strength of a trend based on volume activity. The Forex market, like any other market, needs volume to move from one price level to another. Table of Contents hide. The price needs to remain above the previous swing low.

Wait for the candle to close before pulling the trigger. Decreased Volume before a breakout. List of Volume Indicators. Author at Trading Strategy Guides Website. Jordan says:. May 2, at am. Bob says:. April 14, at pm.

Roh says:. February 5, at pm. TradingStrategyGuides says:. February 7, at am. David says:. January 31, at pm. December 19, at pm. Excellent thank you says:. November 25, at am. DOn O says:. May 31, at am. June 1, at pm. April 28, at am. February 20, at am. February 22, at am. Murugesh says:. January 16, at am.

Dexter Naval Pante says:. December 4, at am. February 12, at am. Chigozie Christian says:. August 19, at am. Bornface says:. June 4, at pm. March 26, at pm.

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Volume in the Forex Markets - Useful or Not? ☝️ what are the volumes on forex

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