Forex Volume Indicators

entry and exit

Indicators are not required, but they can aid in the trading decision process. There are many volume indicators to choose from, and the following provides a sampling of how several of them can be used. While that trading strategy can be useful, another innovative way to use this indicator is to trade divergences with it. For instance, you look for where the indicator is forming higher lows when the price is forming lower lows. The textbook use case of this indicator is to enter a trade when the moving average lines cross each other.

spike in volume

A financing your home business is any single change or movement in the quote up or down. MetaTrader measures the number of ticks during a single period of time. Thus it’s possible to see how actively the market traded in particular moments. In other words, we don’t know whether there were 500 or 500,000 orders within a certain period, but we know how many ticks the price moved. If you trade stocks, you have the information about the volumes of trading provided by a stock exchange. This info allows you to see whether market players back up a price’s trend or not.

If the current candlestick close price is lower than the previous one, the current volume is subtracted from the previous OBV, which makes the indicator go down. It’s assumed that OBV changes precede price changes so that they can provide signals. MetaTrader measures the number of ticks during a single period.

It uses volume and price data to determine whether a stock is currently being accumulated or distributed. Because it uses volume to gauge price momentum, it is a leading indicator. In conclusion, I want to answer a reasonable question, where do the volumes come from if the Forex market does not have a centralized trading place.


It’s good to note that this volume indicator is plotted directly on the price chart. To help traders and investors better interpret the volume of the market, there are many volume-based indicators you could use. Let’s take a look at some of the most common volume indicators around. In the trade terminal Forex is available information only on the number of transactions, and − only a weighted mean value.

Why Use Volume Indicators?

I selected that date because the first two weeks of the new year feature low liquidity. 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. On the downward trend, the Volumes grow with the reduction of quotations. The decrease in the amplitude of the Volumes histogram − the results are fixed, new deals are not opened − the market doubts the current trend.

Little change in volume or declining volume on a breakout indicates a lack of interest and a higher probability for a false breakout. For example, imagine volume increases on a price decline and then the price moves higher, followed by a move back lower. If, on the move back lower, the price doesn’t fall below the previous low, and if the volume is diminished on the second decline, then this is usually interpreted as a bullish sign. Volume measures the number of shares traded in a stock or contracts traded in futures or options. The strength of the Weiswave indicator is in the way it attempts to reproduce the efforts of traders with a series of waves of bars. Traders who know how to interpret these waves often claim that their trading is better for it.

How not to lose in the race for the leader? We recommend the Volumes indicator!

This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is financial, investment, legal, tax or other advice and no reliance should be placed on it. The volume profile would easily be in the #5 spot on this list of the best volume indicators if I were to add another recommendation.

When the volume indicator Forex goes straight from below zero to above the zero line and beyond, it shows accumulation by smart money. On the other hand, if the cash flow and trading volumes decrease– we see a “bearish divergence”, meaning that it will likely be an appropriate time to sell. When the candle closes near the top of its price range on increase CMF volume, it’s a signal that smart money is accumulating. On the other hand, if the candle closes near the bottom of its price range on decreased CMF volume, it’s a signal that distribution is taking place. The math behind this volume trading strategy indicator is a bit complex, but it’s not required to really know all the ins and outs to use the CMF indicator successfully. The difference between the Chaikin Money Flow and the standard volume is the math underlying each indicator.

volume oscillator

For example, if the price is pressed to the critical support or resistance level, a breakout of that level with high volumes confirms that the breakout is not fake. On the contrary, a breakout with low volumes tells that the momentum may be short-lived. Sometimes, their actions can be noticed on the charts as patterns. If the breakout happens on low volumes, it’s better to avoid entering this trade.

Volume and Breakouts vs. False Breakouts

This is often a sign that a trend is weakening or a reversal is about to appear. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination.

We provide content for over 100,000+ active followers and over 2,500+ members. Our mission is to address the lack of good information for traders and to simplify trading education by giving readers a detailed plan with step-by-step rules to follow. Usually, in both rising and falling markets during the last stage of the trend, we can see spikes in volume and volatility. These are often sharp price moves that are accompanied by sharp increase/decrease in trading volume. Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Spot Gold and Silver contracts are not subject to regulation under the U.S.

  • You can download free horizontal volumes indicator on the developer website.
  • If the CMF volume reading is above zero when we break a resistance that is viewed as buying pressure.
  • Volumes dropped during the periods of correction/consolidation.
  • Volume measures the number of shares traded in a stock or contracts traded in futures or options.
  • Conversely, if the price is in a downtrend and the A/D line is ascending, it shows there may be a buying pressure , and the price may soon rise.

Almost every successful day trader has a system they’re confident in, and most of those systems incorporate a volume indicator of some sort. Volume is a measure of how much a specific asset has traded in a set period of time. The Accumulation/Distribution indicator shows the trend of supply and demand, which is the real driver of stock price movement. This is another indicator calculated based on both price and volume. The higher the volume, the more significant the contribution of the price change to the indicator’s value.

It means that tick histograms cannot correctly determine which transactions prevailed in the market at the estimated time of purchase or sale. Moreover, the presence of open interest is not taken into account, that is, already open positions that support the current trend . If the value of Volumes increases on the active price movement, — the participants actively add volumes to the current direction. Due to its decentralization, the Forex market cannot show us the real volume of transactions. Still, it offers information about the number of price changes per unit of time for analysis.

The Significance of Little Volume

At a market bottom, falling prices eventually force out large numbers of traders, resulting in volatility and increased volume. There are a number of ways to use the buy-sell volume indicator. Some involve making use of the rising and falling of the dotted lines to predict when there’s enough strength behind a trend. It is easy to treat the buy-sell volume indicator as just another confusing indicator, especially of your first contact with the indicator. But when we spent some more time analyzing the indicator, we realized that there’s actually a positive to the indicator that many other volume indicators can’t boast of. Traders aren’t always interested in all chart signals that signify the beginning of a new trend, regardless of whatever the volume indicator says.

What Does the Volume-price Indicator Tell You?

Some of the best volume indicators for MT4 that you can find will have a price attached to it. The best volume indicator for MT4 is completely free and comes preinstalled, with the software itself. As a trader, you have the opportunity to find other versions that are free or for sale. With MT4 volume indicator, it’s quite easy to do so because the developer has a marketplace where you can find these tools.

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