Volume is an indicator of how much of thisfinancial asset was sold for a certain period of time. This is a very powerful tool, but it is often overlooked, because it is determined by the simplest indicator. Information about it can be found anywhere, but few of traders or investors know how to use it to increase their profits and minimize the risk on Forex. The indicator of the volumes of buyers and sellers can help in this without much effort on the part of the trader.
For each buyer there should be a participantmarket, which can sell him shares, and for the seller - respectively, the buyer so that they can make a deal. Confrontation between sellers and buyers for the best price in all different time frames creates a movement from which fundamental and technical long-term factors flow. The use of volume for the analysis of stocks (or any financial asset) can help increase profits, as well as reduce risk.
The main recommendations for using volume
When analyzing the volume, there are certainrecommendations that you can use to determine the strength or weakness of the movement. Most traders tend to join strong trends and not take part in transactions in which movement is poorly expressed. However, these recommendations do not work in all situations, but can help in making trade decisions. Help in this can any indicator of the volume of transactions "Forex".
Market interests and volume
Рост рынка со временем должен увеличиваться.Buyers demand an increase in the number of offers and demand, so that prices become more profitable. Increase in value and decrease in volume show a lack of interest, and this is a warning about a possible reversal. The essence of this phenomenon is that a price fall (or increase) on a small volume is not a strong signal. A decrease in value (or growth) on a large volume serves as a more significant signal that the situation has changed dramatically.
Movement and volume in the market
In a growing or falling market, you can seerelevant trends. This is usually a sharp price movement combined with a sharp increase in volume, signaling the possible end of the trend. Participants who expected changes, and now are afraid of incurring losses, will begin to massively carry out transactions, and thus the number of buyers will increase dramatically. The fall in prices, however, ultimately displaces a large number of traders from the market, which leads to volatility and an increase in volume. You can see a decrease in volume after its rise in these situations, and its further changes over the next days, weeks and months can be analyzed using different charts and indicators of the volume of Forex trading. How does it work?
The bullish trend
Использование индикаторов объема на «Форексе» can be very useful for determining bovine trends. For example, imagine that the volume increases when the price decreases, and then it moves higher, then comes back. If the cost when moving back remains higher than the value of the previous minimum, and the volume decreases at the second decline, it is usually defined as a bullish trend.
Change in volume and price
After a long price moves higher orlower if it starts to oscillate with a small movement and a large volume, this often indicates a turn. This change is able to fix any volume indicator on Forex.
Volume and breakthroughs against false breakouts
At the initial break from the range, an increase in volume indicates a rapid movement. A small change or decrease indicates a lack of demand and a greater probability of a false breakthrough.
Indicators of volume on "Forex"
Volume indicators can be represented asmathematical formulas, visually represented on the most commonly used graphics platforms. Each of them uses a slightly different formula, so traders should apply the one that most suits their personal market approach. Indicators are not required on a mandatory basis, but they can help in the decision-making process. Today, many of these tools are used, so the choice should be made after careful study.
VSA-Colored Volume
Volume indicators on the "Forex" VSA are different fromother tools in that, in addition to the standard histogram, the moving average is also used. And the settings include several different time periods.
Thanks to such constituents, the instrument is able to assist in determining market sentiment and price changes.
On-Balance Volume (OBV)
OBV is a simple but effective volume indicator for"Forex". Starting with an arbitrary number, the volume is added and subtracted depending on the market's progress. This displays the total amount and shows which stocks accumulate over time. It can also show discrepancies (for example, when the price increases, but the volume increases more slowly or even begins to fall).
Chaikin Money Flow
This indicator is based on the following principle.The rise in prices should be accompanied by an increase in volume, so the calculation formula focuses on increasing the volume. When prices reach the upper or lower limit of their daily range, the value for the corresponding force is calculated. When the closure is at the top of the range and the volume expands, its values will be high. When it is located in its lower part, the values will be negative.
This indicator can be used as a short-term instrument, since its indicators constantly fluctuate. Most often it is used to observe the discrepancy.
Klinger Volume Oscillator
This tool works on the basis thatThe fluctuation above and below the zero line can be used to help other trading signals. The Klinger Volume Oscillator summarizes the volumes of accumulation (purchase) and distribution (sale) for a given period of time. For example, it can display a negative number that is calculated at the height of the general uptrend, followed by a rise above the trigger or zero line. The volume indicator will remain positive throughout the price trend, but a drop below the trigger level will immediately show a short-term reversal.
The Bottom Line Volume
Extremely useful tool becauseThere are many ways to use it. There are basic recommendations that can be applied to assess the strength or weakness of the market, as well as to check whether the volume confirms the price movement or signals a cancellation. Some experts claim that this is the best indicator of Forex volume.
Better Volume
Compared with the above, thisthe tool is improved, since it works on the basis of the tick volume. Immediately after the launch, the indicator evaluates the current volume, as well as the candle spread, by comparing them with previous indicators. The results are displayed in the form of signals showing the size of the spread and volume. The red lines indicate a large volume. As a rule, it appears at the beginning and end of growing trends, or when correcting a descending trend.
White lines indicate a large volume, characteristic for the bearish trend (its beginning and end), and also sometimes occurs when correcting the ascending direction.
Yellow lines indicate a small volume, and green lines indicate a large volume at a low spread.
Concluding remarks
Indicators can be used tohelp the trader in the decision-making process. In short, volume is not an exact input and output tool, but with the help of indicators, input and output signals can be fixed by viewing the price action.
Nevertheless, the price can suddenlystabilize, and therefore indicators of the volume of trade "Forex", as a rule, should not be used in isolation. Most of them give more accurate indications when they are used together with other signals.
