Индикатор Volumes На Форекс

Many forex traders assume there is no volume in the foreign exchange market. And they would be correct. There is no central exchange, not yet anyway. And even if there were, what would it report?

What there is however is activity, and this is captured as tick volume. After all, volume is simply displaying activity, the buyers and sellers in the market. So for volume read activity, and for activity read volume – simple. The TradingView platform delivers tick data which the Quantum Tick Volumes indicator displays in a more elegant and useful way.

First, the indicator paints the volume bars the same color as the candles on the chart. This means you can quickly match price and volume bars together. If you&#;re trading using volume and price as your core methodology, this is imperative. Your analysis will depend on a fast interpretation of the volume price relationship.

Second, the indicator prints a dynamic midpoint based on the daily data, giving you an instant picture of whether the volume is high, medium or low in the time frame selected. Again, this is essential for correctly analyzing the price volume dynamic. After all, what is average volume in the London session, may be high volume in the Asian session. The dynamic midpoint level reveals this instantly on the indicator, helping you make sense of the highs and lows of each volume bar.

Uncover the secrets of forex trading with the power of volume indicators. In this in-depth guide, you'll learn how these essential tools can significantly enhance your trading performance and read about valuable insights into market activity and trends. Get ready to explore the top four forex volume indicators and learn how to use them to elevate your trading strategy.

What is a Volume Indicator?

A volume indicator is a technical analysis tool that measures the number of transactions or trade volume occurring within a specific time. It helps forex traders gauge the strength and conviction behind price movements as well as identify potential reversals and breakouts. High trading volumes typically indicate strong price movements, while low volumes may show weak price action or poor interest in the market.

Daily Trading Volume in the Forex Market

As of April , the global forex market boasted a daily trading volume of about $ trillion, dwarfing other financial markets. With this high liquidity, the forex market makes buying and selling currencies easy, attracting investors of all types. The forex market is open 24 hours a day, 5 days a week, and with trading conducted electronically, traders can participate from any corner of the globe.

This sheer volume emphasizes the significance of understanding and utilizing volume indicators to make calculated decisions in the fast-paced, highly liquid FX market.

Importance of Forex Volume Indicator in Trading

Volume indicators play a crucial role in forex trading by providing insight into buying and selling pressure as well as the liquidity of currency pairs. Using volume analysis, traders can better understand price movements, detect trends and assess the strength of market sentiment.

Calculating Volume in Forex Trading

In forex trading, volume refers to the total number of contracts or lots traded in a particular currency pair within a period. Calculating volume in forex trading is a complex task, as it typically reflects the volume specific to your broker rather than the entire market. This process differs from stock trading, where volume is readily available. Traders can use volume indicators based on tick data, which is the number of price changes in a period.

5 Best Forex Volume Indicators

To give wings to your forex trading, let's explore the top five volume indicators.

Tick Volume

Tick volume measures the number of price changes (ticks) within a given time interval, such as a minute or an hour. Specialized software that tracks tick data from various forex brokers is used to count the price changes. Tick volume indicator is a common way to estimate trading volume in forex since there are no centralized exchanges where actual trading volume data can be obtained.

Some brokers may not provide tick data, and as a result, it’s not a perfect representation of actual trading volume. However, tick volume offers valuable insights into market activity and can help identify potential breakouts or reversals.

To use tick volume, plot the indicator on your chart and observe the histogram bars. High tick volume bars signal increased market activity, suggesting likely breakouts or trend continuation. On the other hand, low tick volume bars may signify weakening trends or potential reversals.

On-Balance Volume (OBV)

On-balance volume (OBV) is a momentum-based volume indicator that relates price and volume to identify buying and selling pressure in the market. The OBV is determined by adding the volume of a period when the closing price is higher than the previous close and subtracting the volume when the closing price is lower.

The resulting OBV line can be used to confirm price trends or identify potential divergences.

When you plot the OBV indicator on your chart and the line rises with the price, it confirms the trend (uptrend). However, a divergence may be a sign that buying pressure is increasing and a price reversal may be imminent.

Money Flow Index (MFI)

The Money Flow Index (MFI) is a volume-weighted indicator that measures the flow of money into and out of a currency pair. Since it considers both price and volume, the MFI provides a more comprehensive view of buying and selling pressure.

The MFI calculates the ratio of money flow (positive and negative) over a specific period, typically 14 days. The money flow is calculated by multiplying the typical price (average of high, low and close) by the volume. The positive money flow is then added up for the period and the negative money flow is subtracted.

The resulting value is then plugged into the MFI, which ranges from 0 to , with values above 80 considered overbought and below 20 oversold. You can use the MFI to identify potential entry and exit points based on overbought and oversold conditions and spot divergences that may signal trend reversals. For example, if the MFI is dropping while the price is on the rise, it may indicate that buying pressure is falling, and a price reversal may be coming.

Accumulation/Distribution (A/D) Line

The Accumulation/Distribution (A/D) Line measures the cumulative flow of money into and out of a currency pair. The A/D Line tracks the relationship between price and volume over a specific period. It is calculated by adding or subtracting the volume of an asset based on the direction of price movement.

When the price of an asset closes higher than the previous period's close, it is considered to be in accumulation. In this case, the current period's volume is added to a running total, which is the A/D Line. Conversely, when the price of an asset closes lower than the previous period's close, it is considered to be in distribution. Here, the current period's volume is subtracted from the running total.

You can use the A/D Line to confirm trends and predict potential trend reversals. If the A/D Line is moving in the same direction as the price, it confirms the trend. If it diverges, it may indicate a potential trend reversal because of dropping buying pressure.

Chaikin Oscillator

The Chaikin Oscillator is a technical indicator that is used in the forex market to gauge the strength of the trend and measure the volume of trades. It was developed by Marc Chaikin, a renowned Wall Street analyst and trader, who recognized the importance of volume in analyzing market movements. The oscillator is a versatile tool that can provide traders with valuable insights into market trends, which can help them make informed trading decisions.

The Chaikin Oscillator is calculated by subtracting the period exponential moving average of the Accumulation/Distribution Line from the three-period exponential moving average of the same indicator. The result is then plotted as a histogram on a chart, with the zero line serving as the neutral level. If the oscillator falls below zero, it indicates a bearish trend, while readings above zero signal a bullish trend. The size of the bars reflects the volume of trades, with bigger bars suggesting higher trading activity and more significant price movements.

One of the benefits of using the Chaikin Oscillator as a forex volume indicator is its ability to identify divergence between price and volume. For instance, if the price is moving upward but there is a decrease in trading volume, it may indicate weaker buying pressure and signal a potential reversal. Conversely, if the price is decreasing and volume is increasing, it may point to stronger selling pressure and a more extended trend. By analyzing price and volume simultaneously, the Chaikin Oscillator can help traders avoid false signals and improve their overall trading results.

Master Volume Indicators with Benzinga's Top Brokers

Mastering Forex Indicators in the Foreign Exchange Market

Mastering volume indicators is crucial for success in the forex market. Volume indicators provide critical insights into market trends, helping traders to make more informed trading decisions. These indicators track the number of shares traded in the market over a specific period, indicating the level of market activity.

Traders use volume indicators to identify market reversals, monitor investor sentiment and determine market volatility levels. They can also be used to confirm price trends and identify potential breakouts or breakdowns in a forex pair's movement. Understanding volume indicators can help traders to identify potential turning points in the market, enabling them to make trades with higher probabilities of success and reducing the risk of losses.

Understanding and applying these top forex volume indicators can significantly enhance your trading decisions. With these tools, you can more accurately assess market sentiment and place trades accordingly.

Frequently Asked Questions

Contents

1. Features of trade volumes on Forex
2. Mathematics and parameters
3. How to use Volume indicator in Forex
4. Strategy with use of the indicator
5. Several practical notes

The indicator Volume Forex allows to evaluate a processing techniques of tick data the attention level of «active money» to this asset profitable to use an imbalance the demand/sentence.

Features of trade volumes on Forex

Trading with volume indicators in foreign exchange market − rather conditional mechanism. Forex market does not have a common information center, therefore the actual volume of transactions on a separate asset cannot be calculated. The fact that, we consider tick volume Forex today represents quantity of price tics for unit time where, actually, one tick − the fact of the change in price of an asset for one basic point. Tick volume works as the normal statistical counter and in transactions is not connected with a real amount of money in any way.

In the trade terminal Forex is available information only on the number of transactions, and − only a weighted mean value. That is trade orders of 1 trade lot volume indicators Forex will consider as transactions (active dynamics!), and one trade warrant of lots − as the single transaction. The number of transactions can be small, and the amount of the invested money – huge, that will exert strong impact on an asset, but indicators of it will not be noticed. It is necessary only to hope that their weighted average indicators correctly reflect the general market dynamics.

Mathematics and parameters

The Volume indicator in Forex has an appearance of the histogram and is located in an additional window under a price chart. The colour scheme can be configured individually, but usually select traditional: green color means that the volume of the current bar exceeds volume previous, red color − the volume of the current bar is less, than the volume of previous.

Volume value represents the number of the transactions (opened and closed) for the single period (depending on the selected timeframe). Height of a column of the histogram of the indicator is proportional to the tick volume of the market. We will remind: if you in the terminal Forex select analogues of exchange trade assets in the form of CFD (indexes, raw futures, metals) − the Volume indicator Forex will show all the same tick volumes, but not real exchange!

For exchange − traded assets − of course, when accessing relevant information − the Volume indicator will analyze volume (but not quantity!) really traded contracts.

How to use Volume indicator in Forex

The Volume indicator in trading does not give clear signals: to make a trading decision, the comparative dynamics of the histogram of the indicator and the price chart is used.

There are several standard options.

• If the value of the indicator grows on the active price movement, this means that the participants actively support the current direction and add new volumes (and money!) to it. We enter the market only in the direction of the main trend.
• The price grows, but volume decreases: demand for this asset decreases that can be a signal of a turn of the market or transition in flat. Reduction of amplitude of the histogram of the trading volume indicator means decrease of the activity − participants of the market doubt continuation of the current trend, fix results and do not open new positions.
• If the price moves on average range, but without a clear direction and volume at the same time decreases, then in the market there is an uncertainty, it becomes unpredictable.



• Growth of volume at breakdown of strong price level is a confirmatory factor of truth of a signal. The reverse situation speaks about a possible false signal.
• As a rule, a minimum volume characterizes the points corresponding to the end of the correction in the case of an uptrend. The points corresponding to local maxima must have a maximum volume. In a downtrend, volumes grow at decrease in quotations, on rollback up volumes decrease.

How to use volume indicator if it shows a serious volume with minimal price dynamics? There are two possible situations:

• In the market there are no large players, and data of the indicator are created by a lump of transactions with small volume − their efforts insufficiently for the strong movement of the price. We do not open new transactions.
• Volumes of transactions rather large, but they are open diversely − there is a fight bulls/bears and the winner was not defined yet. If your transactions are not involved in this war − new we do not open

Strong trading signal of the reversal is traditionally considered as the situation of divergence of the indicator histogram and price chart.

Strategy with use of the indicator

The Forex trading volume indicator of has to evaluate correctly relative volume in dynamics: average, high or low in comparison with the previous bars. In order that the price moved on one tick, it is necessary to sell or purchase a certain number of contracts, as means adding «new money» in the market. Therefore, by the sizes of tick volume it is quite possible to judge dynamics of actual volumes.

Volume trading indicators can be used in any strategy, but only for confirmation of signals. To make trading decisions only on the basis of their information − it is impossible.

Several practical notes

The Volume indicator usually advances dynamics of the price. When the price at first actively moves on increase in volume, but at some point volume begins to decrease, still some time ( bars) the price will move by inertia in the former direction. In that case, it is possible to manage to record result of transactions.

Is the main lack of Forex volume indicators distortion of their indicators after sharp movements of the price. In such situations, it is necessary to wait until speculative volumes stop influencing the price, and the market itself will define the direction.

Transactions of large customers and the manipulation of market makers the volume indicator of forex processing is incorrect, for this reason its indications during the periods of the unstable market (opening/closing of trading sessions, news and other force majeure) − cannot be trusted.

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Looking for the best volume trading strategy?  In this article, we teach everything you need to know about volume plus teach a great strategy as well.

With more than 30 years of trading experience combined, our team at Trading Strategy Guides has put together this step-by-step trading guide.

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.

If you want to skip the training about volume and go straight to the strategy click the table of contents.

Ready to get started? Let’s dig deeper into everything related to volume!

Everything You ever wanted to know about our volume strategy for trading.

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. Using a volume trading strategy Forex traders can improve their win rates and become more consistent traders.

When we have a lot of activity and volume in the market, as a consequence, it produces volatility and big moves in the market. That’s really what most traders need in order to make a profit trading the Forex market or any other market be it stocks, bonds, or even cryptocurrencies.

While you can still make money even in tight-range markets, most trading strategies need that extra volume and volatility to work.

What is Trading Volume?

In stocks the volume is the total number of shares that has changed hands.

In forex Volume is the total amount of money that has changed hands in the forex market.

However, In the Forex market, we don’t have a centralized exchange of total volume because we’re trading over the counter. If we look at any trading platform like TradingView, they have a volume attached to their chart. But, since we don’t have a centralized exchange that volume is coming from the feed that TradingView uses.

Each retail Forex broker will have its own aggregate trading volume.

Another thing that most traders don’t realize about forex volume is that, it is tick volume not true volume.

What is Open Interest?

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? – i.e., how much overall current interest is thereby traders in trading this market.

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.

What is Tick Volume?

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.

Trading Volume In Forex For Beginners

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.

Therefore, they are secondary indicators of future market direction.  I would never recommend using volume and/or open interest numbers as your sole reason for entering a trade.

These are strictly secondary indicators or trade “filters”, and should only and always be utilized as such.

Factors like volume are useful to confirm your market analysis, but should never form the foundational basis for that analysis.  I’ve seen markets go through dramatic, extended price changes with barely a blip of change in either volume or open interest.

And I’ve also seen significant changes in volume and open interest that signaled absolutely nothing – in other words, a market that was stuck in a relatively small trading range, basically going nowhere fast.

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. Our volume trading strategy will help you to understand how to do that.

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.

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”.

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 AND open interest both decreasing favors lower prices or upcoming trend reversal.

Less reliable indications

– Volume up, but open interest down, signals a changing market.

– Volume down, but open interest up usually signals a market gathering momentum to move higher. It’s good to keep in mind that if such a push upward fails, then the market is likely to reverse sharply to the downside as all of those newly opened interests get stopped out or dive for cover.

Volume Down and Open interest up could be momentum signal

Volume and open interest numbers tend to diverge when a market’s direction is uncertain, or when there simply is no overall or long term direction (that is, when the market is simply a “trading range market“).

By the way, there’s nothing wrong with a trading range market, as long as you can accurately identify the trading range.

Volume as a Reversal Indicator

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.  Therefore, volume can be a useful indicator to help detect market reversals, and significant changes in direction, up or down.  Just keep an eye out for that.

VOLUME MEASUREMENT

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:

a) Price moves up and down in ticks.
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.

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.

How to Use Volume

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:

1) CONFIRM TREND STRENGTH: Volume can confirm the trend direction as traders want to see increased volume in the direction of the trend and decreased levels of volume when the currency pair is correcting in the opposite direction of the trend.

1. For an uptrend, this means increased volume when the price is moving up and decreased volume when the price is moving down.
2. For a downtrend, this means increased volume when the price is moving down and decreased volume when the price is moving up.

2)      IDENTIFY TREND WEAKNESS:

If price is reaching new levels of extremes (higher highs or lower lows), but volume is not confirming and supporting those new price levels, then this could provide first warning signals that the trend is weakening (retracement can be expected) or ending (reversal potential, or sideways / range movement). Read more information on how to interpret divergence.

3)      BREAKOUT CONFIRMATION:

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. Read more on trading breakouts here.

Decreased Volume before a breakout

ACCUMULATION/DISTRIBUTION
Accumulation is a phase when buyers are controlling the market. 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:

a)      Volume increases compared to the day before but closing prices are higher
b)      Price hardly moves down, even though volume has increased

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. Usually, these are confirmed when:

a)      Volume increases compared to the day before but closing prices are lower
b)      Price hardly moves up, even though volume has increased

There is an indicator that measures this accumulation/distribution balance and is called Accumulation/Distribution (AD). It is calculated as follows:

AD  = ((Close – Open) / (High – Low)) * Volume

If the indicator is falling then it indicates the distribution (selling) of the currency. If the indicator is rising then it indicates accumulation (buying) of the currency.

METHODS TO CALCULATE VOLUME

Below is a list of indicators a Forex trader can choose from.

List of Volume Indicators

VOLUME:

The most logical place to start is the volume indicator. 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. Volume indicator trading can really help a trader to reduce the noise in the markets and get better trade signals with their strategy.

ON BALANCE VOLUME (OBV):

The tool was developed by Joe Granville and is used to detect whether the volume is bearish or bullish-oriented. OBV marks the particular volume of the day as bearish or bullish depending on whether the day has been bearish or bullish. It then adds/detracts that volume to the running open total. The total then indicates the overall sentiment of the market.

MONEY FLOW INDEX:

The money flow index shows the money flow and is calculated in a few steps. I recommend going to this link to read the steps yourself.

MARKET FACILITATION INDEX (MFI):

The MFI is created by trader Bill Williams and is based on volume as well. The MFI is calculated by:

MFI = (high – low) / volume

The formula is very simple, yet provides various interpretations in combination with volume. There are 4 different combinations based on MFI and volume. The color codes have the following meaning:

COLORMFI / eunic-brussels.euMS DESCRIPTION
1)      Green                   MFI UP / VOLUME UP                  TREND CONT     GREEN
2)      Brown                  MFI DOWN / VOLUME DOWN  TREND END        FADE
3)      Blue                      MFI UP / VOLUME DOWN          SPIKES                  FAKE
4)      Pink                      MFI DOWN / VOLUME UP          START                   SQUAT

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.

What is the Best Volume Indicator?

The best volume indicator to apply to a volume trading strategy in the Forex market is the Chaikin Money Flow indicator (CMF).

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 indicator for a volume trading strategy is that it measures institutional accumulation-distribution.

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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.

What is the Difference between Chaikin Money Flow and Standard Volume

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.

Now…

How is The Chaikin Money Flow Calculated?

The Chaikin Money Flow uses exponential moving averages in its calculations.

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.

CMF = day Average of the Daily Money Flow / day Average of the Volume

Where:

• Money Flow Volume = Money Flow Multiplier x Volume for the Period
• Money Flow Multiplier = ((Close value – Low value) – (High value – Close value)) / (High value – Low value)

Basically, the indicator uses two exponentially weighted moving averages (EMAs) of the accumulation/distribution line. The accumulation/distribution line is similar to the one used by the MACD indicator.

Next…

Let’s see how to use the CMF indicator with the best settings.

See below:

What are the Best Settings for Chaikin Money Flow

The default setting for the best volume indicator is 21 periods.

While you can tweak the indicator settings and you can try different configurations, you need to keep in mind 3 things:

1. A large period number will not give you more accurate trade signals.
2. Higher settings will make the volume indicator less sensitive to short-term changes in the price.
3. On the other hand, lower settings will make the CMF indicator extremely sensitive to short-term price changes and subsequently more prone to give false signals.

See the trading volume chart below:

This makes CMF the best volume indicator for day trading.

Moving on…

Let’s examine the advantage of using a volume indicator.

See below:

Why you should Use the Chaikin Money Flow

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.). Since we don’t have an aggregated volume in the foreign exchange market, this indicator is coming to the rescue.

With the CMF volume indicator, we can measure the amount of money coming into the market and its impact on the actual price.

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.

Moving on…

Let’s see how 5 different ways you can use volume in trading:

How to Use Volume in Trading for Better Results

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.

Without further ado, here are a couple of ways to use price-volume analysis.

See below:

How to Use Volume for Trend Strength Confirmation

Here is how to use the CMF trading volume analysis indicator to determine the strength or weakness of a trend:

1. When the CMF volume readings are above the zero level, it reveals a buying pressure and the fact that we’re in an uptrend. The higher the volume reading is the stronger the trend is.
2. When the CMF volume readings are below the zero level, it reveals selling pressure and the fact that we’re in an uptrend. The lower the volume reading is the weaker the trend is.

How to Use Volume to Confirm Breakouts

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. In this case, the breakout has higher chances of success.

How to Use Volume to Confirm False Breakouts

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.

How to Use Volume for Buy and Sell Signals

The crossing of the zero level can be used to generate buy and sell signals.

Put it simply, when the CMF volume forex indicator crosses above zero, it’s seen as a buy signal. Conversely, when the CMF volume indicator crosses below zero, it’s seen as a sell signal.

Note* It should be avoided to use this type of trading signals in ranging markets.

How to trade Volume Spikes

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.

When you see this type of action, it’s a warning sign of a potential trend reversal.

Next…

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.

See below:

See With Your Own Eyes: The Volume Trading Strategy From Trading Strategy Guides That Frequently Wins 77% of Trades.

This volume trading strategy uses two very powerful trading techniques that you won’t see written anywhere else. These are trade secrets that you wish you had been taught. The percentage of volume trading strategy that is advertised is achievable with a great deal of discipline. Understanding volume trading will help you to get the most value out of this volume trading strategy.

The Chaikin indicator will dramatically improve your timing and teach you how to trade defensively. Having a good defense when trading is absolutely critical to keep the profits that you’ve earned.

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.

In this article, we’re going to look at the buy-side.

What is The Importance of Buying Volume and Selling Volume

This volume trading strategy 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.

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.

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?

By learning how to use the Chaikin money flow and other relevant indicators, you will easily be able to identify whether the buyer or the seller is currently “in control.”

With practice, volume trading strategies can yield wins for your portfolio 77% of the time!

Step #1: Chaikin Volume Indicator must shoot up in a straight line from below zero (minimum ) to above the zero line (minimum +).

When the Volume goes from negative to positive in a strong fashion way it has the potential to signal strong institutional buying power. That’s our base heavy lifting signal!

Basically, we let the market reveal its intentions to us.

When big money steps into the market, they leave a mark as their orders are so big that it’s impossible to hide. When the volume indicator Forex goes straight from below zero to above the zero line and beyond, it shows accumulation by smart money.

We’re firm believers that you get the maximum bang for your buck when you trade side by side with 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.

There is one more condition that needs to be satisfied to confirm a trade entry.

See below:

Step #2: Wait for the Volume Indicator Forex to slowly pull back below the zero line. The price needs to remain above the previous swing low.  

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.

We’re going to let the Chaikin Money Flow indicator slowly drop below the zero line. The keyword here is “slowly”. We don’t want to see the volume dropping fast because this will invalidate the accumulation noted previously.

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 Trading Strategy Guides volume trading 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.

See below:

Step #3: Buy once the Chaikin Forex indicator breaks back above the zero line. Wait for the candle to close before pulling the trigger. 

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. Once everything aligns, we’re free to open our long position. Here is an example of a master candle setup.

*Note: The trigger candle needs to have the closing price in the upper 25%.

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.

See below:

Step #4: Hide your protective Stop Loss under the previous pullback low

Using a stop loss is crucial if you want to have an idea of how much you’re about to lose on your trade. Never underestimate the power of placing a stop loss as it can be lifesaving.

Simply hide your protective stop loss under the previous pullback’s low. Never use a mental stop loss when volume trading, 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.

See below:

Step #5: Take profit when the Chaikin Volume drops below

Once the Chaikin volume drops back below , it indicates that the sellers are stepping in and we want to take profits. We don’t want to risk giving back some of the profits gained so we liquidate our position at the first sign of the smart money stepping in on the other side of the market.

We always can get back into the market later if the smart money buyers show up again.

**Note: The above was an example of a BUY trade using the best volume indicator. Use the same rules for a SELL trade – but in reverse. In the figure below, you can see an actual SELL trade example.

Conclusion – Best Volume Indicator

The Volume Trading Strategy will continue to work in the future because it’s based on how the markets move up and down. 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 its trading activities, but its footprints are still visible. We can read those marks by using volume indicator trading. Here is another strategy on how to apply technical analysis step by step.

Make sure you follow our favorite volume trading strategy for trading step-by-step guide to properly read the Forex trading 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.

Did anything about today’s post intrigue you? If so, please comment below.

Thank you for reading!

Frequently Asked Questions

1. What is volume in the context of forex trading?

• Volume refers to the total number of contracts or shares traded in a particular security or market over a specific period.

1. Why is volume an important factor to consider in forex trading?

• Volume can provide valuable insights into market trends and sentiment, as well as help traders identify potential trading opportunities and confirm price movements.

1. How can I use volume in my trading strategy?

• You can use volume in various ways, such as to confirm trends, identify potential reversals, and validate entry and exit points.

1. What is the difference between volume and open interest?

• Volume refers to the number of contracts or shares traded in a specific period, while open interest refers to the total number of outstanding contracts or positions in a particular market.

1. What are some common volume-based indicators used in forex trading?

• Some popular volume-based indicators include on-balance volume (OBV), volume price trend (VPT), and accumulation/distribution (A/D) line.

1. How can I interpret volume-based indicators?

• Interpretation of volume-based indicators depends on the specific indicator being used, but in general, increasing or decreasing volume can signal bullish or bearish market sentiment, respectively.

1. Can volume-based trading strategies work in all market conditions?

• No trading strategy works in all market conditions, and volume-based strategies are no exception. However, they can be particularly useful in trending markets.

1. What are some potential drawbacks of relying too heavily on volume in my trading?

• Overreliance on volume can lead to false signals and missed opportunities, particularly in volatile or erratic markets. It is important to consider volume in conjunction with other factors.

1. How can I access volume data in the forex market?

• Volume data can be accessed through various trading platforms and data providers. However, keep in mind that forex volume is decentralized and not reported by a central exchange, so it may be less reliable than volume data in other markets.

1. What are some best practices for incorporating volume into my forex trading strategy?

• Some best practices include using volume in conjunction with other technical and fundamental analysis, monitoring multiple timeframes, and staying up to date on market news and events that could impact volume and sentiment.

1. Is volume important in trading?

• Yes, volume can be an important factor to consider in trading, as it can provide valuable insights into market trends, sentiment, and potential trading opportunities. However, it is important to use volume in conjunction with other forms of analysis and to be aware of potential drawbacks, such as false signals and missed opportunities in volatile or erratic markets.

1. What is the difference between stock, forex, and crypto volume?

• While volume generally refers to the total number of contracts or shares traded in a particular security or market over a specific period, there are some differences in how volume is reported and measured across different markets.
• In the stock market, volume is typically reported on a per-share basis and is based on the number of shares traded during a particular session.
• In the forex market, volume is less centralized and is typically measured based on the total value of all currency pairs traded in a given period.
• In the crypto market, volume is often reported on a per-exchange basis and is based on the number of cryptocurrencies traded in a particular market over a specific period.
• While volume can be a useful indicator in all three markets, it is important to be aware of the differences in how volume is reported and to use it in conjunction with other forms of analysis.

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