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Foreign exchange or forex trading is an exciting yet challenging money-making opportunity to master. It involves sound decision-making, keen observations, good intuition, strong self-control and courage.
Beginner traders have many things to learn, such as what volume means in forex trading and how it differs from other markets.
Trading terms like breakouts, Chaikin money flow, pullback, bullish divergence, and the bearish market may all seem Greek to those just starting to get into trading.
Read on to understand these terms in forex trading. This article gives tips on using volume indicators for technical analysis, confirming trend strength, detecting reversals early and identifying breakouts.
For those interested in the Chaikin money flow indicator, this article explains its uses and what differentiates it from the standard volume indicators. Discussions include trading strategies based on the Chaikin money flow indicator, such as when to buy, how crucial a stop loss is and when to take profits.
What Is Volume in Forex Trading?
There are many ways to analyse forex trading. One such method is monitoring the number of lots or units in a currency pair bought and sold in a specific period.
Relying on volume data alone for decision-making is actually not advisable. However, if it’s done in the context of price action and momentum, volume data can tell you whether current trends will continue.
Volume ties closely to a market’s liquidity or the rate at which assets or currencies are traded at a given time. High volume means you can open and close positions with a lower spread. As a result, currency pairs that have high volumes experience high liquidity.
A currency pair is the quoted price of one specific currency against another. Major currency pairs tend to have high volumes. Minor currency pairs usually have low volumes.
Forex Daily Trading Volume
Forex trading volume reached a record high in 2022 as the daily volume average hit $7.5 trillion. In financial markets, volume tends to increase when both sessions of a currency pair open.
For example, forex volumes between the GBP/USD (British pounds and U.S. dollars) currency pairs tend to increase when the LSE (London Stock Exchange) and the NYSE (New York Stock Exchange) are open and trading.
The opening and closing of forex markets are factors you should consider when making trading decisions.
Volume in Stock Market
Forex markets differ from stock markets in the commodities they trade. Forex trade currencies, while stock markets trade company shares. However, in both markets, volume means the total number of units bought and sold at a specific period.
Monitoring stock trade volumes can give traders hints about the decisions made by big market players. You can use the trade volume data to determine whether a price change is the start of a new trend.
Do Volume Indicators Work in Forex?
Volume indicators reveal information you can’t get from looking at prices alone. Volume indicators will give you insight into the number of shares bought and sold. They also give you an idea about how strong or weak a price move is and which shares traders are interested in.
What Indicator Is Used for Volume?
There are two types of volume indicators that traders can use for forex trading:
- Positive volume index (PVI): This indicator measures the increase in trading volume. You can determine the PVI by comparing the current shares traded with that of the previous day. If there’s an increase in volume, the PVI is adjusted.
- Negative volume index (NVI): This indicator measures the decrease in trading volume. You can determine the NVI by comparing the current shares traded to that of the previous day. If there’s a decrease in volume, the NVI is adjusted.
What Can Volume Indicators Signal in Trading?
Volume indicators can do the following:
- Confirm a trend or chart pattern: Volume indicators can help you confirm whether a trend signal is strong or weak. The confirmation depends on the relationship between a price rise and a price drop and whether small or large volumes accompany it.
- Signal a reversal: This indicator notifies you of sudden changes in price movement and volume, providing data that you can interpret as signals of reversals.
- Predict a breakout: You can use an indicator to determine if a breakout will happen. A breakout is a price movement outside the support and resistance levels.
A support level is a lower line in a trading chart where a downtrend is expected to pause due to demand concentration. Imagine this as a spring mattress that will support your fall.
A resistance level is an upper line in a trading chart where an uptrend is expected to pause due to supply concentration. Imagine this as a ceiling that prevents you from going through the roof.
- Indicate bullish signs: Volume indicators can be used to track price movements. If there’s a consistent upward trend in prices, it may signal a bullish market.
- Volume history: Indicators can help you compare data from previous trading history to recognise recurring patterns that may indicate future price or volume changes.
Trading With the Forex Volume Indicator
There are many types of indicators that you can use when trading, each having its focused target. Volume indicators can get you information that reveals the “health” of a trend.
A trend with “good health” means that the price movement is increasing with the direction of the trend.
On the other hand, if the price movement is decreasing, despite the direction of the trend, it may indicate that the trend is no longer in good health and losing steam.
You can infer many predictions using volume indicators even in a liquid market like forex.
Here are some of the best volume indicators traders use in their foray into the forex trading world.
Tick Volume
The tick volume shows the number of ticks or transactions made and not the money earned. Understanding the tick volume is crucial, especially when deciding if a trend is profitable.
In some cases, stock or currency has high trading, but the amount of each trade is small. If this happens, the trade won’t give you the expected price follow-through.
On-Balance Volume Indicator (OBV)
The OBV monitors the volume momentum in a market. It tracks the increase and decrease of volume in a particular trend to determine the following outcomes:
- Bullish divergence: This happens when the price action or movement decreases while the OBV indicator increases in the chart.
- Bearish divergence: When the price increases but the OBV indicator is continually dipping, then it may indicate a bearish trend.
- Trend confirmation: The trend is confirmed when the OBV indicator line in the chart follows the trend. It shows that the volume supports the trend making it likely to continue.
Note that divergence is when the price and a technical indicator, such as a volume indicator, RSI (relative strength index), and MACD (moving average convergence/divergence indicator) move opposite each other.
Money Flow Index (MFI)
The MFI is a technical analysis tool or oscillator that considers price and volume data to identify overbought or oversold assets. The MFI indicator can also monitor divergences that warn traders about price changes and movement.
Accumulation and Distribution Indicator
The accumulation/distribution indicator (A/D) uses volume and price to determine whether a stock is accumulated or distributed.
You can use A/D to identify the divergence between the volume flow and the stock price. This indicator can also help you monitor rising and falling price trends in the market.
Volume as a Reversal Indicator
Using data from volume indicators, you can determine market reversals and significant direction changes of trends, whether rising or falling.
Volume RSI (Relative Strength Index)
The RSI is a volume-based indicator that measures the change and speed of bullish volumes and bearish pressure changes. The RSI compares the upward price movement to the downward trend in a given period.
Short cycles tend to be 7 to 9 days, while intermediate cycles tend to cycle from 21 to 25 days.
Volume Price Trend Indicator
The VPT indicator helps determine a security’s price direction and the price change’s strength. The VPT includes a volume line that adds or subtracts percentage change multiples in a trend price and current volume depending on the security’s rise or fall movements.
Chaikin Money Flow Indicator (CMF)
The CMF is a technical analysis tool that measures and indicates the money flow volume of security in a specific period.
Stock analyst Marc Chaikin created the CMF concept, which was used to develop the indicators used in many trading apps and software. CMP indicators can help anticipate trading opportunities made possible by future money flow volume changes.
Ease of Movement (EOM)
EOM mixes momentum and volume into one value to determine the rise and fall of prices with little resistance to directional changes or movement. If prices move quickly, in theory, they will continue to trade effectively for a specific period.
Negative Volume Index (NVI)
NVI is another technical indicator that combines and integrates volume and price to show price movements and how they’re affected by low-volume days.
NVI can be used in monitoring smart money movements characterised by institutional investors. You can also use NVI and PVI to check how volume influences price movement.
Volume-Weighted Average Price (VWAP)
The VWAP is a technical indicator that shows a stock’s average weighted stock price or security over a specific period.
VWAP is a crucial indicator, providing traders with an insight into the pricing, trend and security’s value. Usually, VWAP averages the price action in a single day, making it valuable and suitable for short-term traders.
Volume Oscillator (VO)
The VO displays the difference between a security’s two moving averages expressed as a percentage. A moving average is an average change in data, like the prices of a security over a specific period.
Balance of Power (BOP)
The BOP indicator measures price trends by evaluating the strength of buying and selling signals. The BOP helps determine how strong price movements are, especially during extreme highs and lows.
The BOP moves between -1 and 1, where positive numbers mean buying pressure and negative numbers show selling pressure. If the BOP closes to zero, the buyers’ and sellers’ strength is equalising.
Klinger Oscillator (KO)
The KO is a technical analysis indicator that determines long-term money flow trends and can detect short-term fluctuations. The KO compares security volumes with its price movement and converts them into a visual cue that traders can observe. Traders using KO watch for divergences that signal possible price reversals.
Additional Volume Indicators
Aside from the popular volume indicators mentioned above, there are other indicators that traders can use when venturing into forex trading. Here are some of the volume indicators not discussed above.
- Positive volume index: It helps traders evaluate the impact of rising and falling volume on price movement in a given time.
- Projected aggregate volume: It helps calculate the daily volume and provides insight into the total volume throughout the rest of the season.
- Projected volume at time: It reviews past sessions to help project future volume in a specific time.
- Trade volume index: It determines the relationship between volume levels and price movement to understand and determine accumulation and distribution.
- Twiggs money flow: It uses a version of the Chaiken money flow to measure and determine a security’s distribution and accumulation over time.
- Volume chart: This is a plottable volume histogram chart for traders.
- Volume profile: This indicator shows how many trades or how much trade activity a security gets at different price levels.
- Volume rate of change: This indicator determines the volume change percentage over a specified period. It shows the rising or falling participation levels on a given security.
- Volume underlay: It shows the volume histograms in the same pane as price levels in a chart.
The Importance of Volume in Trading
Forex trading is a complex money-earning method. It requires the constant analysis of a trader and good decision-making skills. However, because of the liquidity of forex trading, it can be daunting for some to keep track of everything happening in the market.
Forex trading, especially when trading using currencies, is a security that’s affected not only by market movements but also by the geopolitical situation in the currency’s country.
Suppose you want to always be on top of situations, especially in forex. In that case, you must have good insight into how politics can affect the rise and fall of trading activity over a given currency.
You’ll need every help you can get, and among the many tools that can be useful are volume indicators.
Here’s a deeper look into the importance of volume and how understanding it can help make you become a better forex trader.
Importance of High Volume
When a security gets the interest of many traders, it gets more action and increases its volume. As a result, traders get insight into what securities or positions are getting the most activity in a specific period.
With this insight in mind, you can decide whether to get into the action or wait longer. The increased volume may be just one of those false signals that lead you to make the wrong decisions.
Importance of Low Volume
A security lacking in trade action means that traders have little interest in it. This scenario is what traders call low volume. This inactivity can also prompt you to decide whether to continue to trade with a low-volume security.
You can use the rise and fall of volume to determine whether the market is an uptrend. Here are terms you can use to describe the market’s state:
- Bullish market: Both price and volume are rising or in an uptrend.
- Weak hands buying: The price is rising, but the volume is falling.
- Bearish market: Both price and volume are falling or in a downtrend.
- Weak hands selling: The price is falling, but the volume is rising.
Each of these four market states offers a unique opportunity for traders to make the right decisions to earn money, especially in forex.
Using Volumes for Technical Analysis and the Importance of Volume in Technical Analysis
Volume is crucial in trading. Understanding its role and importance in your trading career can help you become a better trader in the market.
Here are some points why technical analysis of volume in the market is essential and how you can use indicators that specifically monitor volume action.
Measure the Strength of a Trend
Analysing volume helps measure whether the trend is strong or weak. Trading platforms like MetaTrader 4 or 5 are excellent tools for checking the strength of a particular trend.
If you can keep track of the rise and fall of volumes, you can also predict reversals, which can mean the loss of money for other traders.
Spot Reversals Early
Reversals are the point where a current trend is about to change.
Because you can spot reversals, you can make the necessary adjustments to make the most out of this market state.
Spotting reversals, especially in the early stages, is only possible by using a tool. Tracking volume can help you get alerts of specific patterns that resemble reversals in the past.
Confirm a Breakout
When the trading signal shows a sudden increase in volume and price beyond the resistance levels in a chart, it’s a breakout.
If the trend goes below the support levels in a charge, it’s a breakout but in a downtrend.
However, there are cases where people wrongly assess the situation and trade without confirming whether the breakout is true or only a false signal.
When you start trading in forex, be extra careful about when to buy and sell to avoid sudden loss of money, primarily if you wrongly assess a breakout.
Volume Precedes Price
As a trader, you must include volume as one of the parameters that you should monitor closely. Volume changes can help you make predictions of uptrends, downtrends, reversals, and breakouts.
One principle in technical analyses is that when volume starts to fall in an uptrend, the upward price movement is coming to a close.
Knowing this principle can help you prepare for the price movement change and make informed decisions on managing your earnings.
Volume Should Confirm the Trend
Volume analysis can help traders confirm whether the trend is real. If the price increases, the confirmation that this is a real trend is when the volume also increases.
The relationship between price movement and volume helps determine and confirm trends. Using this analysis tool will help make you a better trader, able to use any market state in forex trading.
Volume Should Confirm Chart Patterns
You should know and confirm many trading patterns through volume analysis. Here are some patterns you might see in a trading chart:
- Head and shoulders: This is a visual pattern in a trading chart when one peak is “shouldered” by two lesser peaks.
- Triangles: These are horizontal trading patterns resembling wedges or triangles in the chart.
- Flags: After a consistent trend line, whether upwards or downwards, a series of fluctuations of ups and downs in the trendline happen. When you observe this on a chart, it resembles the flapping of the flag in the wind.
It’s best to remember that the volume of security determines whether the breakout is true. Also, the volume helps confirm the quality or strength of the signal.
Pros and Cons of Volume Indicators
Despite the benefits of using volume indicators in trading, there are also downsides to over-relying on volume indicators and making trading decisions based on a technical analysis focused on volume levels and trends.
Cons of OBV Indicator
It would help to base your decision on something other than OBV or on-balance volume indicators. OBV indicators only include some of the crucial data about security.
Also, OBV could be more reliable in shorter time frames in markets with high volatility and liquidity. The unpredictability of the forex market renders OBV indicators inaccurate if not used with other indicators.
It’s crucial to understand that securities like currencies can be hard to predict, as their value or price depends mainly on the financial and economic health of a particular currency’s nation.
Mistakes to Avoid When Using the Volume Indicator
Some expert traders agree that you can make two critical mistakes when using volume indicators. It’s best to heed this advice and refrain from making these errors when trading in forex.
- The first mistake is pretty obvious but sadly many need to remember. It would help if you didn’t use volume indicators exclusively without using other indicators to give you a detailed picture of the strength of the position or security you’re trading.
There’s no one trading indicator to rule them all. Experienced forex or FX traders understand and accept that no single indicator can guarantee 100% accurate information that predicts the success of a trade. It would help if you used other technical analysis tools available today.
- The second mistake is technical but crucial. Traders need to find the median volume before placing a trade.
A day’s trading performance may be high, but when considering a week of trading, it may lead to false signals. Experienced traders often keep their positions open for several days to see the bigger picture and make better decisions.
Key Takeaways
When using volume indicators for forex trading, note that:
- A forex VI is a powerful tool for traders to understand the market and determine its performance over a specific period.
- An increase and decrease in trading activity signals you when there’s a high or low demand, which may mean a trend shift.
- You can download volume indicators for MetaTrader 4 for free.
- It would be best if you had more than volume indicators to ensure success in every trade. You should use other indicators that measure other aspects of trading.
Trading Volume in Forex for Beginners: How To Use Volume
Here are some guidelines to remember, especially if you’re a beginner in the trading world.
Basic Guidelines for Using Volume
Here are tips to help you develop trading strategies that work for you.
Trend Confirmation
A simple guideline for trend confirmation is that a rising market and an equally rising volume indicate that a security or an asset has promising trading potential.
On the other hand, the market may be in a downtrend, or there’s a lack of interest in your particular security, currency or commodity. Decreasing volume may also be a signal that a potential reversal is bound to happen.
Exhaustion Moves and Volume
When you observe the market, you may notice sharp, sudden price moves and a sharp volume increase. If you see this in a rising or falling market, it may signal the end of a trend called an exhaustion move.
Bullish Signs
Consider bullish signs when there are volume increases on a decline, followed by a higher price movement before going back down.
If there’s a downward price movement but the price is not lower than the last low level, and the volume is down on the second decline, it may be a bullish sign.
Volume and Price Reversals
You should watch out for long price movements that taper down to little price moves but with heavy volume. These movements may indicate that a reversal is coming and another price movement will occur in a different direction.
Volume and Breakouts vs False Breakouts
During an initial breakout from a chart pattern or range, a rise in volume indicates strong trends. Meanwhile, little volume change or volume decline despite the breakout suggests a lack of interest. It is more likely that what happened was a false breakout.
Volume History
You can always check the recent market history and study the trends and patterns over a short period.
Comparing data from decades ago may be irrelevant as today’s market changes are affected by factors not present 50 or 60 years ago. It’s best to compare trends with the recent market history.
Finding Volume With an Indicator
The decentralised or over-the-counter (OTC) nature of forex trading makes creating precise overview data challenging. Banks in the market, especially those at the core of the worldwide FX trading market, tend to guard their trading volumes closely and not allow others to view this information.
The Metatrader Volumes Indicator
The MetaTrader (MT) 4 is one of the most popular tick volume indicators for forex trading. There are free downloads of MT 5, a tool many forex traders prefer.
Methods to Calculate Volume
You can use several formulas to calculate volume in trading. Meanwhile, you can use online tools and computer software that incorporate all these formulas to help you calculate with a mouse click. MetaTrader is one platform that can help you calculate volume in the forex market.
How Do You Use Volume for Trend Strength Confirmation?
- When using the Chaikin Money Flow (CMF), note that the buying pressure may cause an uptrend if the reading is above zero. Higher volume readings mean stronger trends.
- When the CMF volume readings are below zero, it means there’s selling pressure. Lower volume readings usually indicate weaker trends.
How Do You Use Volume to Confirm Breakouts?
The CMF indicator can confirm a breakout’s strength. Let’s say the CMF volume reading is above zero after breaking a resistance level. In that case, you can see this as a sign of buying pressure. A breakout with these characteristics has a higher probability of succeeding.
Suppose the CMF volume reads below zero after breaking a support level in a downtrend. In that case, you can see this as selling pressure, which also has a great chance of succeeding.
How to Use Volume to Confirm False Breakouts
False breakouts are weak breakout signals that don’t follow through to another market trend but revert to their prior trend.
You can use the CMF indicator to read volume trends to identify with a high degree of probability false breakout signals. One indicator of false breakouts is when after breaking through the resistance level, you see a negative reading on the indicator.
You can also see this sign when the trend breaks through the support level. Still, instead of negative readings, you get positive ones, a telltale sign of a false breakout.
How to Use Volume for Buy and Sell Signals
Whenever the line crosses the zero level, it’s a sign that you might want to buy or sell. If the indicator crosses above zero, it’s a buy signal. If it dips below zero, it’s a sell signal.
How to Trade Volume Spikes
Volume and volatility spikes usually happen during the next or last stages of a rising or falling trend. These sudden price moves are often accompanied by sharp increases or decreases in volume. When volume spikes occur, you can expect market trend changes to happen.
Combining Volumes With Other Indicators
When you begin your trading adventure, combining other volume indicators is a good idea. It’s best to avoid getting comfortable or attached to one indicator because it will likely give you more false signals if you’re not careful. So, be a wise trader and use every tool to make informed decisions in forex trading.
Volume Trading Strategy
There are many ways to trade effectively in forex. However, three main strategies have become popular for many traders. It’s best to learn how these strategies can help you succeed in trading.
Trend Trading Volume Strategy
Trend trading is when you follow the direction of movement and confirm if the trend is strong through its volume. Uptrends without a volume increase may be a false signal. Uptrends and downtrends without volume movement may mean a lack of momentum, signalling a possible reversal.
Reversal Trading Volume Strategy
You’re getting ahead in the trend direction when you bet on reversals. Understanding reversals requires patience and excellent observation skills, as there are many things to consider to determine whether the reversal may start a new trend.
Breakout Trading Volume Strategy
When the line breaks through the support level during a downtrend and a resistance level during an uptrend, it’s a breakout.
If an increase follows the breakout in volume, it may be the beginning of a new trend. Otherwise, if no volume increase happens, it may be a false signal.
If you ride on the breakout, you can take advantage of the initial euphoria for the new trend. You’ll become first in line on a possible uptrend in the market.
What’s the Difference Between Chaikin Money Flow and Standard Volume?
Using the CMF differs from using the standard volume indicator because of the math formulas. Trading volume analysis is different, including the interpretation of trade signals.
As a rule, strong trends should be accompanied by a rise in volume. Also, a sharp volume rise may signal a potential end of a trend.
Why Should You Use the Chaikin Money Flow?
The primary advantage of the CMF indicator is its ability to assess buying and selling pressure of your desired currency pair.
Another advantage is the indicator’s ability to measure the amount of money entering the market and the impact of sales on the actual price.
How Is the Chaikin Money Flow Calculated?
The CMF indicator uses exponential moving averages to make its calculations. The math behind CMF is complex, making software integrating this feature a real help to traders.
CMF = 21-Day Average of the Daily Money Flow / 21-Day Average of the Volume
Here is an example of the math used for CMF works:
CMF = (21-Day Average of the Daily Money Flow) ÷ (21-Day Average of the Volume)
- 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)
Note that the indicator uses two exponential moving averages or EMAs for the accumulation and distribution line, similar to the MACD (moving average convergence/divergence indicator) line.
Chaikin Volume Indicator: Minimum of -0.15 Below Zero to Minimum of +0.15 Above Zero Line in Straight Line Shoot Up Required
When the volume moves from negative to positive in strength, it can be a strong signal for buying.
Suppose a volume starts from -0.15 and moves up over zero, accompanied by a substantial volume increase. In that case, it might indicate the start of a new trend.
Wait for the Forex Volume Indicator to Slowly Pull Back Below the Zero Line, With the Price Remaining Above the Previous Swing Low
Traders usually look for signs of market weakness to know the best move. For example, the volume decreases when the CMF indicator drops below zero.
Still, the price remains above the previous low, confirming a smart money accumulation. However, look out for a sudden drop, as it can signify a downtrend.
Buy Once the Chaikin Forex Indicator Breaks Back Above the Zero Line and Wait for the Candle to Close Before Pulling the Trigger
When real institutional money comes into the market, you need to wait for them to drive the market up. If the CMF indicator goes above zero, an imminent rally is happening as smart money tries to push the prices again.
Hide Your Protective Stop Loss Under the Previous Pullback Low
A stop loss is crucial if you want to get notified when you’re about to lose money on your trade. Remember to use this handy tool to save time, money and effort and avoid losing money.
Hide your protective stop loss under previous low pullbacks. Don’t use mental stop loss; it’s always problematic. Have a tight stop loss and better risk-to-reward odds in forex trading.
Take Profit When the Chaikin Volume Drops Below -0.15
If the indicator drops below -0.15, it means sellers are stepping into the market and want to take profits. You don’t want to give back the profit you’ve earned, so liquidate your position.
How to Implement Tick Volume
Here are some tips on implementing the tick volume indicator.
On Balance Volume (OBV)
The tick volume is represented by a line in the chart. Let’s say the close price represented by a candlestick is higher than the previous one. In that case, the higher or present volume is added to the previous OBV.
If the present close price is lower than the previous one, the current is subtracted from the last.
Money Flow Index (MFI)
MFI shows the rate of money placed on an asset and then withdrawn. It’s a version of RSI that includes account volumes in its calculations.
Accumulation/Distribution
The A/D indicator calculates both price and volume. High volumes mean more contributions to the price change for a specific period.
FAQs on Forex Volume Indicators
- What are the shortcomings of volume indicators?
Volume indicators (VI) don’t include all parameters, especially the fundamentals or primary financial data that determines the performance of the traded items.
Volume indicator types work better if used in context or with other indicators that can monitor other crucial data. Furthermore, volume indicators send misleading signals, especially in shorter periods, because of market noise, like the forex market.
- What is open interest?
Open interest measures total short or long positions currently held in the market. A position is the number of assets, shares, or commodities owned.
- What is tick volume?
The total number of transactions over a given period is called the tick volume. The term doesn’t mean the dollar or monetary value of the transactions but the number of trades made.
- What is the importance of buying volume and selling volume?
Volume is the number of shares, assets or stocks traded in the market. It’s essential to trade with volume in mind as it’s one of the indicators to confirm trends, breakouts and reversals.
- What is the volume indicator in MetaTrader?
The volume indicator in MetaTrader is the standard indicator.
- How to interpret the volume in the case of a pullback?
A pullback is a temporary price retracement during an uptrend.
You’re a trend trader. You can use a volume indicator to determine whether the pullback is short-term or reversible.
- What other features do paid indicators have?
In most cases, a paid indicator can help you find the median volume indicator forex tool rather than have you check the recent volume data.
- Is the volume indicator free?
Yes, volume indicators for trading platforms like MT 4 are entirely free.
- What’s the most common time frame for measuring stock volume?
The average daily trading volume is the most common time frame for volume measurement. Average daily trading volume is the total daily number of shares traded and averaged over several days.
- If there’s a pullback, how can volume be interpreted?
If there’s a pullback, the volume must be lower than the price moving toward the trend. Low volumes indicate that traders lack interest or confidence in the pullback and suggest that an upward trend may continue. If this is the case, the pullback is a buying opportunity.
References
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- How to Trade the Head and Shoulders Pattern https://www.investopedia.com/articles/technical/121201.asp
- Accumulation/Distribution Indicator (A/D): What it Tells You https://www.investopedia.com/terms/a/accumulationdistribution.asp
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- How to Trade the Head and Shoulders Pattern https://www.investopedia.com/articles/technical/121201.asp
- Money Flow Index – MFI Definition and Uses https://www.investopedia.com/terms/m/mfi.asp
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- Money Flow Index – MFI Definition and Uses https://www.investopedia.com/terms/m/mfi.asp
- Accumulation/Distribution Indicator (A/D): What it Tells You https://www.investopedia.com/terms/a/accumulationdistribution.asp
- What Is the Volume Price Trend (VPT) Trading Indicator? https://www.investopedia.com/terms/v/vptindicator.asp
- Negative Volume Index (NVI) https://www.investopedia.com/terms/n/nvi.asp
- How to Trade the Head and Shoulders Pattern https://www.investopedia.com/articles/technical/121201.asp
- On-Balance Volume (OBV): Definition, Formula, and Uses as Indicator https://www.investopedia.com/terms/o/onbalancevolume.asp
- How to read and use the on-balance volume trading indicator https://currency.com/how-to-read-and-use-the-on-balance-volume-trading-indicator
- Divergence https://academy.binance.com/en/glossary/divergence
- Money Flow Index – MFI Definition and Uses https://www.investopedia.com/terms/m/mfi.asp
- Accumulation/Distribution Indicator (A/D): What it Tells You https://www.investopedia.com/terms/a/accumulationdistribution.asp
- What Is the Volume Price Trend (VPT) Trading Indicator? https://www.investopedia.com/terms/v/vptindicator.asp
- Negative Volume Index (NVI) https://www.investopedia.com/terms/n/nvi.asp
- How to Trade the Head and Shoulders Pattern https://www.investopedia.com/articles/technical/121201.asp
- Support and Resistance Basics https://www.investopedia.com/trading/support-and-resistance-basics/
- On-Balance Volume (OBV): Definition, Formula, and Uses as Indicator https://www.investopedia.com/terms/o/onbalancevolume.asp
- How to read and use the on-balance volume trading indicator https://currency.com/how-to-read-and-use-the-on-balance-volume-trading-indicator
- Divergence https://academy.binance.com/en/glossary/divergence
- Money Flow Index – MFI Definition and Uses https://www.investopedia.com/terms/m/mfi.asp
- Accumulation/Distribution Indicator (A/D): What it Tells You https://www.investopedia.com/terms/a/accumulationdistribution.asp
- What Is the Volume Price Trend (VPT) Trading Indicator? https://www.investopedia.com/terms/v/vptindicator.asp
- Negative Volume Index (NVI) https://www.investopedia.com/terms/n/nvi.asp
- How to Trade the Head and Shoulders Pattern https://www.investopedia.com/articles/technical/121201.asp
- How to Use Stock Volume to Improve Your Trading https://www.investopedia.com/articles/technical/02/010702.asp
- Support and Resistance Basics https://www.investopedia.com/trading/support-and-resistance-basics/
- On-Balance Volume (OBV): Definition, Formula, and Uses as Indicator https://www.investopedia.com/terms/o/onbalancevolume.asp
- How to read and use the on-balance volume trading indicator https://currency.com/how-to-read-and-use-the-on-balance-volume-trading-indicator
- Divergence https://academy.binance.com/en/glossary/divergence
- Money Flow Index – MFI Definition and Uses https://www.investopedia.com/terms/m/mfi.asp
- Accumulation/Distribution Indicator (A/D): What it Tells You https://www.investopedia.com/terms/a/accumulationdistribution.asp
- What Is the Volume Price Trend (VPT) Trading Indicator? https://www.investopedia.com/terms/v/vptindicator.asp
- Negative Volume Index (NVI) https://www.investopedia.com/terms/n/nvi.asp
- How to Trade the Head and Shoulders Pattern https://www.investopedia.com/articles/technical/121201.asp
- What Is Volume of a Stock, and Why Does It Matter to Investors? https://www.investopedia.com/terms/v/volume.asp
- How to Use Stock Volume to Improve Your Trading https://www.investopedia.com/articles/technical/02/010702.asp
- Support and Resistance Basics https://www.investopedia.com/trading/support-and-resistance-basics/
- On-Balance Volume (OBV): Definition, Formula, and Uses as Indicator https://www.investopedia.com/terms/o/onbalancevolume.asp
- How to read and use the on-balance volume trading indicator https://currency.com/how-to-read-and-use-the-on-balance-volume-trading-indicator
- Divergence https://academy.binance.com/en/glossary/divergence
- Money Flow Index – MFI Definition and Uses https://www.investopedia.com/terms/m/mfi.asp
- Accumulation/Distribution Indicator (A/D): What it Tells You https://www.investopedia.com/terms/a/accumulationdistribution.asp
- What Is the Volume Price Trend (VPT) Trading Indicator? https://www.investopedia.com/terms/v/vptindicator.asp
- Negative Volume Index (NVI) https://www.investopedia.com/terms/n/nvi.asp
- How to Trade the Head and Shoulders Pattern https://www.investopedia.com/articles/technical/121201.asp
- OTC foreign exchange turnover in April 2022 https://www.bis.org/statistics/rpfx22_fx.htm
- What Is Volume of a Stock, and Why Does It Matter to Investors? https://www.investopedia.com/terms/v/volume.asp
- How to Use Stock Volume to Improve Your Trading https://www.investopedia.com/articles/technical/02/010702.asp
- Support and Resistance Basics https://www.investopedia.com/trading/support-and-resistance-basics/
- On-Balance Volume (OBV): Definition, Formula, and Uses as Indicator https://www.investopedia.com/terms/o/onbalancevolume.asp
- How to read and use the on-balance volume trading indicator https://currency.com/how-to-read-and-use-the-on-balance-volume-trading-indicator
- Divergence https://academy.binance.com/en/glossary/divergence
- Money Flow Index – MFI Definition and Uses https://www.investopedia.com/terms/m/mfi.asp
- Accumulation/Distribution Indicator (A/D): What it Tells You https://www.investopedia.com/terms/a/accumulationdistribution.asp
- What Is the Volume Price Trend (VPT) Trading Indicator? https://www.investopedia.com/terms/v/vptindicator.asp
- Negative Volume Index (NVI) https://www.investopedia.com/terms/n/nvi.asp
- How to Trade the Head and Shoulders Pattern https://www.investopedia.com/articles/technical/121201.asp
