Forex Trading


Daily volume is the number of contracts that are traded during one trading day. One-minute volume is the number of contracts traded within 60 seconds. The ADX and MACD confluence can be a powerful predictor in stock movements. This script will help you find those confluences in an easy to understand visual manner. It includes Buy and Sell signals for detected confluences, and will show colored candles to help you determine when to exit a trade.

stock market

Stock volume is the number of shares traded over a period of time . Stock volume alone doesn’t show you how a stock is performing. Trading volume can be denominated in any trading asset, such as stocks, bonds, fiat currencies or cryptocurrencies. For example, if Alice sells Bob 5BNB for 20 USD each, the volume of that transaction can be either 100 USD, or 5 BNB, depending on what the trading volume is denominated in. When they reach an agreement at a specific price, the transaction is recorded by the facilitating exchange.

Volume can provide valuable insights into market trends and sentiment, as well as help traders identify potential trading opportunities and confirm price movements. 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. Volume traders will look for instances of increased buying or selling orders. They also pay attention to current price trends and potential price movements.


Each investor needs to review an strategy for his or her own particular situation before making any investment decision. Learn how to interpret a stock chart to understand the movement of the stock market and an individual stock’s performance, as well as how to make sound financial decisions. WallStreetZen does not provide financial advice and does not issue recommendations or offers to buy stock or sell any security.

RSI Burst – #42

I guess this become important to figure out if accumulation/distribution is happening in a trading range. Also, always make sure you compare real-time volume with the previous day volume to get the bigger picture. So how would you infer a decline in price and a decline in volume? It means the price decreases because of small retail participation, and not really influential selling.

Accumulation Distribution looks at the proximity of closing prices to their highs or lows to determine if accumulation or distribution is occurring in the market. Volume analysis is the examination of the number of shares or contracts of a security that have been traded in a given period. On the initial breakout from a range or other chart pattern, a rise in volume indicates strength in the move.

Knowing how much volume is buy and how much volume is sell is the key to winning almost every trade. However, if you contact law makers, and convince them to pass a law that require stock brokers to show you that buy/sell volume data. In the chart above, you can see that volumes are represented by blue bars . The red line overlaid on the volume bars indicates the 10-day average. As you notice, all the volume bars that are over and above the 10-day average can be considered as the increased volume where some institutional activity has taken place. Another strategy of using the on-balance volume is to combine it with another indicator.

action and volume

The bid price is the highest current price that someone is stating they will pay for an asset. High volume is an indication that a market is actively traded, and low volume is an indication that a market is less actively traded. This can help you make better trading decisions and improve your chances of making more profitable trades in the future.

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. Volume refers to the total number of contracts or shares traded in a particular security or market over a specific period. 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 or base to a breakout and so forth. Second, as the volume decreases and drops below the zero level, we want to make sure the price remains above the previous swing low.

Net volume is used by traders to assess market sentiment beyond the use of standard volume. Positive net volume suggests that a security is experiencing a bullish upswing, while negative net volume suggests that a security is experiencing a bearish downswing. There are several other popular volume indicators in the market. Some of those we have not mentioned here are the negative volume index indicator, volumes, and the force index. The indicator is calculated by first looking at the money flow multiplier followed by the money flow volume. The chart below shows how the accumulation and distribution indicator looks like.

How to Use Volume for Buy and Sell Signals

When there’s a significant increase or decrease, it can mean a shift in how the asset is valued by investors. For example, in the chart below, buying and selling signals emerged when the on-balance volume made a crossover with the moving average. Technical analysis focuses on market action — specifically, volume and price.

Bearish Volume DivergenceIn the above chart, you can see a bearish divergence , with the price making a higher high while the OBV made a lower high. When the EOM climbs above the zero line and continues rising, it suggests that the price is rising on low volume, so there’s an ease of movement to the upside. Conversely, when the indicator falls below the zero line and keeps descending, there’s an ease of movement to the downside. The EOM is larger when the denominator, the box ratio, is smaller. And the box ratio is smaller when the volume is relatively low and the high-low range is relatively large.

step by step

After a prolonged up or downtrend, if the price begins to consolidate with relatively smaller price movements but on heavy volume, there may be a price reversal in sight. It shows that institutional investors are accumulating or distributing positions. This is where a volume indicator can help you assess what is happening and how to manage your positions.

Being a cumulative indicator, the current value is added to the previous value to get a running total. When the indicator is rising from the oversold region and crosses the 50% line, bulls are dominating. On the other hand, when the indicator is coming down from the overbought region and crosses the 50%, bears are dominating. Volume is one piece of information that is often neglected by many market players, especially beginners. However, learning to interpret volume brings many advantages and could be of tremendous help when it comes to analyzing the markets.

Why volume is important in trading

If the stock closes lower today than it did yesterday, then the volume is considered down volume. Personally, I use TradingView to trade, so that’s the platform I share all of my examples in. That said, all 4 of these indicators are available on a wide range of trading platforms. Most forex traders are trend traders and follow the trend using… Pivot points are an excellent leading indicator in technical analysis.

  • As you notice, all the volume bars that are over and above the 10-day average can be considered as the increased volume where some institutional activity has taken place.
  • You can use the links to find more details about the indicators.
  • Volume indicators often also incorporate a moving average, measuring the volume of the candles in a given period and producing an average.
  • In the PVO indicator, a 9-period moving average of the VO is added as a signal line.
  • Similarly, when an asset with typically lower volume sees higher volume, that indicates new interest and activity in it.

When the candles turn to white that means the detected confluence… Last but not least, we also need to learn how to maximize the profits with the Chaikin trading strategy. The crossing of the zero level can be used to generate buy and sell signals. Without further ado, here are a couple of ways to use price-volume analysis.

You can see the low during the attempted breakdown and how in the subsequent sessions, the price turned upwards with a surge in volume . This was the beginning of the upswing that lasted until October. The chart above is for Apple, and you can see the resistance line at $196. Can you see that there’s a breakout with a gap at the beginning of August 2018? Notice the way the OBV was ascending when the breakout occurred, indicating that there’s enough strength behind the move. Both indexes were developed in the 1930s by Paul Dysart but weren’t well-known until after his death in 1969 — when Norman Fosback shed light on them in his book, “Stock Market Logic”.

Volume Delta

It shows the actual value the security is trading at, so it can tell if the security was bought or sold at a fair price. Stock analysts and traders use the VWAP to eliminate the noise in the market so that they can get an idea of what prices buyers and sellers are willing to transact. It oscillates above and below the zero line, corresponding to bullish and bearish movements respectively. When the indicator rises above the zero line into the positive territory, there is a rising buying pressure and waning selling pressure. Conversely, when it descends below the zero line, there is a rising selling pressure and a declining bullish pressure.

The “bid size” and “ask size” will tell you how many shares are behind the bid and ask price. For example, if the asking price is $9, and the ask size is 15, then that means there are currently 1,500 shares available to buy for $9. These numbers constantly change as new orders come in and get filled, so the lot size does not necessarily guarantee all of those shares at that price.

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November 2023