Forex volume indicators display changes in trading activity relative to previous periods. As already mentioned, Forex market is decentralized and counting exact number of total contracts traded at given period is impossible. The best volume indicator is a technical analysis tool that can be used to identify stocks that are experiencing high levels of trading activity. This information can then be used to make profitable breakout trades. Trading volume can help a trader identify momentum of a currency pair and confirm a trend. If trading volume increases, prices generally continue moving in the same direction and can provide a heads-up if volume diminishes.

Regard it as a version of RSI that takes into account volumes. Allen and his team of professionals are actively working together to help the average retail trader become successful and profitable in the market. HaiKhuu runs some of the largest communities of stock traders on Facebook, Discord, and TikTok. With over a quarter-million retail traders in the HaiKhuu Trading communities, we have been able to help out hundreds of thousands of stock traders.

Volume Price Trend Indicator (VPT)

When RSI moves above 70, the asset is considered overbought and could decline. When the RSI is below 30, the asset is oversold how to increase your brokerage trading volume and could rally. Theaverage directional index is a trend indicator used to measure the strength and momentum of a trend.

The bars use green and red colors to help with the filtering. So, you are looking to buy when the faster moving average crosses over the slower moving average and the bars are above the zero line and green. Similarly, you wait for the fast-moving average to cross below the slow-moving average and the bars are below the zero line and red.

Types of Volume Indicators

Volume indicators are used in currency trading to help determine whether a market is overbought or under bought. In this blog, you’ll learn how to use best volume indicator forex trading market to make better trading decisions. Price should follow OBV, and any sudden reversals in OBV could suggest that a price trend reversal is near. The VPT can also be used with the average directional index to confirm the market trend. The VPT is basically used in conjunction with the 25- to 50-day moving averages.

• Cory is an expert on stock, forex and futures price action trading strategies.
• On the contrary, the red color means that the current bar’s volume is smaller than the volume of the last bar.
• The resulting curve is then displayed in a separate window under the price chart.
• After all, the dynamics of volume tell us better than anything how active the trading is.

Considering the Forex market is wholly decentralized, volume will not enjoy the same degree of precision as a particular security traded on just one exchange or another. The https://xcritical.com/ bottom line is that data you receive from your broker is sufficient for trading purposes. The beginning of a down trend is almost always marked by a Volume Climax Down bar.

How to withdraw the money you earned with FBS?

During an up trend, pullbacks are often characterized by Volume Climax Down bars. These show profit taking or traders calling a top too quickly. As soon as this Climax volume declines the up trend is likely to resume. Continuation of the up trend is confirmed when the high of the Volume Climax Down bar is taken out. The textbook use case of this indicator is to enter a trade when the moving average lines cross each other.

Volume indicators are a type of technical indicator used to measure the stock market’s activity. They are most commonly used in conjunction with security prices, and help traders to discern whether the price of a security is overbought or oversold. When the OBV provides more than one bearish divergence, the signal is exceptionally strong. In this example, OBV can be seen signaling not one but two bearish divergences. A trader would open a short position when price touches the bearish resistance line. The On-Balance Volume indicator was developed by Granville, who believed that volume could signal an upcoming trend change or significant market movement.

How do I measure volume in Forex?

The deftness with which the OBV divergence points out its signals is what makes it rank on our shortlist of the best Volume indicators for all traders. VWAP Plus appears on the chart as a series of lines that extend from a vertical line on the left. As soon as you install the VWAP plus indicator, advanced traders may already be able to guess that it tells zones of dynamic support and resistance.

If the breakout happens on low volumes, it’s better to avoid entering this trade. If there’s a divergence between the price and the volume indicator, it signals a potential reversal of the existing trend. The Forex market is decentralized, so it’s impossible to count all the contracts and their sizes like in stock markets. If you’re interested in using a volume indicator, it’s important to study which one best suits your trading style.

FXSSI.CurrentRatio

Widely used on the TradingView platform, Volume Profile offers a unique perspective on volume distribution and its relationship with price action. The goal of every short-term trader is to determine the direction of a given asset’s momentum and to attempt to profit from it. There have been hundreds of technical indicators and oscillators developed for this specific purpose, and this article has provided a handful that you can start trying out. Use the indicators to develop new strategies or consider incorporating them into your current strategies.

On-Balance Volume

A drop in volume when trading a trend might indicate that the price will reverse. The Volumes indicator in Metatrader is the standard indicator of the indicators set in MT5. You can find it by clicking Insert-Indicators-Volumes-Volumes.