Volume, open interest, and price are key components in trading decisions. But unlike stock and futures trading, Forex volume is rarely used in trading. The currency market is a decentralized market where trading operations are carried out outside the exchange.

Forex Triple B PRO

That does not mean, however, that price is going to reverse immediately and sharply. The price reversal may happen later due to the effect of the market inertia. Now let’s proceed to the decryption of the Better Volume indicator’s signals. However, this approach is applicable only to the stock market. As for the Forex market, things look a little different out there. It is impossible to track the total trading volume in terms of standard lots so traders use the so-called tick volumes.

Percentage Volume Oscillator Indicator

The Volume Profile Indicator works by analyzing the trading volume at different price levels. It then displays this information in a histogram, volume indicator mt4 with each bar representing the trading volume at a specific price level. The higher the bar, the higher the trading volume at that price level.

Best Forex volume indicators – how do they work?

Another feature you can take advantage of on the OBV indicator is divergence trading. Phase two showed progressively increasing volumes, creating a smooth up curve. When the price is falling and volume is decreasing, the downtrend is unlikely to continue. The price will either continue to decrease, but at a slower pace or start to rise.

How to Use the Volume Profile MT4 Indicator in Forex Trading

On the contrary, red bar indicates a decrease in the number of ticks for the selected currency pair in the market over the last hour as compared to the previous one. Green bar indicates an increase in the number of ticks for the selected currency pair in the market over the last hour as compared to the previous one. The GBPUSD chart above shows how during bearish trends, VZO tends to stay in the lower volume zone, hovering between 0 and -40. During bullish trends, volume increases with price increases.

However, spotting divergences is sometimes hard for novice traders. And when a novice trader spots a divergence, knowing what direction to make their trade can be confusing too. Relying solely on https://investmentsanalysis.info/ trend indicators may cause you to get into more losses. This is where a volume indicator comes in handy.With a volume indicator, you can filter out signals with a higher probability from others.

Better Volume makes use of colors that have distinct interpretations to help forex traders make more sense of what the forex market is doing. Many professional forex traders never make a trade without consulting a volume indicator. The reason is that most trend indicators merely give you entry and exit signals. With a little practice, you can master trading using the Volume zone Oscillator indicator .

Why Volume Zone Oscillator is the best Forex volume indicator. Not only Volume Profile allows you to spot support and resistance levels, it also highlights prices where there was heavy price action in the past. There are a number of ways to use the buy-sell volume indicator. Some involve making use of the rising and falling of the dotted lines to predict when there’s enough strength behind a trend.

The same is true in the opposite direction for bearish trends. In addition, the VZO indicator adds an exponential moving average to smooth out volume readings. The resulting curve is then displayed in a separate window under the price chart. The result is presented through a vertical histogram chart — the longer the histogram is, the more activity at that price level was. One of the first thing that traders mark up when analyzing a chart is support and resistance.

We can use it to confirm a breakout of support or resistance. For example, a breakout of resistance accompanied by an increase in volume indicates a strong movement. The number of bars, the volume of which will be taken into account when calculating the gradient colors.

It can only be used as a filter in combination with other indicators. Traders aren’t always interested in all chart signals that signify the beginning of a new trend, regardless of whatever the volume indicator says. And when this happens, it simply means that whatever trend that volume is predicting may not last long because there aren’t enough traders to see it through. 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.

• Volume is what makes prices move forward and creates trends.
• Volume Profile is quite similar to Market Profile indicator but with fewer features and its calculations take into account tick volume.
• However, this one looks more appealing and less confusing as it uses four colors on wavelike bars to give clear predictions of market activity.
• Do you have any suggestions or questions regarding this indicator?
• However, this approach is applicable only to the stock market.

Remember that analysis Forex trading should always be used in conjunction with price analysis. The volume indicator can highlight hidden strengths and weaknesses of a trend that are not visible to the naked eye. But between these zones we can distinguishand there are more relevant volume zones that can generate buy and sell signals. However, volume cannot be used as an accurate input and output tool.