Forex Technical Indicators: What Is The VOLUME

Forex Technical Indicators: What Is The VOLUME

Volume (often cited by the abbreviation VOL), or forex trading volume is simply an indicator expressing the total number of contracts traded within a specific time period (eg hour, day, week, month …). In other words, the value of the volume tells us how much is traded at any given moment – a high value means that the “VOL” in the period took place many shops and vice versa.

For example, if daily VOL 1000, it means that the day was total 1000 contracts traded the market, regardless of how much the short side and how long. For example, if daily VOL 1, then for an entire business day was traded only one contract.

The values ​​of volume are easy to find the source of almost every commodity charts. Volume can be interpreted as a form of specific numbers, so graphically – in the form of various graphs.

The picture of the daily chart the market Sugar # 11 (sugar) is the volume seen at the bottom of the image. The green vertical lines in a separate box below the chart shows volume of trading days.

Notice how the volume of trading days varies: while the highest volume traded on the chart documenting nearly 60 000 contracts in a single day during business days with the lowest volume the contrary, it was not 10 000!

Green dashes show the VOLUME or trading volume of trading days. The green line is, the more it contracts traded that day.

High trading volumes taking place mostly during business days, which are somehow affected by an important fundamental information. Simply put – the moment you arrive between traders some major fundamental news, the vast majority of traders to such a message starts to respond either a mass closing of positions held or, conversely, opening new positions, and volume so suddenly due to sharply increase the underlying message. Low trading volumes on the contrary are marked for days, during which “nothing happens”, or days when the market traded in a band and only moves to the side – not significantly netrenduje. On the other hand, if such a band is punctured, trading volume rises sharply very soon, because it enabled a large number of commands located just below / above this band.

Is the VOLUME useful?

For beginning traders trading volume is mainly an indicator indicative of the liquidity of the market. If the volume is only a few hundred contracts traded per day, or perhaps even less, it is an illiquid market, and since such a market would be any newbie to stay away. In less liquid markets usually leads to much worse their orders and illiquid markets have a tendency to often do limit movements.

What is the optimum volume, which should make us care? Anything over 10 000 can no longer be considered as solid a liquid market, some market volume reaching more than 100 000 contracts traded per day. Of course, it should not be a significant problem to trade the market with daily volume of several thousand contracts, should not count here and there with the worst performance. They also do not recommend trading volume markets with only a few thousand contracts per day intraday. Just look at the chart Australian Dollar (AD) – the daily volume to 3,000 contracts and intra-day course usually full of loopholes.

Another possible way to use the VOLUME indicator is an “anticipation” change in trend. Although certainly not a 100% no way, sometimes with a slight volume can indicate in advance the trend turns. Such a turn of the signatures is extremely high volume. Note that the sample chart of sugar, both on days with extremely high volume usually has to turn the trend!Once again, however, point out that there is not a 100% turn indicator trend trader volume should be used for such purposes even in combination with other indicators or technical signals.

Another reason why it is important to track each merchant volume indicator is the transition from one  month to the next. As we have explained in our on-line manual commodity, usually we want to do business nearest contract months – so-called Front month (or also nearby). It is the nearest contract months have the greatest liquidity – or the highest daily volume.

Study the following table. This is a listing of several contract months money market EURO (EC). Note that the March month (March), which is currently the nearest traded month (Front) has a liquidity over 147,000 contracts traded per day, while the following month (June), only 430 and two more next month (September, December) even only 1 and 2 contracts traded per day!

Watch the volume so well the next two months and then mostly watch when the volume decreases and vice versa front month is rising volume of the month following the queues. This change indicates that it is time to merchant moved his business to the next kontraktního month.

As you can see, volume is not difficult, but it is important to keep in mind this indicator.

Incoming search terms:

• forex broker with volume indicator
• best forex volume indicator
• forex brokers by volume
• forex highest lowest indicator
• forex vol what
• high volume forex broker
• the best volume indicator in forex