The Essentials of Trading

Information and resources to learn about trading and the markets

  • Beginner Trading Book
  • Trading Articles
  • Trading Courses
  • The Author
  • Contact

Copyright (c) 2005-19 by John Forman

You are here: Home / Reader Questions Answered / Volume in the Forex Market

Volume in the Forex Market

March 17, 2009 by John

Tweet

Here’s an email question that came in recently which relates to volume in the forex market.

Hello John,

I’m a Forex trader. Is there something equivalent to a buy/sell pressure indicator for the MT4 platform that you know about or can recommend.

My trade plans are less effective when the O/S or O/B conditions last for a long time. One of the indicators I use is the stochastic.

Sometimes it undulates above 80 or 30 so I’m never sure when it undulates if it going to break the high/low of the previous wave.

I’ve seen some buy/sell pressure attempted with tricks for getting the currency’s volume or with number of tics but I don’t think it a reliable way to gather this data. Any thoughts would be appreciated…

–Ermalinda

Pretty much without exception, the volume figures you see in forex are not actual traded volume. They are tick volume, which indicates how many times a given price changed. While it can sometimes be an interesting indication of how active the market was in terms of price choppiness, it gives absolutely no indication of how much actual buy and selling is being done. As such, any technical indicators based upon tick volume are of dubious value from that perspective.

The only readily available public volume figures that I currently know of are in the futures and forex ETFs. They may, at times, be useful. Just keep in mind that they only represent a tiny fraction of what is done on the spot market.

As for the effectiveness of over-bought/sold trading with Stochastics, keep in mind that they will be good during range-bound periods but will kill you in trending conditions.

Share this:

  • Click to email this to a friend (Opens in new window)
  • Click to share on Facebook (Opens in new window)
  • Click to share on Twitter (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)
  • Click to share on Reddit (Opens in new window)
  • Click to share on Tumblr (Opens in new window)
  • Click to share on Pinterest (Opens in new window)
  • Click to print (Opens in new window)

Related

Filed Under: Reader Questions Answered Tagged With: analysis, ETF, foreign exchange, Forex, futures, market analysis, Technical Analysis, technical indicator, tick volume, trading, volume

FREE REPORT

The real truth about trader profitability!

ReportCover-Blue

Key Site Content

  • Trading Book Reviews
    All of the books which have been reviewed here over the years.
  • Trading Articles
    The core articles which are the backbone of the site and represent the primary educational foundation.

Recent Posts

  • Do 95% of traders fail?
  • Things took a quick turn
  • Feel like reading a PhD thesis?
  • Are you really cut out for trading?
  • Is technical analysis useful in the stock market?
  • Picking the best forex pair(s) to trade
  • Is there such thing has hybrid trading?
  • Did you really make that market call?
  • A rookie trader’s plan
  • Being a reflective trader

Recent Comments

  • João on Forex is a scam!
  • Philip on Forex is a scam!
  • Zoa on Forex is a scam!
  • teotroamer on Forex is a scam!
  • teotroamer on Forex is a scam!

Copyright 2005-2019 – The Essentials of Trading – All Rights Reserved

Privacy Policy

loading Cancel
Post was not sent - check your email addresses!
Email check failed, please try again
Sorry, your blog cannot share posts by email.
This website, or its third-party tools, use cookies to ensure the best experience on our website. By closing this banner, scrolling this page, clicking a link or otherwise continuing to browse, you agree to the use of cookies.OkRead more