Trading with MetaTrader’s Forex Volume Indicator
Thinking about incorporating a forex volume indicator into your trading?
In this article, we will introduce and explain how to use the volumes indicator in Metatrader.
Trading With the Forex Volume Indicator:
Volume can reveal details about how much strength stays in a trend. Volume trading is similar to momentum trading. If volumes stay high as the prices move in the direction of the trend, we can say that the trend is in good health. If volumes decline as the prices continue in the direction of the trend, it proposes that the trend is running out of steam. A volume trader might expect the trend to break down in such a situation, and may position their account accordingly.
So we can use the volumes indicator to make a kind of validation check on price moves. If volumes are high they appear to be sustainable. If volumes are low, we should be doubtful about such a move and think it may be susceptible to a reversal.
Does it Actually Work?
The indicator does not represent true volumes of trades in the market. There are causes to believe it to be a sensible yardstick by which to measure.
An example:
over key news releases, where we would look for volumes to be higher, the volumes indicator frequently reflects such behavior. In addition, the self-fulfilling nature of technical analysis lends credence to this method. A sufficiently large number of people look at these values frequently and put stock in what they are saying as to influence market behavior.
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