Meaning of volume in forex trading

These are meaning of volume in forex trading called “round price levels”, which end on 00, 50, 25 etc. Arrows on the chart below show examples of sensitivity of the price to sweetspot levels. 00″ are always much stronger than “50” or “25”.

Boris Schlossberg has discussed on youtube: ‘run for the 00’s’. I have MT4 on my desktop for a quick start. How I do it is I don’t start MT4, but right click on the link, then choose open file location, this brings up a list of everything that’s in MT4, click on the experts folder which opens up another list one of which is indicators, click on that one to see the list of indicators you have in MT4. I meant it’s in custom indicators on the navigator panel.

Volume confirms the strength of a trend or suggests about its weakness. A rising volume indicates rising interest among traders, while a falling volume suggests decline in interest. Extreme Volume readings — Climax Volume often highlight price reversals. Points where market trades on high volume are the points of strong support and resistance. Volume is the second most valuable data after the price itself. Large volume signifies that there is large number of market participants involved, including financial institutions. Small volume tells that there are very little participants in the market, neither buyers no sellers have any significant interest in the price.

In addition, no financial institutions will be involved, thus a market is going to be moved only by individual traders and so the move will be weak. Volume helps to learn about the health of a trend. When price is going up and volume is decreasing, it tells traders that a trend is unlikely to continue. A downtrend is strong and healthy if volume increases as price moves lower and decreases when it begins retracing upwards. When price is falling and volume is decreasing, the downtrend is unlikely to continue. Price will either continue to decrease, but at a slower pace or start to rise. To understand the nature of spike in volume before a trend reversal, traders need to know how the data for volume indicator is gathered in Forex.

Forex volume cannot be measured precisely as it is done, for example, in Equity market, where every share traded equals 1 volume, and selling 200 shares means 200 in volume. Forex by nature cannot count how many contracts and what sizes of contracts were traded at any given time, because the market is wide and decentralized. As it moves up and down volume adds up. When volume rises, it means lots of participants are actively selling and buying currencies. When volume spikes at certain price level, traders know that there was lots of interest shown by traders to that price level. If there is a lot of interest, it means the level is an important one.