My live trading room will be up and running very soon. You can keep up to date via my blog page ‘Live Trading Room’
I am a Cable trader, so will be day trading mainly Sterling Pairs. Volume analysis, momentum, dynamic support and resistance is at the heart of our trading. We prefer live trading and live results, no FXbook rubbish or any other implied performance just live trades from start to finish.
My preferred execution platform is an ECN, CTrader from FXpro, you can download the demo version here to play around and trade the superior DOM. Ctrader Demo with FXPro
I have been getting use to volume myself after a lot of practice and study. You get the hang of it after a while by just looking and studying the volume with price action. You get your own view on it after a while. Whether you call it smart money on high volume or more activity. It’s the same. You have buyers and sellers, usually the higher volume is the smart money but I look at it as higher or lower activity. If it is bearish with wider price spread and higher volume I look at it as more activity. Longer wicks to me is either more selling or buying pressure. Whether it be bullish or bearish. I also use support and resistance areas to determine price targets and fundamentals are important. With some practice you will get the hang of it.
Hi Pip. Not open yet. I will eventually. I am developing a trading algo. Want to get that out of the way (Won’t be for sale). Also waiting for the brand trademark to be approved.
Just wanted to mention for me determining which way the trend will go, bullish or bearish based on volume is a bit tricky for me. I mainly use volume to determine the strength of the market. I’ll go back more than several time intervals or bars to help determine the strength of the pair or the general strength overall. Determining the actual direction is more difficult. If it is a weak market, consolidating, low price spread, low volume etc… I’ll look for more supply which would be higher price spread with higher volume for an up move, low price spread with low volume to determine a possibility of a supply setup. I usually determine this when the market is bearish. I usually determine a bearish sentiment when the market is overbought, usually in supply areas. Just a few examples, but volume is definitely a major determination in either a bearish or bullish probability. I do use the MACD to help determine momentum and two or three moving averages, not really necessary but helpful. Sorry about the long comment.
Here is an interesting situation developing in the currency pair NZD/USD: the declining volume (highlighted by me with a blue line across the top of the volume bars) since the beginning of April has been accompanied by a narrowing price spread, which currently stands at as little as fifty pips (0.7550-0.76):
The four-hour chart screenshot above screams ‘breakout’, almost like a coiled spring waiting to snap free… We just have to see which catalyst will move this (and other US Dollar pairs)… RBNZ rate decision, 30th April? Probably, or it could be the Greek payments next week, or Chinese data, or central bank commentary in any G10 country, and so on… Either way, a breakout is inevitable: my guess is that it will be to the downside, given the RBNZ/Fed different fundamentals, but nobody can say for sure.
Hi all, It seems like the Dollar made its move. It is rather crazy as everyone tries to consider a sell option on USD. Monetary policy keeps diverging with the rest of the world and no matter how much the FED tries, they can’t convince the market that rates won’t go up.
I am long USD all the way. Poor old Sterling is getting the boot.
On the subject of volume, the major volume spike is on the sell side we need to see a similar to consider an upward market. No surprise to see NZD tanking.
This is one of those many situations where you look back on your chosen charts after a break - in this case, the weekend - and the very thing that you expected to happen actually DID happen: in this particular case, as I had said, there was a declining volume on the H1 and H4 time-frames of NZD/USD, and the tightening range in price combined with this also suggested that a breakout was a strong probability…
This is what happened overnight, between the reopening of trading last night and this morning:
That breakout to the downside broke the 0.75 level after several weeks, with a big volume bar and a corresponding large price move (almost one hundred pips) on the H1 chart.
In this case, the technical situation was combined with the fundamental outlook, and the spark was soft data from China overnight…
The strong volume and the true move in price, as well as the breaking of a strong resistance/ demand level, makes this a true move: whether the breakout will lead to the return to the NZD/USD bear trend, it remains to see, but the point here is that waiting for the stars to align (fundamentals, technicals, and market conditions) is worth it…
Looks to me like the spikes indicate supply even though the volume is declining. And the coil with the possible breakout would indicate a bearish breakout. Just my opinion. Never really know for sure.
It appears we can’t win them all. Took a beating on my AUDUSD short recently. So I know the feeling. All in all we are up this year so far so nothing to worry about. I am long Gold at the moment. Going to stick a chart up soon.
Long Gold from yesterday as we made it over 1200/Oz. EW says we could see Gold at 1250/Oz by the time summer sets in. I am the contrarian in the room as most of my peers in the analysis space are calling Gold lower. In fact I believe we will see 1300/Oz this side of the year. A man can be wrong but I shall trade my plan.
As you can see the markets have been crazy but I have been watching this for sometime. Complex corrections are best left alone but that’s what it will be for the next few months as the FED finds its teeth.
Thank you, Jason, that is a really good indicator! Can FXCM Live clients get it (on the selected pairs available for Real Volume indicators)?
I am in two minds about this Euro buying: the fundamentals seem to say it is short-lived… and it
could just be the market front-running a ‘Greek solution’ outcome, but it seems to risky to trade it…
[I][B]Just because price goes up, we have no obligation to go long[/B][/I] (I made this maxim up just now)!
For longer-term traders like me, it is all about waiting for technicals aligning with market fundamentals, meaning that if it takes two months for the Euro-Dollar to resume its bear trend to parity , then I would wait for this upsurge to die out and for it to realign itself with its fundamental outlook, which is bearish for the Euro (=QE through ECB) and more hawkish for the US Dollar (= expectation of a June or September rate hike from the Fed).
Until the Fed changes its mind for this year (like the BoE for 2015, and look what happened to GBP/USD) or the EuroZone becomes a glorious beacon of financial and real-term growth, this Euro buying means very little to me and I will leave it to the shorter-term traders.
Hi Jason,
I’ve been trying to make sense of the Directional Real Volume. Its name suggests it would show whether the number of transactions on a given time period were more long or short. Under that premise, one would expect that when it shows more bullish volume, the corresponding price candle would be bullish and the opposite for bearish. However, studying the indicator bar by bar, I don’t notice any real relationship. Very often you see much more bearish volume on the graph, but the price candles are bullish and continue going bullish. Maybe my interpretation of the indicator is wrong. Could you point me to a source were I can read how the indicator is calculated so I can make sense of it? Thanks in advance.
@ PipMeHappy, the indicator is available even on Demo accounts.
Direction Real Volume measures the amount of currency traded (not the number of transactions). The most likely reason that you’ve noticed price action move contrary to volume is that this indicator measures retail trading volume.
Retail traders tend to fade the trend (buying dips and selling rallies) hoping the price action will stay in a range. That’s why, in a trending market, retail sentiment can be a strong contrarian indicator as shown by the Speculative Sentiment Index (SSI).
Thanks a lot Jason for your reply. That is very interesting and provides good food for thought. Knowing that the indicator shows actually RETAIL trades, opens a new dimension to try to understand current market sentiment. Good stuff.
