Are Volume numbers 'global'? Or are they 'broker' specific?

Beginner Questions Candlesticks, Chart Patterns, and Price Action
1

Hi everyone.

This evening’s question is about the Volume indicators.

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Looking at the above example which is from a 1H GBP/USD chart, and focussing on the volume big spike on the T bar of 5576 BUY trades at 14:00 candlestick.

The question is:

  • Is this showing 5576 BUY orders across the entire globe, across all brokers? Or is it 5576 BUY orders on the broker’s demo users (which I am using at the moment) or is it 5576 real trades but only on my brokerage system?
2

Hi, the forex market is OTC market, so what you see is broker volume. Regards Greg

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3

Ahaaaaa! So using a larger broker can help give a stronger feed in this indicator…

4

Not really. Even the largest private retail forex brokerages are tiny fish in the forex ocean. Ignore volume in forex.

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5

basically, you will see only small part from whole market. If you want to use volume indicator, you have to trade on regulated exchange

6

Okay, so I should literally not ever look at volume, as it is not useful, even as a confirmation? That seems a bit strong. Surely it can act as another piece of weaker evidence that can help give a stronger justification for a trade? Even if it is a small number. It shows if your perception lines up with a relative margin of other people within your brokerage.

Call it a warm feeling?

7

In fact the reverse is true. Many commentators recommend that when the majority of private retail traders are long, the smart thing to do would be to definitely avoid being long, and even to consider getting short. This is because we already know that the majority of traders lose, so doing what the majority do is likely to get the same result.

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8

Very interesting. That’s a very good point. Its 70% of accounts which loose right…hmmmmm! So perhaps it is used as a negative test!?

Or…would you just ignore it to not let it cloud judgement?

9

Its not something I look at but I assume the majority of traders look at price charts - after that it’s just a question of what conclusion you draw from the same chart.

For example, if what we all see is an uptrend, most traders will be going short. The longer the trend lasts, the greater the volume (i.e. percentage) of short positions open. But I would usually be looking to get long in an uptrend. Sometimes I use a signal which recognises in price action the potential for a dramatic counter-trend reversal (e.g. a bearish outside key reversal bar) but it doesn’t look like these guys are waiting for signals like these, they just get short immediately price starts to rise. Oops.

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