Hi All
Is it true the volume indicator is reflective of the volume of trades through your broker rather than total volume for the forex pair?
I’m using MT4 with Oanda and started to research volume as part of my trading strategy but I think it’s misleading because if I open the volume indicator with Alpari for example, for the same pair, they differ…
Any feedback would be much appreciated!
Yeah… To my knowledge volume indicator is basis broker not the whole market so u need to be careful if u wanna basis volume as part of your arsenal.
Appreciate experts to correct me if i am wrong though.
There is no aggregate volume for the spot forex market, so anything you get from your broker will a) only represent their customer business, and b) probably will only be “tick” volume rather than actual transaction volume.
Thanks for confirming what I already thought.
That makes volume an unstable, unreliable and completely subjective indicator. I’m confused how there are threads and comments by people saying they use it (eg VSA indicator) as part of their strategy when ultimately they are relying on transactions made through their broker…
I’ve always thought that maybe if your broker has a large enough customer base that their volume figures would be representative of forex in general just from a statistical point of view. If you have a large enough sample it should be representative of the whole. Right?
I still haven’t figured out how to insert pictures since BP upgraded. But here is one showing the average volume at various times during the day. That I derived from about a year’s worth of data from GBP/USD from IBFX
I suspect the data from most brokers would look the same.
You can clearly see the Asian, London, and NY peaks and the post NY minimum.
Sure there will be a correlation between volume and price movements, but volume won’t give you the complete picture of what is happening for that forex pair … as for the statistical samples, I would say the top 20 forex brokers combined wouldn’t give you a statistically valid sample size. The forex deals will trillions of pounds each day, across commercial, non-commercial retail and little fish like us!!!
Volume may work for some, good luck if it does but it’s not a tool you can shift from one broker to another and expect to get the same results.
Some simple volume setups on AUDUSD 5min chart today using Oanda’s Metatrader 4:
Short entry 1: High volume widespread up bar followed by a high volume down bar with a wick on top at Daily M4. Next bar also closes down with medium volume. Enter short when the next bar breaks the low of the medium volume down bar.
Long entry 1: Two high volume bars seen bouncing off the Daily pivot and the 79% retracement level. Wait for the green bar to close up with medium volume then enter long on the first candle to break the high of the green bar.
Long entry 2. Two high volume bars seen stopping this down move on the 50% retracement level. Enter long on the first bar to break the high of the medium volume green bar.
Long entry 3: A high volume bar that closes down and followed by a medium volume up bar coming off R1. Enter long when the high of the medium volume green bar is broken.
Short entry 2: A widespread high volume up bar to stop the move followed by a medium volume downbar just under R2. Enter short on the bar that breaks the low of the downbar.
Short entry 3: A high volume upbar followed by a medium volume bar that closes down coming off R1. Enter short on the break of the low of the downbar.
From what I’ve read so far on the matter, the “activity” volume is based on the number of times price changes during the formation of each candlestick on the chart you’re looking at. That price change activity is based on the liquidity provider’s price feed each broker uses which does not rule out that some brokers may use the same provider, therefore, it stands to reason that the “activity” volume should be fairly consistent since all brokers seem to reflect approximately the same looking charts …the same prices at the same time and in the same formation.
I feel that if the volume reflects the price change activity of each broker only, then candlestick formations, stochs, RSI, etc across different brokers also would be significantly different and rather meaningless.
Some brokers may assign different values to the volume indicator, such as 1 tick = 100, or 1 tick = 1, however, that’s not as important because 1) you can adjust to that and 2) it’s the height of the volume bar relative to the prior bars and price bars, at least in VSA terms, that is important.
It’s possible to calculate average total worldwide forex trading volume, in billions of dollars per hour, over the 24-hour forex trading day. I know, because I have done it.
And it’s possible to calculate “average” or “typical” tick-volume, hour by hour, over the 24-hour trading day. I have done this, as well.
When you plot average hourly world dollar-volume as a histogram, and compare that histogram to a “typical” tick-volume chart, you might conclude, as I have done, that [B]real-time tick-volume is a reasonable proxy for true real-time dollar-volume.[/B]
Here’s a previous thread where this was discussed — 301 Moved Permanently
Thanks Clint. I enjoyed reading your thread, very insightful.
