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Better Volume indicator and how to use market volumes effectively in Forex?

 

 

All traders come to the understanding that market volume is one of the main factors affecting price movement sooner or later. There are market analysis methods based only on changes in market volumes, for example, the Price Action method. But unlike the stock and commodity market, Forex traders do not have access to data on the real money volume of concluded transactions, and it is necessary to use more complex tools, such as the Better Volume indicator.

 

Let us remind you once again that in the Forex market we are dealing with tick volumes, which show only the total number of concluded buy / sell deals for a certain period of time, and the trader does not see the most important data about the market “in the money”. But even this data, due to the decentralization of the Forex market, shows only a part of it, and the bulk of traders generally see tick volumes of only their broker.

But, despite the listed problems, professional traders widely use volume instruments in trading strategies, or as they are also called psychological indicators, for a general assessment of market sentiment. Of course, such instruments cannot give an accurate signal to enter the market, but they can assess the balance of power and predict the possible actions of large players on price reversals, even using fragmentary tick data.

 

When working with technical volume instruments, you should always keep track of two parameters: the current volatility of the traded currency instrument and the volume value on the indicator histogram. A sharp rise is almost always a consequence of the arrival of large players (or market makers) with a large money supply on the market, causing trend reversals or price movement corrections.

The main problem with standard volume indicators such as Volumes is the correct filtering of false signals, and here the Better Volume tool will be a pleasant exception.

The algorithm for calculating this indicator, in addition to the tick volume data, uses signal filters based on several well-known candlestick analysis models, which favorably distinguishes it among the instruments of this group.

After installing the Better Volume indicator in the MetaTrader 4 trading terminal and moving it to the price chart of a currency pair, you will see that the results are traditionally displayed in a separate window in the form of a histogram with columns of different colors.

 

Interpretation of the primary colors of the indicators from Better Volume:

To summarize, we can say the following, the Better Volume indicator allows you to see the market volume in real time, which allows even beginners and small traders to make educated guesses about the future actions of market makers and what is the balance of power between buyers and sellers.

 

A good profit is obtained precisely after moving towards large players, who always try to go against the market and take money from smaller participants. It is necessary to search for an entry point using proven technical tools and candlestick combinations, but monitoring the behavior of the “market crowd” and large players using the Better Volume indicator can be a must for any trading strategy.

At the same time, you should always remember that there are no ideal technical tools, and there will always be risks of losses. Therefore, in addition to technical tools, a carefully developed system of optimal money management is needed, which absolutely every trader must adhere to.

 

 

 

 

Published on: 9/18/20, 12:59 AM