What does volume tell us about the market? Volume patterns?

There is no real volume in forex and I am aware that the volume is different for every platform. But ticks at least correlate with the futures volume and maybe we can use them to gain a little bit of information.

Imagine a few scenarios:

1. Price went up in 2 seperate ticks but the price came back down to the starting level again only in 1 tick. We might be able to conclude that a huge short position entered the market. (Big money?)
2. The ask changes but the bid stays the same what does this tell us?

I usually don't use mt4 anymore but earlier today I decided to start fire it back up again to write a 5liner of code.

Are those valid patterns? I don't know but maybe you can find some. We might be able to spot bigger positions and difference on higher timeframes. The picture is 1 min only due to the fact that we need real time data to generate the values I just wanted to try out the indicator


I don't have much insight about using volume in trading but maybe I can spark an interesting discussion.

Very interesting indicator- I am running now - trying to see if it tells me anything of value.

last week i began with Market profile, its also calculated with ticks from the market (ticks and time are the only two things we got on our charts)
however, Market profile shows volume data from the past. i just started so i cant say so much... but it seems pretty interesting. with the right settings you can see high volume levels from the past. maybe a good idea to take a look at it. it isnt a standalone indicator offcourse... but it helps you to see so thinks clear in my opinion.



Goodluck,

Tk

Hello. What is the download for in the bottom of your post?I can help you with some of ^

violatelity can be hi .... volume can be lo ......

volumcanbe hi ... volatelity can be sleepin .....

only loudness (or wieght ) can be compensiiiteee ... with volume .....


hope these helllpyy .............

( if both can be run 2 get her ..... it will only beeeeeeeeee .... candle armargerdornnn ............ )

I'm sorry i dont understand your post. make it clear to me please

thanks

I have looked into market profiles and thought they are pretty interesting. I have read a paper somewhere which gave detailed stats about retracement percentages maybe I can dig it up again.
Anyone found something interesting so far?

would be awesome

Trading Kid, how do you use the MP indy? What settings do you use please?

I noticed that lately most my post a quite negative answers and this one probably will be the same.
Your idea would be right in equities market, where every single tick represents order flow.
FX situation however is quite different as ticks represents change in price only. Its worth to check myfxbook brokers volume chart as it is calculated from ticks. Some "no name" brokers does more volume than FXCM, Oanda and other biggest retail players combined together. That should rise a question how it's possible, if you think that ticks are reflection of orders
I'll repeat myself again, but you just wasting your time concentrating on wrong things that has no value in trading at all.

Oh it is not waste of time at all as I don't even intend to use it on trading. I enjoy asking myself those questions and digging deeper into it. I didn't believe I will gain much valuable information here which I could use for my trading but if someone came up with interesting observations I would be delighted to hear about it.

If small retail platforms display more ticks it is because a tick does not represent a trade on it's own but rather a change in the underlaying market. It could be that small brokerages don't filter their price feed as much as our big known companies. Brokers get your their quotes from different liquidity providers and use algorithms to smooth it out a little bit (at least they do it to prevent huge spikes).
I don't event think we get to see the orders being placed by the clients of the individual broker but rather one level behind them the orders settled one step further down the read. (no prove here). I have read somewhere in a paper that the tick and actual volume are highly correlated (80 -90%) but sadly I can not find the mentioned pdf anymore. Even if the absolute number of volume changes for different broker isn't the relative change from one candle to another pretty interesting?

Price "activity" matters more than volume.

Which is why those who use volume will tell you that VOLUME IS ACTIVITY. If you took the time to do some homework, you would find numerous studies that have concluded that tick volume is upwards of 95% equal to exchange traded volume. As a matter of fact, the "inventor" of Volume Spread Analysis (VSA), who mainly trades S&P futures, prefers tick volume even where actual volume is available. Simply put, tick volume is perfectly suited for ferreting out the intentions of the Smart Money (or Big Boys).

Take a look at the chart below.

Let me first say, that I know this is a great example and it does not always appear so obvious. If it did, we would all be rich. Actually, we wouldn't. As there would still be those who say, "there is no such thing as volume in forex". The naysayers would point still point out the differences among the various brokers as evidence to tick volume lack of worth. Not realizing that those who use tick volume understand that not all tick volume information is created equal. That some tick volume is better than other tick volume does not render all tick volume useless.


On to the chart.

There are many ways to use volume in trading. There is no implication being made that this is the only way to use it.

As price moves into the Supply/Demand Delta Zone, some interesting things can be see with the aid of Volume. The first thing to note is the wide spread up candle that closes off is high with the next bar down. If all that volume, or activity, represented buying then why did the bar close off its high? Moreover, if all that activity was buying, how could the next bar be down? There must have been some selling into all that buying. In VSA terms, we would call this interval Supply Coming In. But if we move away from the nomenclature and simply look at the candle, we see a bar with a lot of activity (Smart Money involvement) that closes off its high with the next bar down appearing just as price enters an area where we believe there is an imbalance in the Supply/Demand dynamic in the market.

But price actually continues to move up. If we look closer we see that price is rising and volume is falling. Price and volume (activity) are diverging. Weakness usually appears on UP bars. An UP bar is a bar that closes higher than the previous bar. Decreasing volume on UP bars is a sign of weakness. Some might see the price action as multiple unconfirmed No Demands. More broadly, we are seeing price move up, but fewer and fewer traders getting involved. Price is rising, but the Smart Money is less interested in the up move. If the Smart Money is not interested in higher prices, there's a good chance is because they expect price to move in the other direction.

Now take a look at the candle with the "X". Notice the lack of volume on a candle that has a wide spread closes higher (as well as makes a higher high), but closes below its midpoint. This can only happen is "somebody" or "somebodies" are SELLING. Since we are in a Supply Zone, we are predisposed to see selling, and that is exactly what we are seeing. I would also point out that this candle with "no real buying pressure" is confirmed with the next bar being down.

I'm going to skip the UT, which for some is the entry signal, and speak about the wide spread down candle. In a perfect world, this candle would have increasing volume and we would call it the "gotcha" bar. In this case the volume is decreasing. It makes this candle look like No Selling Pressure. I wont get into what happens after this interval to confirm the weakness. What I will say is that this candle/volume relationship shows that not every interval will be ideal.

(tick)VOLUME IS ACTIVITY.

Approximately 90% of tick volume can be attributed to the activity of the Big Boys.

When Elephants walk across your front lawn, they leave footprints.

Wake up.

i use the following settings on 1h chart

monthly - 12 lookback
weekly - 12 lookback

so 2 times indicators plot

the remaining standard settings,

goodluck mate

For the price-volume patterns HiddenGap is telling you about: here is the pdf of the book "Master the markets" by Tom Williams.

k

Most excellent HG !!

Especially this paragraph. This has to be one of the most explanations of Volume in Forex I have seen:

As price moves into the Supply/Demand Delta Zone, some interesting things can be see with the aid of Volume. The first thing to note is the wide spread up candle that closes off is high with the next bar down. If all that volume, or activity, represented buying then why did the bar close off its high? Moreover, if all that activity was buying, how could the next bar be down? There must have been some selling into all that buying. In VSA terms, we would call this interval Supply Coming In. But if we move away from the nomenclature and simply look at the candle, we see a bar with a lot of activity (Smart Money involvement) that closes off its high with the next bar down appearing just as price enters an area where we believe there is an imbalance in the Supply/Demand dynamic in the market.

TSD

Activity is more important than volume

If you watch carefully you can see the price spin like a yoyo

Quoting Richard D. Wyckoff
The element of manipulation need not discourage any one. Manipulators are giant traders, with deep pockets. The trained ear can detect the steady 'chomp, chomp' as they gobble up stocks, and their teeth marks are recognized in the fluctuations and the quantities of stock appearing on the tape.
From Wyckoff's "The Day Trader's Bible", originally published in 1919.

Exellent Stuff................................................................................................................................

An interesting take on volume, if youve got the time:



Regards.