The Equilibrium, a key to success!

Hello shahd58,

simply explaining something complicated is always a challenge. I have now found a way to represent the volume so that everybody can understand the relationships easier. This is the prerequisite to approach the Accumulation and Distribution. I will publish an interesting report tomorrow.

Have a nice evening.

best regards

How important is the volume?


Hello dear traders,

Before we deal specifically with the volume, we should first understand which factors are crucial for a successful trade in detail. You can choose from the fundamental analysis, the technical analysis and the chart technique.

Fundamental analysis:

We know that two key drivers are driving one currency - central banks and policymakers. With fundamentals, we determine if a currency will rise or fall in the near future.

The following questions help us to do a forex fundamental analysis:

1. What is the key interest rate level in the country of the currency concerned?
2. What is the key interest rate in relation to other G10 countries?
3. What interest rate steps will the central bank expect to make?
4. Which political issues surround the currency?
5. What about the economic strength?

If we can answer these questions for each currency, then have a rough picture of the fundamental situation. Important: The fundamental situation describes the overall, big picture of the currency. It does not mean that positive fundamentals can not lead to a multi-day crash. Nevertheless, the fundamental parameters in the short term can determine the trend of a currency.

Technical analysis:

In stock market trading and Forex & CFD trading, technical analysis is a proven tool for predicting price movements of financial assets or currencies. In Forex, all currency pairs are based on five important data values:

Opening Course (Open)
High Level (High)
Low Level (Low)
Closing price (Close)
Volume

The latter is a bit more complicated for foreign exchange trading, as it can not be measured in the same way as in stock, commodity or futures markets (as there is not one central stock exchange in the Forex market). Forex Fundamental Analysis is fundamentally statistical in nature as historical data to be evaluated can be easily quantified and visualized in charts. Traders use these charts to identify movement patterns, supports and resistances, and other laws or parameters. Course formations often follow movement patterns, be it trend patterns, reversal patterns or market formations, and are often referred to as market sentiments. For many analytical traders, the first step in a trading strategy is to recognize the current market sentiment and estimate how long it will last. Roughly speaking, technical indicators can be grouped into four groups:

Trend Indicators: Moving Average (MA), Directional Moving Average (ADX), Ichimoku Kinko Hyo, Moving Average Convergence / Divergence (MACD), Parabolic SAR

Momentum: Relative Strength Index (RSI), Stochastic Oscillator, Williams% Range (% R)

Volatility: Average True Range (ATR), Bollinger Bands (BB), Standard Deviation

Volume: Money Flow Index (MFI), Accumulation / Distribution Line, On-Balance Volume

In the stock and futures market, volume is one of the most important indicators. Although this can also be applied to Forex & CFD trading, it is simply not possible to analyze the total traded volume in the forex markets, due to the lack of a central trading venue such as a stock exchange. The international forex market is the interbank market, without a fixed stock exchange. Thus, the volume can not be counted at any central collection point. The Forex market is traded "OTC" ("over the counter"), so the total trading volume can not be calculated. As a result, all indicators can use only a sample of the volume data for their analysis. The accuracy should be around 80%, but the crucial market movements are usually displayed incorrectly.

Chart Technique:

Course histories of the past will be repeated in the future. From this, distinctive points are marked in the chart and combined into formations. An important role is played by the trend, ie the direction in which a course runs. A course maintains the direction until a distinctive movement signals a turning point. Trends can basically have three directions: up, down, and sideways. Different extreme points (ie highs and lows) are combined in the historical price trend to a trend line. An uptrend consists of a series of consecutive highs, each higher than the previous one. A downtrend corresponding to a series of lower and lower lows. A sideways trend occurs when the price has the same high price peaks and valleys over a longer period of time. The straight line is called a trend line.

When analyzing the current prices, the high and low points are usually considered a bit closer to define trend lines. The analysis should not only look at the values of a course from the last hour, but it is also important to look at the values of the past few days. Depending on the forecast period, the last period should be considered closer to use similar values as support. The specialist uses resistance as an important factor in the analysis of a chart, which can help in the analysis. For this purpose, a resistance line is drawn, which is used as an obstacle within an upward movement. In a long-term chart, a breakthrough can be well recognized. Like previous support, the uptrend line can turn into a resistance when it has broken down. Resistance and downtrend lines serve as support for the course after a breakthrough.

Focusing on one technique may not be wise, so we get the most out of each area.



Fundamental Analysis: What do I buy?

I have already answered that question for me, the EURUSD, because for me it is the safest currency pair in the world. Keeping an eye on news and key interest rates as well as all the key influencing factors is absolute nonsense in my situation. There are people who want to make you believe that you have to have all the news in mind to predict a possible course. This is absolute nonsense for me, because the market makes the news and not otherwise. In retrospect, a course is always easy to interpret with messages. A course does not crash just because Trump was elected, a price crashes because the majority of traders, the current situation is not as positive and therefore they sell. A negative message can thus also be positive in the course of the share price and a positive message can also be negative in the share price. This has nothing to do with the news, but only with the intention of the individual traders. Only a glimpse into the glass ball can know how the majority react to a message. For me, the crucial area is the currency strength of the euro and the currency strength of the dollar. I keep track of them at all times. It is the decisive factor in fundamental analysis. This is easy and effective because the currency strength quickly shows me the decisions of most traders.

Technical Analysis: When do I buy?

Those who rely on the basic indicators in the forex market have lost before they started trading. The only factors that are important to me in the technical analysis are the accumulation and distribution as well as the volume. However, only with real stock market data, since I can not rely on the Forex volume data.

Chart Technique: Where do I buy?

After developing the bioniccandle, I was able to draw resistance and support zones more easily on the chart. Although the volume data in the forex market are completely misrepresented, the price data of my broker is almost identical to the stock market data. Resistance zones I draw within a tick chart exclusively in the forex market, since I also carry out my trading there. For this I will publish in the next few days a concrete example with the associated auxiliary indicators.

Richard D. Wyckoff (1873-1934) is probably not the inventor of volume analysis, but he was the driving force behind it. He made it clear that the price behavior of a share in terms of trading volume is a key component for the further course of the share price. In his day, he was an authority in the financial markets and was the founder of the Magazine of Wall Street. However, nowadays his view of the volume in the Forex market is only partially applicable. This is due to the changed market situation, new strategies of the big players and the high proportion of high-frequency traders, which leave a completely wrong picture of supply and demand.

Since the volume is very difficult to understand, I have developed an interesting comparison that we first want to talk about in detail.



To illustrate the volume, comparisons are made on the internet with a car, but this comparison is not quite correct. In the last few days, I came up with the idea to present you this comparison with a watercraft, I believe that one is able to relatively quickly capture the benefits and the functioning of the volume.

Water craft have very interesting features, such as a sailboat can sail faster than the wind and a raft move faster than the flowing water on which it is located. In 1837 engineers made a very interesting experiment. A raft was attached to the shore, holding a small waterwheel on a stick sideways out of the raft. Now the water wheel was driven by the flowing water and turned backwards. Now they let the raft go. The rotation of the water wheel slowed down until the wheel finally stopped moving. Boat and water were now at the same speed. But then the waterwheel began to spin forward. And that actually means that the boat was faster than the river. Responsible for this is classical physics. On a flowing body of water it goes downhill, the surface is in principle an inclined plane. This inclined plane slides down the boat and accelerates relative to the water. Because the friction in the water is very low, even the small slope is sufficient to move a heavy boat or float. Large inland vessels were thus able to be up to 15 km / h faster than the river.

Controlling a motorboat requires different skills than driving your car. The steering wheel reacts much slower than that of a car. The acceleration is slightly lower and there is no brake, but you can run the ship's propeller in the opposite direction to slow down the boat.



There are three main factors to move a boat forward or slow it down. On the one hand there is the speed of the boat, which is measured in knots. Then there is a control lever that controls the speed and direction of the ship's propeller. (Accelerator). With a right turn propeller, the boat will move forward as you push the control lever forward. When you pull the control lever backwards, the propeller first stops and then runs in the opposite direction to the left. This slows down the ride and as soon as the boat comes to a stop, it starts to drive backwards. An additional aspect is the ocean current. If you drive against the current, you need more power than when you drive with the flow. If the flow is stronger than the power of the engine, the boat will not move forward. Of course, there are other influencing factors in the physics of a boat that are not relevant to us in this example.



Since we now have three factors, speed, throttle and flow, there are eight possibilities. Four ways to drive forward, four ways to drive backwards. The boat has a right turn propeller, which means that when the propeller turns to the right, the boat moves forward, when the propeller turns to the left the boat moves backwards.

1.
We have a negative speed, so we drive backwards. We turn the boat's propeller to the left and the flow is negative, in this case even in the direction we are moving. This situation ensures that we can reach the highest speed backwards.

2.
In this case, we have a negative speed, we still let the boat's propeller turn to the left, but now we're going against the current. This situation causes our speed to be much slower than at point 1. As long as the current does not get stronger, the boat will continue to move backwards.

3.
In this case, we have a negative speed, we pushed the throttle forward, which means the boat's propeller is running to the right and trying to accelerate the boat forward while we are still driving with the current.This situation causes our speed to be slower than at point 1 and 2. After a while, the boat will stop and then drive forward.

4.
We still have a negative speed, we pushed the throttle forward, the boat's propeller turns to the right and tries to move the boat in the other direction, at the same time we move against the current. The boat will now come to a stop relatively faster than at points 1, 2 and 3. After a while, the boat will begin to move forward.

5.
Here we have a positive speed that boat moves forward. We pushed the throttle forward and the flow is just as positive, so it moves in our direction of travel. This is the optimal starting position for the highest forward speed that we can achieve with this boat.


6.
We still have a positive speed, the throttle is pushed forward, but now the flow is moving in the opposite direction of our direction. This slows down the speed of our boat versus point 5. As long as the current does not become stronger, the boat moves forward.


7.
We still have a positive speed, the throttle now we have inserted in the opposite direction to the rear. The boat's propeller now turns to the left and brakes our boat. The positive thing is that we are still moving with the current. This situation causes us to move forward more slowly, as at points 5 and 6, and after some time the boat will stop to reverse.

8.
The speed of the boat is still forward, the throttle has been pulled back and we are moving against the current. This situation causes the boat to come to a relatively quick stop and then reverse. Then we start again at point 1.



To make a comparison with the volume, we assume that we always go backwards when we drive backwards by boat. In reality, of course, you would turn the boat around to drive straight ahead. The speed of the boat corresponds with the course of the ticks, the higher the speed of the boat, the faster the ticks move up or down. The volume corresponds to the throttle of the boat and the flow corresponds to the absorption of bit or ask at a certain price level. As we have already noted, it is possible to works with the ticks on the forex market as the price movement closely matches the stock market movement. The volume can only be determined in the stock market, since the forex market does not provide any specific volume. Likewise, the absorption of bid or ask you can be easy identified in the stock market with the corresponding footprint charts. Let's look at an example.



At first we are in a downtrend, at point A we can clearly see that the positive volume is already getting stronger. At first the price goes down, the bearish volume becomes much smaller starting from point B. At point C and D the bullish volume gets stronger and leads upwards for some time. At point E, the bullish volume has reached its peak, the price goes first into a pullback and then goes up again. At point F, the bullish volume increases again. The uptrend that follows now shows that the bullish volume is significantly decreasing ( point G). Thereafter, the bearish volume rises sharply, causing the price to move lower. From point I, the bearish volume decreases and the bullish volume goes up again.

We can see that the price always follows the volume. The comparison with a motorboat is good in that a boat does not react immediately to a steering or gas change. When I push it full throttle, it takes a while for the boat to reach its top speed, just as I brake.



The information about the volume can only be obtained with real stock market data. In addition, I recommend you in addition to the volume data in addition to bid and ask data to show. The reason for this is relatively simple: if it is a bullish candle, the volume is always displayed bullish. However, this is not always correct, because under certain circumstances it could happen with a bullish candle that there are more Ask than Bid in this candle. That alone is an important piece of information for the rest of the course. In addition, I recommend using an indicator to indicate the speed of a single candle. This makes the speed of candle formation easier and clearer.



The absorption is also only with stock market data and somewhat easier to identify with the footprint charts. Let's return to the comparison of our boat. The price is initially up and despite high volume, it does not go up. If you push the throttle fully forward, but the ship does not move forward, you may have encountered an obstacle. This obstacle could well be a very strong current. This flow is the absorption of a big player. What do you do as a ship's guide if the boat does not move forward? You can run the propeller in the other direction and the boat moves backwards. This is exactly what happens in the market when a big player absorbs the bid and then pushes down the price. For this reason, it is important to keep an eye on the speed or size of the candles, the volume and the absorption (flow).

And there we are already at a crucial point, the current. When you're in a boat, you can not see the current immediately. You may notice that your boat is moving more slowly. For this reason, it is important to consider all these different factors simultaneously in the chart. Perhaps with this pictorial example, you can better understand the volume in the future and make your trading decisions a little more efficient.

Basically, the volume with stock market data is a very interesting thing but requires additional information. As already described, I additionally use the currency strength and in the tickchart with the Bioniccandle my resistance zones. In combination of the technical and fundmental analysis as well as the chart technique, I am currently achieving my best results. However, I am convinced that these values can be significantly improved.

A crucial aspect is the correct identification of the volume. We will look at the 8 different possibilities of Speed, Accelerator and Current in the next few days concrete examples from the market.

I wish you a successful trading week.

best regards

have good time Bionics
I love Simplicity
Please continue , looking forward to your simple and useful examples

Hello shahed58,

Thank you for your kind words. In my last post, I've tried to explain the volume as simple as possible. Pictorial examples also help me to remember what I have learned. The problem is having the right idea, sometimes it takes time. If you take it exactly, the stock market is highly complicated. You only have one chance by simply explaining this market to yourself. I'm just about graphing the absorption of Bid and Ask for me graphically and easily, but that's still a big challenge. I will certainly come up with an solution.. I am glad that this blog helps you and I am convinced that together we will achieve a lot.

best regards

I thought the attached indicator might be of some help in gauging the speed and velocity. The indicator shows you one line of text for every new tick comes in (price, time and the change in pips). If you set PeriodSeconds to a value x other than 0, it will give you a new line of text every x seconds. It is as if you had an X second-period chart in MT4.

What indicator are you using to find out absorption bears and absorption bulls?
Also for graphing ticks bulls and bears?

Hello simnz,

the indicator is a great idea, first of all very much thanks for that. I think that can help the many traders. I will also try it. I would like to answer your question, how I determine the absorption.

My data for my trading decisions I get from Forex and stock market data. For me, one crucial area is the currency strength of the euro and the currency strength of the dollar. I keep track of them at all times and, for me, is the decisive factor in fundamental analysis. Resistance zones I draw with the bioniccandle within a 16-tick chart exclusively in the Forex market, since I also carry out my trading there. In addition, I have a 8196 tick chart for the long-term overview. The only factors that are important to me in the technical analysis are the accumulation and distribution as well as the volume. However, only with real stock market data, since I can not rely on the Forex volume data.

In the field of stock market data, there are currently only three ways for me to correctly capture absorption.



At point A you can see an order flow chart, which in principle is a time and sales list, which also shows the tick changes on the chart. In the following case one sees in the time and sales list 47 lot traded. Point B, the 47 Lot are now broken down individually. In this case, it can be seen that a single trader has traded 40 lots. After that the course went down massively. At point C I have created an individual DOM. On the outside you can see the limit order in Bid and Ask, next to it the executed Oder and in the middle the order shortly before execution, added or deleted. (Spoofing). With that Iam relatively quickly able to detect whether it comes to absorption.



Another option that I find very interesting is a two tick chart. The Heiken Ashi I have only used, since he combines the incomplete candles in the two Tick Chart meaningful. The smoothing interests me less. Underneath is an indicator that lists the bid and ask from the DOM one by one. At the bottom you can see a volume chart. At first the price rises, at point A you can see that our volume is still relatively high, but the price goes first sideways and then further upwards. At point B, a strong bearish volume develops, followed immediately by a strong bullish movement. However, this bullish movement has no relevance to change the course. Likewise, there were strong bullish movements at point C and D which also did not provide for a course correction upwards. At point A and B you could already detect an absorption. This means that the limit orders in the market have simply absorbed the bid. At points C and D, there were further absorptions, which then caused a stronger downtrend.



However, it is important to keep an the overall picture. In Footprint Chart M10, you see, at point A, the delta volume at a price level. Within this price level, which I have marked with a blue arrow, most Bearish Lot have been traded on the stock exchange during this period. At point C, there was then a strong absorption within the M10 candle. You can see this clearly in the imbalance and that the course was then strongly rejected upwards. So it was clear that you had to find a good entry for a long position below the blue line. I would find this optimal entry in the 2 Tickchart.

However, I am still trying different variants to test that will certainly take some time. Due to the erroneous volume data, it is difficult for me in the Forex market to reliably identify a specific absorption. In the past, I managed to do so, but with much higher losses than with real stock market data.

Thank you again for the great idea with the indicator, I wish you a great weekend.

best regards

Volume: Speed, Accelerator and Current


Hello dear traders,

As promised, today I am publishing in volume an example of speed, accelerator and current.



Basically, I get correct volume data only from the stock market, so an example from the Euro FX. You see a normal candle chart and at point A the volume shown. The following example is an excerpt from the yellow-bordered square.



The course comes first from the top and then runs into an equilibrium. At point A we see a normal volume. This volume always assumes the color of the candle in the chart, no matter what the distribution of bid and ask looks like.

At point B I have shown the respective color of a delta volume. The size of the volume bars does not differ from the normal volume, but I reduced the bars due to the overview. If the bids are larger than the ask, the bar turns red and vice versa.

At point C you can see the different bid and ask traded within the candle. The bit and ask ad is the more reliable volume indicator for me, but at first glance, it also takes some getting used to.

At point D, you see a bearish candle that has a range of five ticks. At point E, I enlarged this candle again. On the left side you can see the number of lots that have been traded in the bid and on the right side you can see the number of lots traded in the ask. 223 lot were bid on the bid side and 168 lot on the ask side. At point F you can see the result again. In total, 391 lots were traded in the candle.

Let's take another look at point G, the Bid and Ask ad. Here you can see that on the bid side more lot was traded than on the ask side. The representation of the normal volume at point H shows only a red bar containing the 391 Lot. Here you can not see how many lots were traded on the bid side.

This brings us back to the delta volume at point I. This delta volume shows in color whether more was traded on the bid side or on the ask side. We will see a few more examples soon.

The course comes from above and goes first into a pullback. Now we are at point 1. In row A you can see that a green volume candle has been formed. The delta candle, on the other hand, is red, and in the bit and ask indicator (row C), it looks like it is an equilibrium. In fact, in the candle on the bid page 211 lot were traded and on the ask side 198 lot. With the information of the green volume candle (point A) one could assume that the price may rise again. Just the fact that in a bullish candle, more bid than Ask traded, lets me be careful at first.

Then the course continues down. At point 2, a stronger bullish candle is created. The lower volume in row A is green. However, the candle traded more bid than ask. At point 3 we see an absorption at the red arrow. 62 lots were traded on the Ask side, which were absorbed by limit orders. That pushed the course down first. But what do we notice within this candle? The red volume indicator in row A does not indicate that this candle has traded more ask than bid. After that, the course went into a sideways market. At point 4 we can see that it is a bullish candle but here again more bid have been traded as ask.

The volume is a deciding factor, but it is important to choose the right volume setting. Therefore, my basic recommendation, if you have a delta volume available, take it. As soon as the color of the candle and the color of the delta volume differ, you should be careful and look closer into the candle to see what happens. The more accurate display is however the Bid and Ask indicator, but that takes a bit of getting used to.



In this presentation, I once presented the bid / ask indicator, you see that it takes a relatively large amount of space to have a good overview.



Maybe you can still remember my volume comparison with the boat (Post 1022). If you do not know this article, I ask you to read this first.

https://www.forexfactory.com/showthr...0#post12443320

There I represented the volume with a boat propeller. When the boat propeller turns to the right, the boat moves forwards, when the boat propeller turns to the left, the boat moves backwards.



At the bid and ask screen you have to imagine a boat with two boat propellers over each other. The upper boat propeller always runs to the right and the lower boat propeller always turns left. The bit and ask display shows almost how strong the respective boat propeller turns. However, since a boat does not respond directly to the boat propeller, it sometimes takes a while for the force to be translated. That way, you might be able to understand Bid and Ask a bit easier.



As I described in post number 1022, there are three key factors we need to keep in mind. That's the speed of the candle. It's not just about the candle moving fast or slow, but it keeps following the trend direction. Then there is the accelerator, which is the volume indicator, or the bit and ask. Finally, there is the current, which can possibly slow down a boat in his drive strong. Absorption is a factor responsible for flow. However, current can also be created by selling off the position. Here's an example. A big player buys the euro and the price goes up sharply. Now he goes out of the position to realize his profit. So he sells the euro and at the same time he buys the dollar. At that moment the price is going down again. I have now tried to put these three factors: speed, accelerator and current in an example.



We start with the red point A. The course first goes down, it also creates a strong bearish volume. At point 1 the throttle is put on bullish, we can see that this happens already in the last red candle (point 1). Starting at point 2, the price will rise more sharply. When the yellow candle, the course has reached the highest speed, shortly thereafter, the throttle is set to bearish and the course is initially in a pullback. At point 4 comes again a strong bullish volume, which drives the price upwards. We see again a yellow candle and shortly afterwards the course runs out of air. It is initially in a sideways phase, the course tries to push up again, but is absorbed on the upper level. We see that very clearly when we look into the candle (point 7). At point 8, the accelerator is turned back to bearish, the course runs down and is intercepted by the bulls. At point 9, the bulls try to accelerate again, but they are intercepted at point 10 again. Only starting at point 11, the bears manage to push the course down a bit more.

The volume is very efficient, but also difficult to act. There are several factors that must be considered at the same time. In addition, the time unit M30 is clearly too big for me, my volume display runs in the 2 Tick Chart. It may be a bit stressful at first, but over time I got used to it. Most scalpers, however, I would recommend M1 or M5.



In an uptrend, we will often find the following default situation. At point 1 the volume is still very bearish and in the further course the bulls try to get ahead. At point 2, we see that the bulls kindle a veritable firework of bullish volume, but the price is only slowly rising. At point 3, a strong bullish volume enters the market, and shortly thereafter, the price has peaked until it then pulls into a pullback. Thereafter, the course runs to the point 4 and turns into a sideways market. In the volume chart, the bullish volume is decreasing and the bearish volume does not seem to be dangerous. At point 6, the bulls start again and the course goes up to point 7. After that comes very strong bearish volume that slows down the bullish speed. If you compare the bullish volume (point 3) with the bullish volume (point 6), you see that the bullish accelerator has been significantly reduced. As of point 7, the bearish volume also falls sharply, but at point 8 it is significantly stronger than the bullish volume. The movement upwards was gradually slowed down with this bearish volume from point 7 onwards and then went more strongly downwards from point 9 onwards.

So, if a price goes up higher and you realize that the volume is decreasing significantly within the course, then you have to be careful and expect a downtrend. If you still have the opportunity to look into the single candle with a footprint chart, you have an advantage that over 90% of traders do not have. Of course, a footprint chart is not a guarantee to do everything right, but you'll get important information about the current market situation. That's one of the reasons why people should deal with stock market data. As you know, legal regulation dictates that every broker must publish how many traders lose. For most Forex brokers that's 80 to 90%. With the Future Broker AMP, which also offers CFDs, 43% of traders lose money. Maybe it's because the stock market data provides the better information. Another point is that only experienced traders will take on the futures market. However, we do not want futures trading, we just need the stock market data to be able to trade successfully in the forex market.

The volume of data in the forex market compared to the stock market differs significantly, so I can not recommend anyone working in the forex market with the volume. Just get the right stock market data and you will significantly improve your quotas. I have already made a specific recommendation in Post 1013.

I wish you a nice weekend and a successful beginning of the week.

Best regards

Important information about the volume


Hello dear traders,

As we already know, there can be no concrete volume in the forex market, as it is an OTC market and not a stock market regulated market. In contrast, we have found that the price movements in the Forex market and in the future market are almost identical. This fact has brought me an interesting idea that could possibly bring our forex traders closer to the volume. Let's take another look at the difference in volume in the forex and future market. I used a H1 chart for this from the 12th of August to the 16th of August.



On the left side we see the H1 in the forex market and on the right the H1 in the future market. Basically, we can say for the first time that the price developments are almost identical. By contrast, the volume looks completely different. While the highest volume was formed in the Forex market at the beginning of the chart, the highest volume in the future market was only formed towards the end. Let's take a closer look at this comparison.



Here the full extent of the disaster becomes clear. Even when you close your eyes, you can not see a clear match. On the right side, at first glance, there seems to be a similarity that still has some flaws. This presentation alone should prevent any trader from concentrating at the volume in the forex market. At the crucial points, the volume reading in the forex market is so wrong that you may lose a lot of money.

In each aircraft there is a display "stall" indicating a flow demolitions on the wings. If such an indicator lights up you have to press the nose of the aircraft down and accelerate immediately. Many years ago, a large passenger plane crashed because the pilot thought the "stall" message was wrong. More than 250 people lost their lives. Would you fly as a pilot with a machine whose "stall" display is faulty. Probably not. If you know the volume display is incorrect, you probably will not trade with the volume. Unfortunately, volume is one of the most important indicators in trading, because we know that the price follows the volume.

My basic recommendation is that one should rely solely on stock market data for the volume, or to take complete distance from the forex volume. At first, this may be a bit frustrating, but there is a small ray of hope, as the price is correct in Forex. A trader relying on fundamental analysis might have a good chance in this market. Also in the area of technical analysis one can realize quite good profits with accumulation and distribution. In the field of chart technique, resistance and support zones can definitely be charted.

Without stock market data you have to do without many things. You get no volume, you can not look closer into the candle and is thus unable to detect concrete absorption in the market. In addition, one can not tell whether in a bullish candle more Bid than Ask were traded. And all of that is crucial to pinpoint the turnaround and get you started. Now, not every trader is likely to be able to get data on exchanges. So I've been wondering if there's a way to show the volume in the chat a little more accurately.



At the bottom you can see the right volume in the stock market. I used the last week's period and plotted lines at each of the highs and lows. In the stock market, there are four bars that exceed my drawn lines. This is the basis for me. First let's take a look at the normal volume display in the forex market. There, the lines are broken a total of 19 times, that is 15 times more than in the stock market. I now had an idea to calculate the volume in a different way and was amazed that the lines were only 4 times, as in the stock market, broken. This has led me to pursue this idea further. If you compare the volume in the stock market with my idea you will see that there are still big differences. I am convinced that these differences can be brought even closer to the future market, but I will still need some time.

Although some tests have been made and found that the Forex volume should be about 80% correct, but I doubt this thesis strong. And even if it were true, in the crucial places, the volume is factually wrong. And that is exactly what ensures that many get a false entry into the market. I'll take a closer look at my approach over the next few days, and there may be a solution to how the volume in the forex market could be presented in more detail. I'll keep you up to date and maybe post an indicator next week.

Basically, you should know, however, that the Forex volume never comes close to the stock market volume and who wants to play it safe, must get the right stock market data in any case.

I wish you a nice rest weekend

Best regards

Amazing discovery in volume


Hello dear traders,


Today I want to write about an amazing discovery that I have made in the last few days with the Forex volume.
The interbank market is the market where money and credit business takes place only between banks. Banks and financial institutions trade with one another in the interbank market, lend each other money and can thus ensure that they remain liquid. Securities, money, foreign exchange, precious metals or derivatives are exchanged in the interbank market. The interbank market is assigned to the money market. The rates of currencies are not determined by a government as long as they are freely tradeable and not linked to another currency. They are based solely on supply and demand. Forex trading is usually OTC, i. E. it is not centrally organized, but takes place directly between the market participants or through a broker. This trade without a central marketplace is referred to as over-the-counter (OTC) trading.

Bank risks are to be spread across the interbank market. Through it, the banks can carry out liquidation of open positions that were previously established in the customer business. Or the banks operate proprietary trading on the interbank market. In addition, interbank trading should ensure sufficient liquidity at all times for the banks.

On the stock exchange all market participants have the same extensive information. In Forex market, most market participants have insufficient information. The forex market is for the retail trader more opaque than the exchange-regulated market.

In the forex market, we do not receive a specific volume (number of lots) or a specific number of completed trades. Therefore, there can be no Dom and no Time & Sales list. It is also impossible to display a footprint chart, a volume profile, deleted lots in the dome or an imbalance in bid and ask. For this, the largest banks would have to be willing to publish their data. And that is exactly what will never happen in the forex market.

This is dramatic as the price always follows the volume, so a forex trader misses a big opportunity. I have already written this in detail in my last posts. In addition to the price information and the time, we receive individual volume data from our broker, which our volume indicator implements on the MT4. Since our broker never maps the entire Forex market, he can only provide us with limited volume data. Thus, the volume data are only a pure estimate and have little in common with the actual market.

In recent weeks, I have found that the price movements in the forex and stock market are almost the same. I also have some examples and a video published.

https://www.forexfactory.com/showthr...7#post12405527

Now, I came up with the idea, based on the pure price, with an indicator to recalculate the volume. I would like to introduce the result to you first.



On the upper left side we see the EURUSD M5 in the forex market, on the right side the Euro FX M5 in the futures market. Just below the M5 Chart we can see the volume that we are getting in the forex market. Below that is the volume that I have generated from the price with my indicator. On the right side we see the real stock market volume in Euro FX.



Here I put the three different volume calculations together. The reference value is the real volume from the futures market. One recognizes at first glance that the calculation of the price is closer to the future volume than the forex volume. Let's take a look at more examples.



Here we see an M 15 chart in the forex and futures market within the same time frame. The respective volume is listed below.



Here we see within a same period of time a M30 chart in the forex and in the futures market. The respective volume is listed below.



In a direct comparison, one can see that the volume calculated from the price is still approaching the real volume of the stock market. Nevertheless, there are significant deviations.



Here we see a H1 chart in the forex and futures market within the same time frame. The respective volume is listed below.



Here we see a H4 chart in the forex and futures market within the same time frame. The respective volume is listed below.



We note the larger the time periods, the more accurate the volume price representation. Still, the calculation of the price compared to the Forex market has the nose ahead. I deliberately did not compare the two daily charts, as we are already trading on the Sunday evening in the forex market, which means that 6 candles per week are displayed.



Let's compare the volume in the M15 again. We must note that the real volume from the futures market is the reference value. Using this example, we can clearly see the benefits of calculating the price. This means that a calculation from the price provides more accurate volume data than the volume estimate of the market. That was very amazing for me at first, even a calculation in the tick volume did not approach the price calculation. But as nice as the whole thing looks like, you basically have to realize that the volume calculation is still not correct. It may not be quite as wrong as in the normal volume calculation, but it is still incorrect. Since the price development in the forex market is almost identical to the price development of the futures market, there has to be a possibility to build an effective indicator from the price that gets even closer to the actual volume. I could imagine, if one combines a certain proportionality of Open, High, Low and Close with the speed of the respective candle, that one can achieve a much better value from it. There are far better professionals here at FF than me, who can possibly do such a programming. The fact is that a price calculation from the price brings a significantly better result in volume than the estimate of the individual brokers. However, please note that this is just a project. I realize that the basics of volume data are the result of bid and ask. In addition, I have not had time to thoroughly test the indicator.

The indicator I like to provide you. You might try to use this indicator in a tickchart because a tick chart comes closest to the volume. I also wrote some reports for that.

https://www.forexfactory.com/showthr...3#post12272183

Although the results of the volume indicator look better at first glance than the results of the normal volume indicator, please note that no volume indicator calculates the right values in the forex market. Therefore, you should not enter into trading on the basis of these values. As before, my recommendation is to get specific stock market data. Maybe a capable programmer has the time and the desire to deal with this project more closely. I am definitely convinced that with a professionally programmed indicator you can get even closer to the stock market volume.

Maybe I could prove with my presentation that the price calculation may progress further than an estimate. And that is already a big step forward.

The indicator was very easy to program and should only be considered as an example. The basis is the Bionic candle, so you are also able to deduct the pullbacks of the candles within the volume display. For this, you have to colorize the first two bars black in the color setting of the indicator.

I have the indicator running in a 2048 tickchart and the values are very impressive. In a tickchart, the size of the candles is in principle the existing volume. If you run a normal volume indicator in the tickchart, the same volume is always displayed. With the price volume display, we also have the opportunity to generate a clearer volume display within a tick chart.

I hope that this idea helps you and I look forward to your feedback.


I wish you a successful trading week.

best regards

i'm agree with you that the volume is different between the future and forex market and looks different from broker to other ....But we can find some famous members in forexfactory they are succeeded with the volume in forex market and they are become as reference for many traders interested in volume spread analysis so we have malcolmand ...petefaders and others stars...so if the volume is incorect in forex how is those guys are working great with it ?

Hello thelord14,

First of all, many thanks for working through the posts so much and dealing with them in detail. There may be some complications when translating from German to English and back into Tunisian or French. This is not uncommon on an international platform. Basically, I did not say that you can not trade with the Forex volume, I advised against doing so because the data is incomplete. Why traders with forex volume succeed, you do not have to ask me, rather the successful and well-known forex volume traders, you mentioned . A successful trading approach always relies on correct trading data in order to achieve the highest profit probability. Of course you can also achieve profits with incomplete data, it is only much harder but not impossible. There are also enough traders who are successful without volume information. I myself traded the last few years without the volume and was satisfied with that. Every trader works with the best data and strategies and that's a good thing. Also, you have the right to work with the volume data from the forex market and I heartily keep my fingers crossed that you will succeed.

My block is, as I have emphasized a few times, a buffet, everyone takes out what he considers important and the other he lets be. So I do not want to get involved in discussions about what's right and what's wrong, because there is no right or wrong in the forex market. Personally, I try to work exclusively with data that, with a high probability, optimally support my chosen strategy. No more and no less. I represent this point of view within my blog. Each trader is responsible for his own actions and everyone has of course the right to work with all available data. Basically, I'm not sad that there are traders who do not rely on stock market data, because ultimately increases the probability of profit of those who use the stock market data. And in a purely random market, it's all about probabilities. This is a curse for some, a chance for others.

I hope you can understand my point of view and accept it. Albert Einstein once remarked that the horizon of many people is a circle with zero radius - and that's what they call their point of view. "Maybe my point of view is wrong, the question is just for whom? Therefore, every trader, from the multitude of different information, must gather his own truth and put it to the test in practice. The forex market is my home, it offers the most interesting odds while providing the highest level of security. And that's exactly why this blog was launched.

I'm convinced you see that in the right context.

best regards

hello sir ....i have some question about the last indicator volume price
as you can see in the picture

Attached Image (click to enlarge)

at point 1, it's your indicator
at point 2 ,it's a indicator showing the candle length as a volume
at point 3 , the volume from metatrader
so you can see clearly seem like there a perfect match between your indicator and the candle length indicator ...whats that mean ?
is that mean the full size candle in Forex it can be the real volume ?

Hello thelord14,

As I already wrote, my indicator is a normal calculation of high and low of a candle, I assume that the Candle legth uses the same calculation. In the volume price indicator can additionally subtract the last pullback of a candle, so that the calculation of Bionickerze arises. In fact, a price calculation for the volume seems to be more accurate than the volume we receive from our broker. However, the most accurate calculation is within a tick chart, there may be deviations in the normal time chart.

best regards

A kind of bid-ask indicator



Hello dear subscribers,

In the last few days we have talked in great detail about the volume and I have give you in the last post a volume indicator, which is calculated from the price. The challenge with volume is that there is only one volume per candle. A distinction between bulls and bears is thus difficult. In the stock market, there is a so-called bid and ask indicator that shows the number of bid and ask traded in the market. Now I have developed a kind of bid and ask indicator, which is calculated from the price. If you are not yet working with the Bioniccandle, but with a normal candle chart, then you have relatively quickly the problem within this candle to recognize the actual strength of the bulls and bears.



On the left side you will see a bullish candle and in the middle the price. Overall, the candle has made a bearish move of 20 points and a bullish move of 50 points. The bid and ask indicator now translates this candle into a bullish and a bearish movement. The result can be seen on the right side.



I have created a video for you, in the chart you can see the Bioniccandle underneath the already published volume price indicator and at the bottom you can see the new Bid and Ask indicator. On the right side I show for comparison the DOM with stock market data.



The price is on an upward trajectory. It is very easy to see from the bid and ask indicators when the bulls and when the bears are getting stronger or weaker.



Here's an example in the Euro Dollar within an Equilibrium. In the Bid and Ask indicator you first realize that the bulls are a bit stronger, but the more we go to the right, the more the bears gain strength. Then the course goes down. I believe that with this indicator, you can see the actual strength faster.

I would like to point out once again that this indicator is of course not a true bid and ask indicator, as we unfortunately do not get such data in the forex market. This indicator translates a candle in bullish and bearish movements based on the OHLC. I recommend you to use this indicator in a TickChart, as it allows you to identify trend reversals even faster. Take a closer look at this indicator, I am convinced that it will help you in many areas.

I look forward to your feedback and wish you a nice weekend

best regards

Translation from bid and ask indicator


Hello dear subscribers,

On Friday, I introduced you to the Bid & Ask indicator. This indicator measures within the candle, the bullish and bearish movements and outputs the result on two levels. But this again gives us two different pieces of information that we need to process. Now I've built an indicator out of it, which translates the two movements into an actual movement.



Here you can see the Bid & Ask indicator in the M15 Chart. The blue arrows show a downward trend with five red candles. Of these five candles, however, there are three candles that already contain more bullish movements than bearish movements. It is clear in this indicator that the bullish movements are growing stronger within the downtrend. Professionals are already recognizing that by the candles, but I think such a translation indicator helps to spot the strength of the single candle more quickly.



I once constructed the Bid & Ask total indicator for two levels. Once where the bulls and bears are separated and once where bulls and bears are right next to each other. In principle, this indicator is a slightly more accurate volume indicator. Below you can see the price volume indicator, which is calculated exclusively from the high and low.



Here you can see again the different indicators in use within a M15 chart. You see that the Bid & Ask Total Indicator gives much better signals. I still recommend using this indicator in the tickchart, as it is closest to the volume. This indicator makes it relatively easy to detect when more bearish movements have taken place within a bullish candle and vice versa. This could help to detect potential reversals or pullbacks more quickly.

I wish you a great weekend

best regards

Crazy statistics


Hello dear subscribers,


Over the last few weeks, I've come to believe that the forex market is three times harder to trade than the futures market. Although this could partly be proved by the world championship in the forex and futures market, I only wanted to go a little deeper to find out for myself personally what risks await me in the different markets.

Why do I do this?

As I have already stated, due to the high level of security, I only trade in the forex market while using data from the futures market for my trading decisions. Now I wanted to check to what extent such an approach is worthwhile. The following statistics, based in part, on a purely hypothetical assumption, since some factors are unknown about the forex and the futures market.



Last Friday there was a day candle in the Forex as well as in the Future market. When evaluating the OHLC data, 205 ticks or 102.5 pip between high and low were reached in the futures market. By contrast, the forex market came to 101.9 pip or 204 ticks. Of course there were minor differences when comparing the OHLC data. But for me, the deciding factor is the range in which the price moves. And the similarity of price movements is clearly visible. In addition I have already published a video in which the individual tick charts were compared. The similarities in the price history were the basis for me to use the futures data to take the risk of trading in the forex market.



The Forex market trades an average of $ 1.7 trillion per day. That's about 17 million lot and 11.3 million transactions. In the futures market, on the other hand, $ 18.75 billion is traded on average per day. That's an average of 150,000 lots or 100,000 trading transactions. These numbers result from different press releases. Of course I can not know if these numbers are correct, but this is just a hypothetical assumption.

The yellow marked fields are numbers used by me to create a possible calculation. Although there are only institutional traders in the futures market, I have distinguished between private traders and institutional traders. In fact, the Forex market is 90-100 times larger than the futures market.

The first question that interested me was how much money is actually exchanged within a day. Of course, we know that the forex market generates $ 1.7 trillion a day in sales. Although this money will be invested in the market, it will not be completely exchanged. If I invest one lot, that's $ 100,000 in the market as sales. Now, if I count on an average stop of five pip, the average loss on one lot can be $ 50. Of course, there are traders who use significantly larger or no stops. However, there are also a lot of Scalper who work with much lower stops. That's why I've calculated a $ 50 risk per $ 100,000.



Let's start with the Forex market. First of all, I will use my estimated numbers, where there are 1 million private traders and about 10,000 institutional traders in EURUSD within one day. The turnover of private traders is around 6% compared to institutional traders. Thus, the risk for private traders would be $ 50, as they trade average one lot, while institutional traders on average risk $ 80,000, as they trade on average 1600 lots. That brings us to a total risk of approximately $ 850 million. If we assume that 94% of all private traders lose, that would be $ 47 million. That corresponds to a risk of 1:18. Assuming that the institutional traders operate at a 1: 2 risk, it would add $ 400 million per day. Thus, I come to a sum of about $ 500 million per day, which could be exchanged in EURUSD.

In Future Market, we quickly realize that the amount exchanged per day is about 100 times smaller. That would also coincide with the sales figures. Since it is very difficult to determine the quotas of the individual institutional traders, I would like to count in the following comparison only with private traders. It is quite clear that most of the money is lost by the private traders, but there are also institutional traders who lose money.



In the following overview, I once pretended that there were no big players in the market and that only private traders would trade with each other. The forex traders would take a total risk of $ 50 million, and if 94% of these traders lose 5 pip, $ 47 million would be in the pot, which will be distributed to the remaining 6% of the winners. That would be $ 784 per winner. Again, I calculated a risk of 1:18 again.

In the futures market, the total risk of private traders would be $ 3 million. Here we already have a much better odds of 1: 6. So, if 83% of traders lose 5 pip, that would be $ 49,800. This money was split to the remaining 17%, giving each winner $ 244.

While a trader in the forex market has an average risk of $ 50 and may potentially win $ 784, a futures trader comes at a risk of $ 300 because he trades an average of six lot to potentially win $ 244. So we see that the price-performance ratio in the forex market is much better. What speaks against the forex market is the ratio of 1:18 against the futures market 1: 6. If I now work with stock market data in the Forex market, I improve my profit probability and at the same time increase my payout in case of profit.

I hope everyone understands that this example is really only hypothetical, as we are dealing in this market with professional institutional traders who usually take the money from private traders. However, if you are lucky enough to be taken away by the institutional traders within a breakout, you will get a portion of the pie. Of course there are also institutional traders who lose, but usually these will be the private traders.

For me it is clear that it makes no sense to trade in the futures market, because I can win much less than in the Forex market. And that's also logical, because a win rate in the Forex market of 1:18 means: You win the money that the other 17 lose. However, the probability here is 6%. A win rate in the futures market of 1: 6 means: You win the money that the other 5 lose. However, the probability here is already 17%.

The trick is to use the stock market data to make the right decisions in the forex market. Not only do you need a good data feed from the stock market, you also need a very professional trading software to translate the stock market data correctly. After that you have to be able to interpret this data in such a way as to gain profits in the forex market. I am aware that this is a very big challenge, but who gets this degree walk can make interesting long-term gains.

Please note that this presentation is very simple because of the clarity, the reality is much more complicated and possibly my data is completely wrong. However, I can derive an important insight for myself from this. The forex market is still the most interesting market in the world, while I can optimize my profit probability with the stock market data. Of course you can optimize your profits in the forex market even with the pure price data, but the stock market data are more accurate in the volume range. Anyone who correctly interprets the price or stock market data will be among the big winners in the long term.

Our project # 6 has started and I am in close contact with some of the friends involved in the project. We will test different scenarios and exchange ideas regularly. At the same time, we are acting with the same brokers, receiving the same stock market feed that we have linked to a professional trading platform. The challenge is to identify the right data to make the best trading decisions. There are hundreds of different settings that we will review individually. Of course we will keep you up to date regularly.

I wish you a successful trading week

best regards

Hi Bionics,

Mean reversion is a trading strategy based on the statistical phenomenal of regression to the mean.
How could a trader (not a mathematician) quantify mean (by using any MT4 indicator) and plot a table and histogram (again through an indicator based on tick data?

Which types of bands would you use to help identify deviation and enter the trade?

Is it possible to forecast month-wise exchange rate on what probably could be the distribution pattern? Picture attached.

Please also explain how best to use the two indicators shown on the chart?

Thank you and best regards

[quote=simnz;12475042]Hi Bionics, Mean reversion is a trading strategy based on the statistical phenomenal of regression

Hello simnz,


First of all, Thank you so much, that you have dealt so extensively with our blog. I would like to answer your questions in detail.

Our project number 6 deals with a possible commonality of the futures and forex market. While we get correct time and OHLC data in the forex market, in Future Mark we also get the number of trades and the volume. As we noted earlier, the volume in the forex market is not comparable to the volume in the futures market. For this reason one can rely in the Forex market only on the factor time and on the factor price. That's why in the past I have created many projects to identify possible turning points faster.


For the two indicators that you have shown in your chart, you will receive detailed information in the following blog.

Bionic Bull Bear Average Candle Indicator

https://www.forexfactory.com/showthr...1#post12293331

Power x candle

https://www.forexfactory.com/showthr...1#post12369371

The indicators work very fast because they are price dependent, but do not personally give me the information I need for my trading style. Regression based on the mean, I have developed an indicator that I think filters the bullish and bearish movements quite well. I would recommend this to you to try once.

Bionic percentage balance indicator 1.2

https://www.forexfactory.com/showthr...6#post12305976

Moreover, the bid and ask indicator that I posted in the last post is currently a very interesting indicator for me as it indicates the specific strength of the price. It is interesting, if with a bullish candle, the upper pullback is larger than the actual candle body, then the indicator shows me a negative volume.

Her question: Is it possible to forecast month-wise exchange rate?

In my opinion, this is unfortunately not possible because the price development is purely coincidental. As we all know, the price is determined by the big players in the market because only they can move the course. A big player will do everything to confuse and mislead the mass of traders. As I explained in my review of accumulation and distribution, these are the zones where the big players prepare their strategies. Then the strategy is executed.

How to use the stock market cycles correctly

https://www.forexfactory.com/showthr...3#post12432243

So the main zones are these accumulation or distribution zones - I like to call them equilibrium zones where the big players absorb a certain amount of solder. These zones are optimal for me as a scalper, because I can act without much risk up and down. Depending on how the big players get their strategies, the price changes up or down. Of course, the big players also pay attention to market conditions and important meetings, but usually the price depends on their strategies. That's why I do not pay attention to news at all but try to focus exclusively on the big players to follow them.

Your question: Which types of bands would you use to help identify and enter the trade?

In the forex market I work exclusively with the price and with the currency strengths. Based on the price, I work out my resistance zones using my key candles. In addition, I work exclusively with the Bionic Candle in Tick Chart, because the price is displayed to me the most accurate. In addition to the, Dom, the time and sales list as well as a delta footprint chart, I receive the volume from the futures market that I can display in the form of bid and ask. As soon as the course runs into my created zone, I search in the 16 Tickchart my optimal entry zones. I usually work with a stop of 0.5 pip and am already out again after 2-5 pip. Sometimes this only takes a few seconds sometimes a few minutes. The success rate is quite high with such an approach.

As a rule, I prefer to work within the accumulation and distribution phases, firstly because they account for 70% of the overall price development and secondly because it offers great security. If the course breaks out of this zone, I'm also often there and then let the course from fun just run. Gains resulting from this are pure luck. If I am stopped out I have lost nothing at least. But most of all I like the trades, which I have estimated with a high probability, because only these trades are repeatable. IIf you just trade down today from the Daily open and let the course ran, that has little to do with strategy and will be pure coincidence. And coincidences are just not repeatable. So it is even if I lose, then I would like to know exactly why. I then search until I find out a plausible reason for me. Whether it is always right, I doubt it, but I try to learn from everything. And most of all, I've always learned from my losses.

Basically, I recommend that you do not make any predictions about the course of the price, but to follow the price as best as possible. For this you have to identify the big players in the market. This is usually a very difficult task, but there is a simple solution. You have to find out where the mass is. And unfortunately that is only possible with real volumes and the footprint chart in the stock market. Since you act with Future, this should not be a big problem for you. Decisive, however, is a professional trading platform that optimally translates the stock market data.

I hope I could answer your questions to your satisfaction and wish you a great weekend

Best regards

Thank you for your detailed response.

Today I have come across a video which is quite close to what you have been writing about. The speaker puts forth the views on market operation with a rare clarity. I hope you develop or use existing indicators to identify the three phases of the Market :contraction, expansion and profit taking.
Thank you.