Tick Volume Divergence Trading

I will show you a strategy I use to trade tick volume. Forex is a decentralized market, so the information is not as useful as on stocks, but I found it useable on shorter time-frames like the M1 and M15. Why shouldn't you trade it on higher TFs? Volume becomes less reliable as you increase the timeframe and I want to hold my trades for max. several hours and not days.

Tick Volume Divergence Trading

1. Open a M15 chart
2. Add tick volume
3. Watch for the trend on the H1
4. We want to trade in the direction of the trend, so we will look out for countertrend moves and wait for decreasing volume.
5. If the countertrend move has high volume in the beginning, look out for divergence. If we are looking for BUY trades: Price trading lower with volume decreasing. If we are looking for SELL trades: Price trading higher with volume decreasing.
6. When the divergence is spotted, wait for it to decrease to a low volume and take a trade in the direction of the trend.

I recommend minimal 1:2 risk-reward ratio and definitely avoid ranges for this strategy.

Here is a screen of a trade from yesterday and I trade I have currently running.

EUR/USD in a downtrend
Divergence with prices trading higher (countertrend) and decreasing volume spotted
Enter SELL trade as volume decreases to low vol. level

I also follow "minimal 1:2 risk-reward ratio" while going for forex trading. Thanks to share your some other suggestion as well.

I don't get it , you trade in the direction of the trend, but you look out for counter trend moves,



--------

best indicator

Yes, I look out for them and trade in the direction of the trend when the countermove is done (decreasing volume).

My chart example above should help you understand.

Happy trading

Thanks for sharing.

Where would you place your SL levels? Above / below recent high / low?

Exactly, usually a few pips above recent high/below recent low.

For profit taking, most times I use trailing stops, but sometimes also Limit orders.

How long have you been trading this strategy?

the reason why i call it great is because we using volume i look foward to continuation and more live setups thankyou for this pls go on

I've never looked at volume in forex for the reason you describe, but it's clear there is some correlation here. On further reflection, it only stands to reason that tick volume from any given broker should be a microcosm of the broader market, albeit somewhat less reliable than stocks. But combined with other analyses it looks to be a promising addition to one's trading arsenal.

I look forward to continued study of this. Thanks for sharing your work.

Richard

Check out the VSA thread started by Malcolmb, lots on volume there.

Gez.

Thanks for the feedback.

Here is another trade from last Friday where we had a countertrend move and decreasing volume.

You'll notice from time to time the volume bars which are much higher than the other one's. This can be a sign that there is strong volume and price will continue to move in the current direction or there is a peak/bottom. I would never trade solely on this pattern, as it is impossbile to say if it a continuation or a reversal one. But those looking for more confirmation in their trades, they might look for such a high volume bar before the countertrend move has started and enter as described in the opening post.

What indicator do u use?

Not a single one, Sir. Tick volume only.

But if someone has problems identifying the trend on the H1 chart, I would recommend using Moving Averages.

hi
what for opposite direction? (price down and volume increasing)

You are good source of inspiration.
Thanks alot