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How useful is volume to a forex trader?

  • #1
  • First Post: Edited 4:50pm Jun 27, 2014 4:29pm | Edited 4:50pm
I've never really given much thought to the use of volume in forex trading. I once began looking into it, but was quickly discouraged by the fact that the volume shown on forex trading platforms was only the volume for your broker, rather than for the entire market. Does this make volume redundant as a tool for forex traders? Or is the volume seen by your broker representative of the volume within the entire market?

EDIT: I've just downloaded MT4 from a second broker, and seems that the volume given by one broker is not always representative of the volume seen by other brokers. See the image below, as an example.
Attached Image (click to enlarge)
Click to Enlarge Name: Volume.PNG Size: 150 KB
  • #2
  • Jun 27, 2014 6:21pm Jun 27, 2014 6:21pm
I use volume to trade all this time, but using volume alone cant help you much, it will confuse you badly.
t.me/LWBRfx Discord.io/LWBR
  • #3
  • Jun 27, 2014 6:45pm Jun 27, 2014 6:45pm
Just like any tool you use to trade it really depends on how you interpret it. Two professional traders could see the same chart and come to entirely different conclusions and scenarios on how to trade it.
  • #4
  • Jun 27, 2014 7:02pm Jun 27, 2014 7:02pm
Quoting Ponzi Jr
I've never really given much thought to the use of volume in forex trading. I once began looking into it, but was quickly discouraged by the fact that the volume shown on forex trading platforms was only the volume for your broker, rather than for the entire market. Does this make volume redundant as a tool for forex traders? Or is the volume seen by your broker representative of the volume within the entire market? EDIT: I've just downloaded MT4 from a second broker, and seems that the volume given by one broker is not always representative of...
Aside from everything else, the difference is explained by start and end time of 4 hour bars on each chart. Look at different appearance of the candles.

Visuals would be different even with price feed for both of them coming from the same broker.
  • #5
  • Jun 27, 2014 10:55pm Jun 27, 2014 10:55pm
It's the way I started out trading and still use it on stock charts, so I would say it's the only way I read a chart. Whether anyone wants to believe it or not we all trade volume, the amount of buying and selling is volume, in forex though you don't get the exact number, but that's not that important in the grand scheme of things as volume is relative and is at least good to be compared to least the last 4 candles. The 4 hour chart is the only one where the volume is accurate 95 percent of the times, if you want to nitpick, but volume reading is an art, it can show you what is at a certain price level and also what is not there. Hope that helps.
Being a trader is lonely, but being a great trader is lonelier still
  • #6
  • Jun 28, 2014 4:53am Jun 28, 2014 4:53am
volume is count of tick... By that count we know the amount of enthusiasm into certain price level... If price up with a low volume notably low, why you buying it? The price up with low volume is a sign a reversal is on the way. Volume will look different if your broker using a cheap and scam server. Notably volume can be a good indicator about your broker intention... Did they manipulate some? DMA broker / ECN will be good.. Look the ECN broker... The volume will be nearly same... But non DMA / ECN broker? I never put my money into a cheap and not validated broker like that...
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-GP-
It's all started from page one
  • #7
  • Jun 28, 2014 5:38am Jun 28, 2014 5:38am
Hi all
Unfortunately, most of subjects and books about volume are about Stock Market and never concentrating on Forex.
As you have mentioned the amount of showing volume be different from broker to broker, it is true but it is like the of opening and closing of Candles which they don't show the same time
But there is some problem for using and interpreting the amount of volumes in different levels by traders, for instance when the candles get to specific levels for bouncing back or continuing the direction the amount of volume increases

this is the critical moment that most of traders must be aware about it

though, you have to know , there are lots of information to know how to use volume in Forex Market,
and again i must say there are some threads in this site, they have issued so many good information but don't know how to use Volume in Forex correctly and just make traders disappointed for using this valuable tolls for using in specific time, Level and so on
if i have time i try to write here some useful info. for using volume in Forex Market beside you.
Don’t follow someone else’s trading advice blindly
  • #8
  • Jun 28, 2014 2:03pm Jun 28, 2014 2:03pm
Quoting feinan
I use volume to trade all this time, but using volume alone cant help you much, it will confuse you badly.
As I understand it, it's best used as confirmation of initial analysis. For example, if you've decided that a reversal is likely to occur, then volume should be decreasing. Is this correct?
  • #9
  • Jun 28, 2014 2:08pm Jun 28, 2014 2:08pm
Quoting Gupito1508
volume is count of tick... By that count we know the amount of enthusiasm into certain price level... If price up with a low volume notably low, why you buying it? The price up with low volume is a sign a reversal is on the way. Volume will look different if your broker using a cheap and scam server. Notably volume can be a good indicator about your broker intention... Did they manipulate some? DMA broker / ECN will be good.. Look the ECN broker... The volume will be nearly same... But non DMA / ECN broker? I never put my money into a cheap and...
Thanks for the response. Can you recommend any UK brokers who're likely to provide reliable volume data? The 2 demo accounts I've been using are with Alpari and FXCM. Are either of those brokers you would trust?
  • #10
  • Jun 28, 2014 2:11pm Jun 28, 2014 2:11pm
Quoting Ponzi Jr
I've never really given much thought to the use of volume in forex trading. I once began looking into it, but was quickly discouraged by the fact that the volume shown on forex trading platforms was only the volume for your broker, rather than for the entire market. Does this make volume redundant as a tool for forex traders? Or is the volume seen by your broker representative of the volume within the entire market? EDIT: I've just downloaded MT4 from a second broker, and seems that the volume given by one broker is not always representative of...

On it's own pretty useless, point blank.
Passion, Persist, Patience, Protect
  • #11
  • Edited 2:41pm Jun 28, 2014 2:16pm | Edited 2:41pm
Quoting FXEmpire
{quote} On it's own pretty useless, point blank.
In forex, or in any market? Are there any circumstances in which you believe that volume can be useful?
  • #12
  • Jun 28, 2014 9:04pm Jun 28, 2014 9:04pm
Quoting Ponzi Jr
{quote} As I understand it, it's best used as confirmation of initial analysis. For example, if you've decided that a reversal is likely to occur, then volume should be decreasing. Is this correct?
when high spiked volume appear, it means some kind of S&R area is made.. if you look at increasing/decreasing method watch petefaders from youtube might help you,,
t.me/LWBRfx Discord.io/LWBR
  • #13
  • Jun 29, 2014 3:23am Jun 29, 2014 3:23am
I do not think I could trade without volume anylonger. I understand the points that were made and believe me when I started I did not pay attention to volume at all for the mentioned reasons above. And yes, volume alone is useless but if you look where the extrmes of volume appear (at which levels) it suddenly starts to make sense.
Trading for a living? No problem.
  • #14
  • Jun 29, 2014 3:23am Jun 29, 2014 3:23am
Quoting Ponzi Jr
{quote} In forex, or in any market? Are there any circumstances in which you believe that volume can be useful?
Forex mostly.. no centralized market.. the volume you get on your platform is just the sum of your broker.. if you watch a few industry leaders you might get a slight idea which might help you in longer term like daily and above.

The real thing is, there are too much swinging big dicks around going on behind the closed doors in Forex market, which makes any one single analysis vulnerable, punting it in nutshell.. that is why it is a tough market to be consistent at and requires versatility from traders side to have the slightest chance if psychy is all there. So needs tag-team it and not approach it with just one particular thing that i assume your asking about here.

Good luck.
Passion, Persist, Patience, Protect
  • #15
  • Jun 30, 2014 11:21am Jun 30, 2014 11:21am
Quoting Ponzi Jr
{quote} Thanks for the response. Can you recommend any UK brokers who're likely to provide reliable volume data? The 2 demo accounts I've been using are with Alpari and FXCM. Are either of those brokers you would trust?
Don't know sir... I primarily trade from Indonesia with my trusted broker that use ECN (DMA system) already...
It's all started from page one
  • #16
  • Jun 30, 2014 5:16pm Jun 30, 2014 5:16pm
Quoting Ponzi Jr
{quote} Thanks for the response. Can you recommend any UK brokers who're likely to provide reliable volume data? The 2 demo accounts I've been using are with Alpari and FXCM. Are either of those brokers you would trust?
Great topic!

While I can't speak for other brokers, FXCM provides clients with not only Tick Volume, but also Real Volume and Transactions indicators.

As you can see from a 1-minute chart below of the recent ECB announcement there's definitely a correlation between Real Volume (top), Tick Volume (middle) and Transactions Volume (bottom).

http://i.imgur.com/nnSJFpR.png


However, there are notable differences when there is a large spike in real trading volume. This reveals a limitation with tick volume in that it has no way of showing when a large amount of volume trades at a single price, since that would only be counted as a single tick. Real Volume and Transactions indicators can thus provide new perspectives on what traders are doing during major news events, especially since they work even on 1-minute charts.

To summarize:

  1. Real Volume shows you how many currency units traded
  2. Transactions show you how many client orders executed
  3. Tick Volume shows you how many times the price updated


Quoting Ponzi Jr
is the volume seen by your broker representative of the volume within the entire market?
To give you an idea of the proportion of total retail volume represented by FXCM's real volume indicators, below is a table comparing our retail volume to that of other forex brokers. The numbers shown are in billions of dollars.

http://i.imgur.com/bo7Nbgz.png


The stats above are from the Forex Magnates industry report for Q4 2011. I would post something more recent, but that's the last report that's available to non-subscribers. I hope the authors won't mind me revealing that even their latest report for Q4 2013 confirms FXCM's lead over the other firms listed above in terms of monthly trading volume although, as you probably know, volumes were down across the board in 2013 due to lower volatility.
  • #17
  • Jul 9, 2014 6:01pm Jul 9, 2014 6:01pm
Quoting Jason Rogers
{quote} Great topic! While I can't speak for other brokers, FXCM provides clients with not only Tick Volume, but also Real Volume and Transactions indicators...
Thanks for the input. Are all of those volume indicators available on the MT4 platform, or only through your online platform? Would you be willing to speculate as to which type is the most valuable?
  • #18
  • Edited 7:27pm Jul 9, 2014 7:14pm | Edited 7:27pm
Quoting Jason Rogers
{quote} Great topic! While I can't speak for other brokers, FXCM provides clients with not only Tick Volume, but also Real Volume and Transactions indicators. As you can see from a 1-minute chart below of the recent ECB announcement there's definitely a correlation between Real Volume (top), Tick Volume (middle) and Transactions Volume (bottom). {image} However, there are notable differences when there is a large spike in real trading volume. This reveals a limitation with tick volume in that it has...
Based on the FXCM info we have 15 billion daily which is supposed to give you insight on 5 trillion daily.

Even if you was able to combine all available volume it would be 75 billion.

Not enough IMHO.

Even if you go to equities where volume is supposed to be "real" it can and it is manipulated by the big players.

But if you believe and make money out of it good for you.
Attached Image
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  • #19
  • Jul 10, 2014 1:55am Jul 10, 2014 1:55am
It is EVERYTHING. Spot volumes are inaccurate, use futures ie /6e, /6b, /6a, /6j, etc...

Volume is the most widely distributed indicator there is, yet the least understood. I love how it works that way!
  • #20
  • Jul 11, 2014 3:04pm Jul 11, 2014 3:04pm
Quoting Ponzi Jr
{quote} Thanks for the input. Are all of those volume indicators available on the MT4 platform, or only through your online platform? Would you be willing to speculate as to which type is the most valuable?
The Real Volume and Transaction indicators are only available on Trading Station Desktop. While there are no plans to make an MT4 version of these indicators, all MT4 account holders with FXCM can use the same login details to access Trading Station. While I personally use Real Volume more than Transactions, I've lately been comparing Real Volume to Transactions to find points of divergence where Real Volume spiked higher indicating a larger than average Transaction size.

http://i.imgur.com/23swLoM.jpg

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