Volume Indicators

The volume indicator is also a significant index aside from its own price. It is very beneficial in the stock market because it shows how much stocks have been traded (both selling and buying) at any given time. As it is systematized in Forex, you cannot determine the figures as to the amount of money that has been bought or sold during a particular time. You can determine the figures of the volume indicator using the movement of the price as your base.

 

This bar chart uses two different bars, the green, and the red bars. These bars are used to show whether you have a greater value or a lower value. When you see a green bar, it shows a greater value than what the bar previously indicated while the red bar means the current value is lower than the previous value. With the bars displaying a color green, it means that there are more people participating in the stock market at that particular time.

 

The volume indicator can analyze how strong the trend is. The price follows the trend, whether it is going upwards or downwards. If the volume increases, it shows a strong trend. However, when the price starts fluctuate while the volume begins to decrease, then it shows a trend that is getting weaker and will probably stop. What follows this is a reversal or a rather quiet market. Still, you will need other indicators to confirm the current situation.

 

Volume indicators are also used in sorting out the validity of breakouts. When a low volume centralized market showed a single high bar in the volume indicator, it can mean that a possible break out is expected at any moment. When it happens, the volume indicator displays high values, which is considered more accurate. When the indicator displays a low interest, the breakout is considered not valid.

 

The volume confirms the most significant movements in the market. When the traders’ activity becomes higher than usual, these are confirmed by having higher volumes. Nevertheless, a volume indicator can be considered accurate and reliable if there is access to the information from the actual turnover in the market.