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[Joe Ross]

It didn’t in the past because volume was a day late and a dollar short, when trading the daily charts. But these days, where volume is live, it does count.

At Trading Educators we use both contract volume and tick volume as a guideline and filter for our trading.

Here’s a simple idea that works well for indexes. Most people ignore volume as an indicator. I think it’s overlooked and I will show you here how to use it to figure out possible turns in the market. The concept is that of a volume spike. If you will look at just about any weekly chart of the S&P 500, you will see what I'm talking about. Note the volume spikes that occur at the turning points in the market. This occurs when large numbers of contracts change hands. Usually it happens when the smaller trader gives up and sells his contracts. If enough traders do this at once and the price is right the professionals will come in and snatch up those contracts.

Therefore you have this large volume that occurs right at the bottom of a decline as the market is churning. The contracts move from the weak hands (the man on the street) to the strong hands (professionals).You need to look for volume that is larger than the last 10 bars volume. This is not cast in stone but is generally a good average to go by. You might decide that 8 bars are enough. It also helps if the volume is substantially larger than the previous volume and is accompanied by a large downward move in price. I wouldn’t necessarily trade this as a standalone indicator but use it as a general warning of a possible change in Market direction. Does this work with intraday charts?

Absolutely. Volume is important.

[pinalli]

Dear Joe,

Your post inspired me so much..... I never ever gave so much importance to t but your post have really pushed me to expore more about this subject. I found Volume indicator - which are used to show the volume of broker trading and are useful to confirm the direction of a trend, a reversal or a breakout. Price movements increase when the volume increases, low volume may warn of a reversal in a forex trade. If a currency pair trades from a narrow range and then breaks out on high volume, this is a strong signal and may suggest a breakout.

Really a great post with lots of good learning

[hanzahar]

unless u trade currency futures...

how can u trade volume w fx?

[bobbhim]

Volume is most important as it suggests the coming momentum. One cannot trade against the market momentum and a good tool is the increase in volume.
It works well in forex but care must be taken to understand it. Indicators lag.

[Alex_S]

I trade using only volumes, I think actually it is only was to trade successfully on forex- using volumes from futures.

[hanzahar]

[Joe Ross]

Originally Posted by hanzahar

unless u trade currency futures...

how can u trade volume w fx?

I am attaching a chart showing currency volume in futures (Upper chart) and forex (Lower chart).

I use several software programs in my trading. The one that produces both charts simultaneously as you see them is Aspen Graphics. I don't know of any software that shows daily forex volume, but Aspen Graphics will show you intraday volume for any time frame you choose. I think it's cool!

[bobbhim]

Originally Posted by Joe Ross

I am attaching a chart showing currency volume in futures (Upper chart) and forex (Lower chart).

I use several software programs in my trading. The one that produces both charts simultaneously as you see them is Aspen Graphics. I don't know of any software that shows daily forex volume, but Aspen Graphics will show you intraday volume for any time frame you choose. I think it's cool!

No Kidding. The chart is clearer(less noise) for futures. Very useful for Forex nonetheless. Thanks you for posting these charts. This topic needs further development.