Which trend indicator should a beginner choose - instructions with examples. The best volume indicator on Forex Finding profitable Forex indicators through back testing

For many FOREX market traders, indicators help them make decisions on market actions. The use of various indicators in graphical display allows you to clearly see the picture in dynamics and make a decision. Market indicators are used by both experienced traders and beginners, and some believe that the greater the number of different “assistants”, the better forecasting is possible. Is it really?

In most cases, to make a decision, traders are guided by a few basic selected indicators that they are accustomed to trust. Various indicators show market trends, on the basis of which we can assume its further movement, but using a large number of indicators for this is not always reasonable. For the main decision, a coincidence of 2 - 3 factors is sufficient, which are reflected by indicators located both in the main window of the trading terminal and in additional windows. Most experienced traders rarely use the readings of more than 4 indicators to make decisions, although they may have a large arsenal of such tools for market analysis.

What’s inconvenient about a large number of different indicators in the terminal is that it clutters the chart window. In some cases, the chart itself gets lost against the background of various indicators, which in most cases does not allow one to see the current market picture. Do not forget that all or almost all indicators are focused on displaying and analyzing past events, but cannot accurately predict market behavior in the near future.

There is another inconvenience from using a large number of indicators. This may require a very powerful computer, and on most PCs, using and displaying dozens of different indicators can cause a delay in order execution. To eliminate this, you will need to open pending orders, which will trigger when quotes reach a certain level.

Using the terminal tools, you can develop your own indicators that will collect only certain indicators in one window and reflect their summary value. For convenience, the expected direction of the trend can be highlighted in colors of different intensity, for example, use red and orange for short positions, and green or blue for long positions.

Developing such an indicator and setting it up is not an easy task, but it is quite feasible. This will simplify the use of the indicator and help make the right decisions based on the data that the trader is accustomed to trust. It is better to entrust the development of such a tool to professional programmers who are familiar with the work of the Forex market, since traders themselves rarely have any idea of ​​programming, and most programmers understand little about the foreign exchange market.

Using a specially designed indicator, you can combine several indicators in it, and for a more accurate situation, use other sets. Ideally, several of the most used indicators are combined into 2 - 3 specially designed indicators, which can significantly improve the quality and profitability of trading. At the same time, the main terminal window remains free enough to analyze the chart by other means, for example, placing Fibonacci levels, setting graphic markers of support and resistance lines, or tracking figures on the chart. If the main terminal window is significantly cluttered, all this is simply lost in the mass of different lines, graphs and indicators, and the use of additional windows reduces the scale of the graph display and makes it difficult to perceive. In turn, this approach helps to make the right decisions and increases the chances of quick profit.

Volume is a measure of how much of a given financial asset has been traded over a given period of time. This is a very powerful tool, but it is often overlooked because it is defined by the simplest indicator. Information about it can be found anywhere, but few traders or investors know how to use it to increase their profits and minimize risk in Forex. buyers and sellers can help with this without much effort on the part of the trader.

For each buyer there must be a market participant who can sell him shares, and for the seller - accordingly, a buyer so that they can complete the transaction. The competition between buyers and sellers for the best price across all different time frames creates movement from which fundamental and technical long-term factors flow. Using volume to analyze inventory (or any financial asset) can help increase profits as well as reduce risk.

When analyzing volume, there are certain guidelines that you can use to determine the strength or weakness of the movement. Most traders tend to join strong trends and not take part in trades in which the movement is weak. However, these recommendations do not work in all situations, but can help in making trading decisions. Any Forex transaction volume indicator can help with this.

Market interests and volume

Market growth should increase over time. Buyers are demanding more supply and demand for better prices. and decreasing volume show a lack of interest and is a warning of a possible reversal. The essence of this phenomenon is that a price drop (or increase) on a small volume is not a strong signal. A decrease in value (or increase) on high volume serves as a more significant signal that the situation has changed significantly.

Movement and volume in the market

In a rising or falling market, you can see the corresponding trends. These are typically sharp movements in price combined with a sharp increase in volume, signaling the possible end of a trend. Participants who were expecting changes, and are now afraid of incurring losses, will begin to make transactions en masse, and thereby the number of buyers will increase sharply. Falling prices ultimately force a large number of traders out of the market, leading to volatility and increased volume. A decrease in volume can be seen after it rises in these situations, and further changes in volume over the following days, weeks and months can be analyzed using various Forex trading volume charts and indicators. How does it work?

Bullish trend

Using volume indicators in Forex can be very helpful in identifying bullish trends. For example, imagine that volume increases as the price declines and then moves higher before moving back. If the price on the move back remains higher than the previous low, but the volume decreases on the second decline, then this is usually defined as a bullish trend.

Change in volume and price

After a long price moves higher or lower, if it begins to fluctuate with little movement and high volume, it often indicates a reversal. Any volume indicator on Forex can record such a change.

Volume and Breakouts vs. False Breakouts

On an initial breakout from a range, an increase in volume indicates a rapid move. A slight change or decrease in it indicates a lack of demand and a high probability of a false breakout.

Volume indicators on Forex

Volume indicators can be thought of as mathematical formulas, visually represented on the most commonly used charting platforms. Each uses a slightly different formula, so traders should use the one that best suits their personal market approach. Indicators are not required, but they can help in the decision-making process. There are many of these tools in use today, so the choice should be made after careful research.

VSA-Coloured Volume

Volume indicators on Forex VSA differ from other tools in that, in addition to the standard histogram, they also use and the settings include several different time periods.

Thanks to such components, the tool is able to assist in determining market sentiment and price changes.

On-Balance Volume (OBV)

OBV is a simple but effective volume indicator in Forex. Starting with an arbitrary number, volume is added and subtracted depending on market progress. This displays the total and shows which shares are accumulating over time. It can also show when price is rising, but volume is increasing more slowly or even starting to fall).

Chaikin Money Flow

This indicator is based on the following principle. An increase in prices must be accompanied by an increase in volume, so the calculation formula focuses on increasing volume. When prices reach the top or bottom of their daily range, a value is calculated for the corresponding strength. When the close is at the top of the range and volume is expanding, its values ​​will be high. When it is located at the bottom of it, the values ​​will be negative.

This indicator can be used as a short-term tool because its indicators fluctuate constantly. It is most commonly used to monitor divergence.

Klinger Volume Oscillator

This tool works on the basis that fluctuations above and below the zero line can be used to assist other trading signals. The Klinger Volume Oscillator summarizes the volumes of accumulation (buying) and distribution (selling) for a given period of time. For example, it can display a negative number that is calculated at the height of an overall uptrend and is followed by a rise above the trigger or zero line. The volume indicator will remain positive throughout the price trend, but a fall below the trigger level will immediately display a short-term reversal.

The Bottom Line Volume

An extremely useful tool as there are many ways to use it. There are basic guidelines that can be applied to assess market strength or weakness, and to test whether volume is confirming a price move or signaling a reversal. Some experts claim that this is the best Forex volume indicator.

Better Volume

Compared to the above, this tool is improved, since it works based on tick volume. Immediately after launch, the indicator evaluates the current volume, as well as the spread of the candle, by comparing them with previous indicators. The results are displayed as signals showing the spread and volume. Red lines indicate high volume. As a rule, it appears at the beginning and end of rising trends or during correction of a falling trend.

White lines indicate high volume, characteristic of a bearish trend (its beginning and end), and also sometimes occurs during an upward correction.

Yellow lines signal low volume and green lines signal high volume with a low spread.

Final word

Indicators can be used to assist a trader in the decision-making process. In short, volume is not a precise entry and exit tool, but with the help of indicators, entry and exit signals can be captured by viewing the price action.

However, price may suddenly stabilize and therefore Forex trading volume indicators should generally not be used in isolation. Most give more accurate readings when used in conjunction with other signals.

We present to you an indicator that, despite its simplicity, has earned recognition among many beginning and experienced Forex traders. Using the points that the Dots indicator places on quote charts, this indicator quite accurately shows the entry and exit points when concluding transactions on the market. This means that it can effectively complement any scalping or positional trading methods.

How the indicator worksDots

Let's start with the fact that the points with which Dots confirms the places for entering the market (when making deals) and exiting the market (when closing them) are not redrawn. And analyzing the fairly accurate signals of this indicator, we can say that Dots demonstrates the current dynamics of price movement much more accurately than most other indicators from the MT4 platform and is one of the first to show a trend reversal.

Appearance of the Dots indicator on the quote chart

In other words, when the direction of the trend begins to change, the Dots indicator will demonstrate this faster than anyone else, which will help you make a trading decision more quickly.

The mechanism of operation of this indicator is very simple. By analyzing the angle of inclination of moving averages, as well as taking into account the opening/closing prices of candles, Dots demonstrates the direction of the trend and its changes, for which it places dots of two colors on the quote chart:

• Blue – trend up
• Red – downward trend:

Indicator signals

As you understand, the main signal of the indicator is a change in the color of the dots. Accordingly, trading signals for entry and exit when entering and closing transactions will be as follows:

• Changing the blue color to red is a place to enter the market to sell (or exit from buy trades)
• Changing the red color to blue - a place to enter the market for purchases (or exit from sell transactions):

As you can see, during a trend in the Forex market, this indicator shows fairly accurate and stable trading signals and, most importantly, keeps the trader from leaving the market prematurely, allowing him to take the maximum number of points from each transaction.

However, during a flat, Dots can also give many false signals. Therefore, it is better to use it in conjunction with trend-following indicators and at the most volatile time of day.

As written above, Dots uses ordinary moving averages to analyze the quote chart. And as we know, this type of technical indicator is considered one of the most effective and accurate. According to professional traders and analysts, traders earn much more using moving averages than using all other indicators combined. But this does not mean that only Dots can be used when trading, and other Forex indicators should be neglected. On the contrary, we recommend using Dots together with additional filters and trend-following technical indicators.

For example, using the same moving averages, only of an older period, you can determine the global trend and trade only in its direction. That is, to effectively find places to enter into and exit trades, as well as filter out unprofitable signals.

additional information

Also, Dots can become a unique component for an already assembled trading system complex. Thus, you get a successful expansion of the strategy due to more accurate implementation of moving average signals. For example, this is how Dots will look profitable in a strategy that uses moving averages and the MACD indicator. When moving averages cross, we receive a primary signal about a change in trend, which must be confirmed by the MACD indicator. Next, we wait for the price to correct in the opposite direction and enter the market when the trend continues based on the signal from the Dots indicator:

Thanks to the unique algorithm of the Forex Contrast indicator, you get an excellent filter that determines the direction of entry into the market (histogram squares of the same color - at least three taffyframes). Whereas, with the help of Dots signals, you will receive an excellent signal about the possibility of concluding transactions. As a result, the joint work of these indicators will allow you to filter out more than half of unprofitable trades and significantly increase the profit factor of your trading strategy:

An example of using the Dots and Contrast indicators within one trading strategy

While using this indicator, the trader can change some of the input parameters:

• Length – period of the indicator operation. The higher this parameter is, the less frequently Dots changes the color of the points on the price chart and the more accurate its signals are.
• AppliedPrice – a type of moving average that is used when calculating Dots signals
• Filter – a filter that suppresses market noise
• Deviation – shifts the indicator points vertically
• Shift – shifts indicator points horizontally

Dots indicator settings window

Conclusion

We will not claim that Dots are the holy grail for Forex trading. However, as you can see for yourself, it is quite accurate and can be an excellent addition to any scalping or positional strategy. This means that it is simply impossible to ignore this indicator. Test it on the history of quotes, combine it with other effective indicators, and you yourself will understand how enormous its potential is!

Download indicator

How to install the indicator in the MetaTrader 4 trading terminal.

With this, we say goodbye to you until the next review of the next indicator!

Good luck and significant profits to you!

Having completed training, the novice trader sets out on an independent “swimming” through the Forex currency market. The beginner learned how to build trends, add them to a chart, open and close positions. What else is needed for trading?

At one point, the trader realizes that the MetaTrader 4 platform contains not only the Moving Average, MACD and RSI indicators, which he was told about during his studies, but also that there are a lot of technical indicators in the terminal. Having entered the forum, a novice trader is even more shocked - it turns out that there are also various modifications of these indicators, as well as proprietary indicators.

What to do? How to choose and configure the Forex indicator correctly?

Grail indicators

Some beginners try to take the path of least resistance. They are looking for the Grail (since this article is intended primarily, Let us explain that “Grail” in Forex slang means an indicator or advisor that will bring endless wealth to its owner. - Editor's note), starting to trade using arrow indicators. Why bother? Downloaded, installed, enter the market when the arrow appears, but just have time to withdraw money from the deposit.

Such traders come to the understanding earlier than others that there are no Grails in Forex. And, unfortunately, they pay for this understanding out of their own pockets.

So, having found out that arrow and signal indicators are unlikely to help you earn a million dollars by the New Year, a novice trader asks a fair question - how to choose the right Forex indicator?

Indicator – market thermometer

It is very important to understand the very principle of operation of any technical indicator - the indicator is formed by the price, and not the price by the indicator. Any indicator is an algorithm that uses historical data and visually interprets the calculation results. The trader makes the decision INDEPENDENTLY based on the identified patterns in the indicator readings. The indicator does not care whether the FOMC increased the interest rate or whether the ECB expanded the volume of the asset purchase program; it will only show what the current price dictates to it.

Figuratively speaking, the indicator is a thermometer. I looked at the thermometer - it was -10 outside. The indicator will not tell whether it is cold or hot outside. It simply reports the temperature. And whether to put on a coat and a hat, or go out in jeans and a sweater, in the hope that it will soon become warmer, is a decision we are already making.

What are the types of Forex indicators?

It is necessary to understand that technical indicators are divided into two conditional groups:

• leading,
• lagging.

Leading indicator signals a price reversal, allowing you to open a position at the very beginning of a new trend. The disadvantage of leading indicators is false signals, which can lead to losses.

Lagging indicator gives a signal after the price has reversed, which increases its accuracy. The disadvantage of lagging indicators lies in their name - the signal appears after the price has traveled a certain distance in the desired direction, and there is a high probability of opening a position at the end of the trend.

Also, the trader must understand exactly what information the indicator provides and what tasks it performs. For this purpose, indicators, according to their functionality, are divided into several groups:

• trendy,
• volume indicators,
• informational,
• duct,
• level indicators

Let's take, for example, the standard one related to oscillators. The intersection of the zero line by the histogram signals a change in trend, and the divergence of the price direction and the histogram (divergence) signals an imminent trend change. It would be, to say the least, unsporting to expect information about support/resistance levels or Pivot levels from the MACD oscillator.

Therefore, a trader must clearly understand what indicator he needs and why, and how well this or that indicator corresponds to the given goals.

How to set up a Forex indicator?

Choosing the right indicator is only half the battle. For two different traders, the same indicator can show completely different signals. It's all about its settings.

It is worth noting right away that there are no ideal settings for any indicator. They depend on the currency pair, time frame and much more. Some people try to take advantage of the default settings, some people look for advice on Forex forums, but in reality the optimal settings of a technical indicator can and should be selected independently.

In order to select the optimal Forex indicator settings, you need to:

• understand exactly what the indicator should show (trend strength, direction, support/resistance levels, divergence, etc.),
• determine the timeframe on which the indicator will be used, and it depends on the trading tactics,
• look at the indicator’s performance on history and identify its inherent patterns,
• determine what signals the indicator gives - lagging or leading,
• select indicator parameters, achieving optimal signal quality. You won’t get a perfect picture, the main thing is to determine the parameters at which the indicator will produce signals with the required frequency,
• test the indicator with the selected parameters in trading on a demo account or micro account.

At the same time, you need to understand that no indicator is ideal and does not give 100% correct signals. Any indicator will give false signals – this is normal. Such false signals can be filtered by other indicators, and unprofitable trades must be closed on time.

Volumes are considered the main means of technical analysis. They allow you to both predict the vector of price movement and find the expected points of entry into and exit from the market.

In the process of technical analysis, they work at the following levels:

• Help in finding signals to enter the market.
• Searching for points to exit a position.
• Determining the moment of a possible market reversal.
• Determining the direction of price movement.

It is important to remember that the indicator itself does not trade. It depends only on the trader himself how he will use the information received: trust it blindly, double-check it using several sources, or ignore it.

Forex indicators can only give you up to half the success associated with the probability of receiving the correct signal. The final result depends on the trader and the correct, and also, importantly, timely interpretation of indicator signals.

Volume indicators and their varieties

The volume of the asset used determines the level of activity of major market players.

Volume, when it comes to Forex, is the total number of trades (and therefore the amount of funds) used in trades within a certain period of time.

This parameter indicates:

• Having a high interest in a certain price.
• The number of operations per given unit of time.

Due to the specific nature of speculative currency trading on Forex, there is only tick volume. It shows the number of transactions over a certain period of time. But it does not show the amounts involved, since it will not be possible to find out the number of contracts per transaction.

Volume is important not only in terms of a momentary decision to enter a position, but also for a global analysis of the current market situation, for example, to confirm a strong trend.

Volume indicators Forex markets allow you to obtain information calculated from trading volumes. Such indicators include:

• Standard volume indicator on Forex Volumes. Allows you to identify market activity and determine the expected stage of reversal.
• On Balance Volume (OBV) indicator. Makes it possible to quickly respond to changes that occur in the level of value of an asset and its volume.
• Accumulation / Distriburion (A/D). It shows the levels of accumulation and distribution of funds. Provides an opportunity to confirm or refute information about the strength of the observed trend.
• Money Flow Index (MFI) allows you to find out the level of intensity of market turnover. This indicator, as well as the next one (but each in its own way) confirm or refute the trend.
• Volume Accumulation. It deals with the calculation of the distribution or accumulation of the value of an asset. Date is able to find entry points by predicting a reversal of the price vector.
• Absolute Strenght Histo allows you not only to find out the tick volume, but also to catch the moment of reversal. A very useful filter for false signals.
• Azzx EMA Volume is interesting with the idea embedded in it – the idea of ​​decomposing the tick volume. Finds which of its parts plays a key role in pricing, due to which
• Normalized Volume is another very useful signal filter that cannot be used on its own, but is very useful as an addition to technical analysis.
• Price Volume Trend (PVT) shows both volume and price vector. Gives a lot of false signals, but useful in combination with a filter.
• Volume Ticks Separate. It makes it clear what the current state of the market is – a trend (and also how strong it is) or a flat.

Methods for analyzing volume indicators

There are two methods for volume analysis:

1 Comparison of existing bars. The work is carried out with history.

A bar is a graphical analysis figure that is used to display changes in the value of an asset.

Compare the last and penultimate past bars. The information obtained using this method will allow us to draw a conclusion about the situation on the market for a specific period of time and at a certain moment.

2 Analysis of the trend in volume changes as a whole.

This method provides analysis of volume indicators for the period of interest. Through it, conclusions are drawn about the general activity in the market or its absence during certain time periods.

Rules for volume analysis:

1. The shape of the graph corresponds to the letter V.
2. The volume level is proportional to the interest in the asset.
3. Volume needs to be correlated with volatility.

Volatility is a measure of the degree of variability in trading prices over a given period of time.

1. During non-working hours (at night or during the lunch hour), small changes in volume may have a greater impact than usual.
2. You should also pay attention to special periods in a more global sense, for example, at the end of the calendar year, transaction volumes also increase significantly.
3. Maximum volume values ​​can be interpreted as a sign of a trend reversal and the price reaching important levels.

Volume indicator

It allows you to draw conclusions about investor activity over a certain period of time. It does this by counting the number of transactions. Volumes are correlated with an analysis of the asset price movement to predict a reversal.

On the graph it is displayed in the form of bars, which are proportional to the volume indicators in height. This format is also called a histogram. In MetaTrader, its bars are colored red and green. Each bar corresponds to a specific trading period (from a minute to a month). Each corresponds to a separate bar or candle on the quote chart.

Formula for calculation

Volume = number of trades over a certain period.

Confirming the trend using this indicator

• Increasing volumes mean an upward trend.
• A fall means a downward trend.

If prices go up but volumes go down, it means demand is down. This situation is a sign of a weakening trend.

Volume indicator

On Balance Volume (OBV)

Shows the rate of change in price and volume. A change in direction according to the OBV indicator precedes the price movement, which makes it convenient for forecasting.

Sometimes changes in volume indicators do not accompany price increases or decreases, but precede them. In the trading platform, the OBV indicator is displayed as a single line that follows the trend.

Sometimes big players take actions against the crowd. The total volume changes, but the exchange rate does not yet have time to react to it. So OBV often shows major trend reversals.

Used to confirm a trend:

• When OBV values ​​are rising, there is an uptrend;
• When OBV falls, the trend is down.

Sometimes the indicator chart and the instrument chart are in different directions. This is called divergence, and it allows you to determine possible price reversal points.

The key role is played by the direction of movement of the indicator, not the numbers.

Volume indicator On Balance Volume (OBV)

OBV based signals

1. The volume indicator reaches a new low. This means there is a high probability of further price declines. So you need to open sell trades
2. When OBV reaches a new high, the value is likely to rise, giving rise to buy trades.
3. Particular attention should be paid to discrepancies with the price chart:
   • A strong signal to sell if the price has reached the top, but the indicator has not.
   • If the indicator reaches a low with a force greater than the price, it is a strong buy signal.

Accumulation Distribution (A/D)

This indicator works with the difference between all cases when the price reaches the top (for days when it generally became higher); and the difference between all the times it went to the bottom, if that day it went down overall. The first case is usually called accumulation, the second - distribution.

A rise in A/D means a purchase, and when the indicator falls, the asset is sold in the market. The discrepancy between the A/D indicator and the asset price indicates future changes in value. Usually then the price follows the indicator in its direction. If the indicator is falling, and the price has been rising for a long time, it means that it will soon reverse and also begin to move down.

The indicator confirms or does not confirm the current trend. A trend is confirmed if it is unidirectional with the movement vector of this indicator. Conversely, a rapid reversal is observed in cases where the indicator moves in the other direction relative to the price.

Volume indicator Accumulation Distribution (A/D)

Money Flow Index (MFI) indicator

It allows you to assess the intensity of investment and profit. MFI can be used to determine whether an asset is overbought or oversold and to find turning points.

Overbought is a sharp increase in the value of an asset when it is predicted to decline.

Oversold is a situation where the price drops too sharply and quickly when it is expected to reverse upward.

There is only one rule for using the indicator: you need to wait until the index starts moving in the opposite direction than the asset price chart.

Analysis of the MFI indicator

Working with signals is as follows:

• If the MFI index rises above 80, it means overbought. The time to sell is when the downward movement begins.
• If the MFI index falls below 20, it means it is oversold. You need to buy when the signal starts moving up.

The dynamics of the indicator must confirm the dynamics of the trend, otherwise its momentum is small and a reversal is possible.

Volume indicator Money Flow Index (MFI)

Volume Accumulation (VA)

For a given period there is a maximum and minimum price. If the trend is upward, then closing prices are closer to the maximum, and if it is downward, then closing prices are closer to the minimum. At the same time as capturing this information, this indicator also records trading volumes that are higher than the average in both cases.

Three ways to use this analysis tool:

• If an asset closes above the daily average, this is a sure sign of accumulation. Accordingly, the lower the close (and closer to the lower daily extreme), the more intense the distribution.

Hoarding is when demand is greater than supply.

Allocation is when demand is less than supply.

• The increase in cost is accompanied by an increase in volumes. If this is not the case, the trend will soon end.
• You can find market tops (maximum price values) and bottoms (minimum price values).

Chaikin indicator Volume Accumulation

• the trend is confirmed if there is unidirectionality in the uptrend. A downward trend is confirmed if it is multidirectional.
• the trend is refuted if the price chart and the indicator diverge during an upward trend; a downtrend is refuted if they are unidirectional.

Absolute Strong Histo

It is also called the price and volume reversal indicator. Its task is to determine the prevailing trend and filter signals from the main indicator.

Color differentiation is important. A green histogram indicates an uptrend, a red one indicates a downtrend.

You should enter when changing colors according to the following rules:

• A change from red to green means you should open a buy deal.
• A change from green to red means it is possible to open a sell transaction.

This tool is used to trade when the trend direction changes. If a sell signal appears higher than the previous one, you should not pay attention to it, as well as if a buy signal appears below the previous one.

An important drawback of the indicator is that it works with a delay. But this is compensated by multi-currency and the ability to work on any time frames.

Lagging indicators signal price movements after they have begun. These include most indicators in general. This is the main reason to use .

This indicator is more suitable as an additional filter in trend trading, but not for working in a flat and not as a main analysis tool.

Azzx EMA Volume

This tool distributes tick volume. Graphically, it looks like three stripes with different colors.

Green – shows tick volume. Blue indicates a downward trend, and red, on the contrary, indicates an upward trend. The main stripe is the one at the top. The probability of continued price movement is proportional to the increase in tick volume.

The size of the indicator period is inversely proportional to the speed of its response to changes in the market situation. The longer the period, the more protracted trends the instrument reacts to, which is useful for those who use medium- and long-term trading strategies.

Like the previous volume indicator, this one is more suitable as an additional filter. It is best to combine it with indicators from another group, for example with MACD or Stochastic.

Normalized Volume

Intended exclusively for cutting off false signals. He doesn't produce his own at all. The calculation uses the number of trades, but not the number of contracts entered into per trade. This indicator allows you to determine the strength of a trend.

Normalized Volume is reflected in the window at the bottom of the chart

The trend is accompanied by high volumes. This means that if the current volume is above average, the indicator line grows, and if it is less, it decreases.

The starting point is one. If this indicator is higher, then the others are showing the correct picture; if it is lower, then the signal for the other indicators is false.

Price Volume Trend (PVT)

This is a multifunctional Forex technical indicator. It takes into account both the volume and direction of the trend.

To eliminate false signals, this indicator needs to be filtered, say, using oscillators. However, this volume indicator is very accurate; it takes into account both the number of transactions and their impact on price changes.

The direction of the indicator confirms the trend movement vector. If the value is large (in any direction), then an overbought or oversold situation is likely.

If the indicator indicators and the observed situation on the chart do not coincide, then the strength of the trend is small and the likelihood of a change in its direction increases.

Trading signals are quite simple. PVT buy signals:

• the tool strip goes up;
• entering an oversold zone and then exiting from there.

PVT sell signals:

• the tool strip goes down;
• reaching the overbought zone and exiting from there.

This indicator needs to be filtered because it gives many false signals.

Volume Ticks Separate

This volume indicator often replaces the standard volume indicator from the trading terminal. Allows you to understand who is more numerous – sellers or buyers by dividing transactions.

A high value indicates a trend, a low value indicates a flat.

Graphically it looks like this: there are columns that display closed bars, and they can be one or two colors. When the entire length of the bar is red, it means there are more sellers. If there is a blue top, there are more buyers. The indicator also indicates the volume in numbers.

Information on average volume allows you to determine a trend and assess its level of strength through comparison with different periods.

If the trend is upward, then the volume increases overall, but decreases during periods of correction. If the trend is downward, the volume also increases, and decreases during periods of upward pullbacks. This simplicity made this indicator universal for all timeframes and currency pairs.

Which volume indicator to choose

It is advisable to limit yourself to one or two volume indicators in order to also use a trend indicator and an oscillator. You should not use more than 4 at the same time, betting on just one, so that there is no confusion. It is also very important to test each selected indicator.

The Volume indicator is reliable and allows you to cut out false signals. And the On Balance Volume indicator is suitable only as an additional analysis tool. According to the description, the On Balance Volume indicator has a fairly weak signal.

With all the positive features of A/D, you need to remember its disadvantages.

• The gap is not taken into account.

A gap is a break in the price chart. Appears as a consequence of the big difference between closing one gap and opening a new one.

• A/D sometimes misses signals.
• Relatively low sensitivity.

The main advantage of the MFI indicator over other indicators is its stability. To reduce false signals, it is better to use it with trend indicators.

An example of using the volume indicator in the trading strategy “Trading on volumes”

The Volume Trading strategy requires discipline and responsibility.

The methodology is simple: you need to catch the moment of volume growth, after which a trend reversal is usually observed - and enter a trade in the right direction. You should always focus on a candle on a large volume.

1. If it is growing, then you should buy the asset on a decline.
2. If it is falling, then it is recommended to buy the asset on the rise.

It is also recommended to add new ones to the transaction according to the set parameters if the price chart goes in the direction the trader needs. The strength of the strategy is that it can be used even during news releases and on any platform.