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The volume indicators in Forex

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The volume indicators in Forex



General rules for all volume indicators Forex:
1. If trading volumes are reduced, the interest for the currency pair decreases, possible short stabilise prices or a change in trend (trend).
2. When you increase the volume of trade transactions should expect an increasing interest in the current dynamics of the exchange rate, the trend may intensify and turn around.
3. There are situations where a gradual decrease in volume leads to a drastic price change.
4. In the presence of the peaks of the volumes of a possible trend reversal.

As you can see, the signals are still obscure. To improve the accuracy of prognosis, it is necessary to use additional indicators - for example, moving (Moving Average).

In the terminal MetaTrader 4 there are 4 types of indicators: Accumulation/Distribution, Money Flow Index, On Balance Volume and Volumes (Insert menu gt; Indicators gt; Volumes). Let us learn more about the features of each of them.





Accumulation/Distribution (A/D)


The name of the oscillator is translated as “accumulation/distribution”. When the analysis takes into account only the direction of the curve of the oscillator, the numerical values are not important.


Money Flow Index (MFI)


This oscillator is very similar to relative strength index (RSI), but takes into account the volumes (teak). MFI is good to use as an indicator to determine the strength of the cash flows invested in a particular asset or derived from it.

By analogy with RSI, to analyze Money Flow Index important 2 signal - divergence and the movement curve of the oscillator to the overbought (80) or oversold (20).


On Balance Volume (OBV)


Consider the volume and price changes, which accompany this volume.

Consider only the direction of the curve, not its value (level).

In most cases, the indicator OBV follows the price, repeating her movements. If there is divergence (divergence) indicator with the price, we can expect a reversal of the current trend.

The graph of the oscillator OBV can be applied as trend indicators and other oscillators.


Volumes


The volume in this case is the number of contracts for all trading transactions for a certain time interval. Low volume means that investors have not decided this is the case for consolidation. If most of the players are confident in their abilities and the positive dynamics of prices, volumes will grow.

If the trend is up, Volumes will increase in periods of growth rates and decrease in the period of its decline. In a downtrend all the way around - volumes grow in periods when prices are falling.

In General, you can use any of the above described volume indicators, but not to clutter the graph of their accumulation. After the comparative analysis, we can conclude that in the main data the volume indicators very similar, however, they are quite useful for analyzing the current market situation.


Remember that the profitability of trade is highly dependent on your chosen broker!



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