Is volume important?

[Boat]

Hello there, all you succesfull traders!

I am a newbie from Sweden who finds FOREX to be a fantastic opportunity for making money.

Since I´m still in "the cradle" when it comes to trading I will drop in some questions now and then with hopes of plenty good answers and a lot of discussions.

I have read in some other forums about the importance of volume. I guess volume is very important when it comes to stocks, but how important is it when it comes to FOREX?

Regards and happy trading

Fredrik

 

[zuke]

Hello there, all you succesfull traders!

I am a newbie from Sweden who finds FOREX to be a fantastic opportunity for making money.

Since I´m still in "the cradle" when it comes to trading I will drop in some questions now and then with hopes of plenty good answers and a lot of discussions.

I have read in some other forums about the importance of volume. I guess volume is very important when it comes to stocks, but how important is it when it comes to FOREX?

Regards and happy trading

Fredrik

As FX is not traded on a central exchange, volume is MEANINGLESS. Ignore it.

 

[TheMoneyMachine]

Hello there, all you succesfull traders!

I am a newbie from Sweden who finds FOREX to be a fantastic opportunity for making money.

Since I´m still in "the cradle" when it comes to trading I will drop in some questions now and then with hopes of plenty good answers and a lot of discussions.

I have read in some other forums about the importance of volume. I guess volume is very important when it comes to stocks, but how important is it when it comes to FOREX?

Regards and happy trading

Fredrik

Hello Fredrix,

It depends if you are referring to the cash market or the futures market. The cash market (spot) is decentralised and unregulated making it virtually impossible to collate an accurate record of volume in real time. Currency futures contracts are traded on various exchanges and therefore volume data is available like any other exchange traded instrument.

The CFTC compile a monthly COT report (commitment of traders) at the end of each month using data from the CME. This report shows open interest volumes for commercial and non commercial entity's and can be a useful tool for gauging overall sentiment if used appropriately. Please try the links below.

http://www.cftc.gov/cftc/cftchome.htm
http://www.cftc.gov/dea/futures/deacmelf.htm

Kind regards

TMM

 

[Skog]

As FX is not traded on a central exchange, volume is MEANINGLESS. Ignore it.

I beg to differ. Volume is activity. Activity is always important, no matter what product you trade.

As we all know, you can't get actual traded volume in forex, but there are other ways to trace the activity. By using Tick Volume for example.

It isn't the number of traded contracts on each bar that is important. It's the activity on the bar relative to the activity on the previous bars.

I think VSATrader has some screenshots of a couple of Forex spreads with Tick Volume here on T2W. Do a search of his name and check out his posts in the "Live Cable Trading" thread.

It is also possible to use the volume from the forex futures contracts while trading forex.

There are many ways to trace the activity in forex, it's certainly not meaningless and you should definitely not ignore it.

-Skog