Continue reading...Many traders look to volume as a method for identifying the strength or weakness of a trend. It may also be used to gauge turning points at supply and demand. In looking at volume, most traders will place the volume histogram at the bottom of their chart to see it correlating with the candles and thus the trend.
There is another way to incorporate volume into your charts. You can combine volume with the candles themselves. Volume charts are created in the same way as normal candles. However, instead of being based on time, a new candle is created only when a certain number of shares are traded. Time is irrelevant. Until enough shares are created to complete the current candle, it will not close and a new one will not be formed.
This can be extremely useful in determining strength of trend. When there is an increase in volume to sustain the trend, there will be more candles created and they will appear larger to cover more price. When the volume and buying (uptrend) or...
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