Volume??

[PKFFW]

Ok, I know there are no real volume figures for the FX market. However some platforms give volume figures anyway. I can only assume they are one of two things....
1: Figures for volume traded through that platform only.....
or
2: "Approximate" figures for the FX market

So my question is.........

Does anyone use these volume figures and if so are they reliable, do they add anything to your analysis?

Cheers,
PKFFW

 

[JTrader]

I would guess that they may aply to your no.1 scenario.
I don't use volume in forex. There isn't any volume with my forex data providers. If there was i still wouldn't use it!

 

[PKFFW]

Thanks for the reply JTrader.

I reckon the figures would be pretty unreliable if they were attempting to approximate the volume of the FX market so no point using them. If it was just the volume of that broker then also pretty pointless using the figures I suppose as it wouldn't be indicative of the FX market in total.

Always open to new ideas though and volume analysis seems to be generally accepted as valid and helpful in most other markets. So if anyone has found these "volume by proxy" (so to speak) of any use I'd be interested to hear your thoughts.

Cheers,
PKFFW

 

[atomm]

Unless the volume at your broker dominant the volume of transaction at the retail forex market, it is less representative on the price movement. In this respect, you need to know the percentage of its market share.
IMO, volume is just one of the indicators, like MACD, stochastic, moving average, Bollinger band, RSI,...etc. It can give a constructive indication ( forecast or extrapolation ) at certain state of price movement, but not continuously and consistently.

 

[wasp]

Oh, I use the volume with metatrader... Couldn't live without it

 

[PKFFW]

Serious wasp? Can't tell with that wink at the end! lol

If you are serious.......can you suggest any further reading that may be of interest to me?

Cheers,
PKFFW

 

[wasp]

Serious wasp? Can't tell with that wink at the end! lol

If you are serious.......can you suggest any further reading that may be of interest to me?

Cheers,
PKFFW

No sorry, not really! I was having an off day... The only thing I can say volume is useful for is when your watch has stopped and you don't know if the UK sess has started yet!!!

There was a drop in the Asian session about a month ago after a hard drop in the US sess and volumes would have shown it was going to actually move big outside of usual hours, but other than that, I couldn't see how it could be used in the traditional sense.

 

[PKFFW]

This is the conclusion I'm coming to. Not really useful in the traditional sense. Not accurate so don't use it.

Cheers,
PKFFW

 

[ronblack]

Does anyone use these volume figures and if so are they reliable, do they add anything to your analysis?

Totally unreliable, don't use them.

Ron

 

[timm]

The reason they're unreliable is simple - they aren't really volume as far as I'm aware. Aren't they some artificial measure called 'tick volume'? There are some pretty fundamental reasons why tick volume has no guaranteed correlation with actual market traded volume whatsoever.

I posted something on this a while back if anyone wants to serch for it.

GJ

Yes. Metatrader just gives tick volume. Not very useful. It varies a lot between different brokers.

I'm not entirely sure what you would count as actual traded volume for a pair anyway. If you're looking at gbpjpy for instance most of the actual volume moving this pair is going to be traded in gbpusd and usdjpy isn't it? So to get some measure of volume for a pair you would need to look at the total volume on both individual currencies. It's nothing like volume on a stock. It's a multi-dimensional problem.

 

[wasp]

Absolutely - that's part of the problem (especially as Reuters Dealing and EBS dont see any volume at all going through in a cross like GBP/JPY, although the other ECNs do)

Also, tick volume makes the basic and totally erroneous assumtion that lots of price changes = big volume. It doesn't. It could actually mean the market's a bit thin and only a small amount of flow is needed to move the price at that time.

It could even mean that in a given ccy pair there are lots of contributors to Reuters blended rates for example, and every time one of these 200 banks spews out a rate update that might make the price go up or down a tick, causing a ripple effect in the live pricing engines of any firm that relies on this rate source. Since all many of these banks do is take their own in-house e-commerce rate, spread it a bit, brand it with their own name and send it to Reuters, Bloomberg etc every say 10 seconds, that's a lot of rate updates from all these banks, with not necessarily anything at all going on.

So tick volume isn't even just vague - it's a total fraud.

GJ

I know what your saying GJ but how do you explain my post and chart above. That one Asian session with the huge drop as the market opened and the unusual volume increase? I know overall it doesn't explain much at all but that would certainly have given a hint that something was happening.