Volume

[cr6196]

Is volume as important a technical indicator in forex as it is in stocks, or does it hold a different weight of significance?

cr

 

[Trader333]

It is not possible to get an accurate measure of volume in currency trading. There have been many arguments about using proxy volume but in the end the evidence would suggest that it cannot be made use of.


Paul

 

[intradaybill]

Good reply by Trader333. I would also like to add that volume is always important in trading because it differentiates bull from bear market behavior. During bull markets volume increases. During bear markets volume decreases until you get a surge and that is often an indication of a short term bottom or even a trend reversal.

Now listen to this: currencies do not have bull or bear markets because they trade in pairs and for that reason volume plays a completely different role in technical analysis than in stocks or futures.

 

[cr6196]

Thanks a lot guys, just as i suspected, the appearence of volume bars in metatrader threw me but am getting the hang of this forex thing now

cheers

cr

 

[jiggly]

volume in the forex market in terms of actual contracts traded is not obtainable, as already mentioned by the previous poster you can get 'tick' volume for forex. this is just a count for how many up and down ticks occured during the given period.

depending on your interpretation of the volume will depend on if it is any use to you or not. volume, either ticks or contracts traded is a measure of 'activity', and this is very useful to someone who is trading off of price/activity relationships, i.e VSA

 

[jiggly]

thats a rediculous statement,

there are bull and bear markets in every market,

depends on your time horizon, but there are even bull markets on a 5 minute chart for a very very short term trader that is.

 

[intradaybill]

jiggly,

Consider EUR/USD in the past couple of years. You can say EUR was in a bull market. You can also say USD was in a bear market. It is a bull market for EUR and a bear market in USD.

Thus, Bull or Bear -- which are terms borrowed from the stock market -- depend on which side you are on. On the contrary, in stock market a bull market is defined as one where prices keep on rising. It is the long side only, it does not matter whether you are a buyer or a seller.

Bull or bear are stock market concepts which make no sense in forex. Trending market makes sense, of course.