An extremely important metric, it is often overlooked by novice traders. Read this article to understand the concept of volume better and learn how to use it in trading.
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Why is it important? Why is it important to follow trading volume?
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Turns out, volume has extended implications. As you already know, all exchange-traded assets behave in accordance with the principle of supply and demand.
The higher the supply all else being equal the lower the price, the higher the demand all else being equal the higher the price. With this in mind, try to imagine a situation when the number of deals goes up. When the market participants are uncertain and nothing about the future price can be said for sure, trading activity goes down, as for an ever-increasing number of traders the uncertainty and, therefore, risk becomes too high.
Simply explained on-balance volume
When the trend is strong and price moves in one direction only, the increasing number of trades can be witnessed.
It is, therefore, can be said that, as a rule, trading volume goes up during the strong trend and down during the flat market.
Volume indicators on the IQ Option trading platform Note that the volume itself should not be treated as a decision-making tool. Rather, it is a complementary tool that, combined with other indicators, can help you make a sound investment decision.
Why Is Volume Important?
How to measure volume? On the IQ Option platform, there are four different volume-related indicators.
When volume indicator for binary options indicator is rising, people tend to buy the asset at hand. When the opposite is true and the indicator is going down, people tend to sell it.
Volume is one of the most popular indicators for traders and - as we have already mentioned - can prove to be very useful, especially in the individual value area. As the volume is not calculated from the price itself, it can therefore also be considered as additional information. This fact is very important to many traders.
Net Volume is calculated by subtracting downtick volume from uptick volume over a certain period of time. Unlike general volume, it can help you determine the prevailing market sentiment. When Net Volume is below 0, the sentiment is considered to be bearish and more investors are thinking of selling the asset.
The number of people involved in a given movement, relative toe the number of people involved on an average basis, is an key metric defining the strength or lack of strength in the market. The trouble is that tracking changes in volume on your own on other than very basic level can be quite messy.
When the indicator is above the zero line, the sentiment is considered to be bullish and more investors are thinking of buying the asset.
Volume Oscillator shows not the volume itself but rather the change in volume and is identical in its design to the Relative Strength Index.
Volume is highly relevant to binary options traders. It can help you identify profitable trading opportunities and avoid bad ones. In detail, this article will answer these questions: What Is Volume? How Can I Measure Volume?
When the indicator is above the middle line and goes up, the volume is growing at an accelerating rate. When the indicator is below the middle line and goes down, the volume is falling at an accelerating rate. When the indicator is at zero, the volume stays exactly the same.
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Weis Wave Volume takes volume and organizes it into wave charts. What you get in the end is a series of selling and buying waves. In other words, it takes volume to another dimension and helps traders to better see the connection between the price action and volume.
This indicator is arguably the most complex of all four, yet it definitely deserves your attention. As you can see, all indicators from this list have something to do with volume but deliver the information a little bit differently. Give them a try and decide for yourself what indicators better suits your personality and trading style.
What Is Volume?
Who knows, maybe you would want to use each of them depending on the market conditions. Trading volume, when identified and interpreted correctly, can greatly improve your trading results.
Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future. Volume indicator for binary options should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
- Why not trade in the direction the big guys are going and volumes are the ones to show the direction, right?
- The indicator for binary options volume A reliable broker, online signals and a robot!
- Relative strength index Stochastics Learn a little more about each of these indicators and how they can help you become better at detecting trading opportunities for binary option contracts.
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- The Most Important Technical Indicators For Binary Options