Forex Volume Strategy

By Matt Speler

In the first part of our series, you learnt about the daily method for predicting market direction. It is determined by market mood. The second section is concerned with the subject of precise trading.

Have you ever struggled and questioned your ability to choose the ideal time to begin a trade? We can assure you that your problem will be resolved. We are really excited to show you a publication that describes the straightforward use of real volume in conjunction with Price Action.

It is not just another book full of procedures and patterns. It's a book about daily market life. We traded the examples outlined in the book all year long.

It's not just a story, my dear reader. This book reads like a training manual. There will be times when you will gleefully exclaim "WOW!" and rush to open your platform in search of similar situations. There will also be times when you will devote yourself to just one example with enthusiasm and curiosity, and after a long period of examination, you will emerge as a skilled warrior who understands the mechanics of the market. The examples in this book differ, but the purpose is to make you an aware trader who opens trades in precise spots where the opposing side of the market truly enters.

That is our other educational manifesto. Additionally, in our store you can get actual volume and wonderful software that gives you instant access to daily current price levels crucial for the top market players!

You'll discover the best way to identify the existence of major players in the market. They won't keep anything a secret from you any longer, and you'll start trading consciously rather than solely relying on statistical analysis. You'll supplement your direction strategy with a volume strategy. You can now combine both going forward.

 
What you will get from reading this book?

 

1. You will understand what the real volume is and why is it so important
2. You will get the knowledge of the basic principles of using volume in conjunction with Price Action
3. You will learn in practice how to use a real volume to trade at different time intervals
4. You will learn how to use time intervals … Where to analyze and where to look for entries, what sequence of intervals is best to use
5. You will learn many intuitive relationships between price and volume
6. You will learn how to initially combine the real volume and sentiment. This also will be an introduction to the final part of the series

• Language: English
• Publisher: Matt Speler
• Release date: Feb 25, 2022
• ISBN: 9788396414717

Book preview

Table Of Contents

FROM THE AUTHOR

AN INTRODUCTION TO THE WORLD OF VOLUME

VOLUME ANALYSIS

PRACTICAL SECTION

FROM THE AUTHOR

Dear reader, We are extremely happy that you have read our first publication on market sentiment, and have decided to reach for another ebook on real volume. However, if you have not read the e-book about sentiment, and chosen the topic of volume right away, then do not worry. These are two separate topics that complement each other. However, the idea behind the sequence is that sentiment is the mood of the market, which is something deeper. In turn, the volume gives specific signals on entering and exiting the market. The sentiment refered to the potential market mood of the day. However, it did not answer the question of how to use it and where is the optimal market entry. This e-book will provide such an answer. You will learn to see even more. You'll know ahead of time whether market strength is weakening and whether it is preparing for a reversal. You'll start noticing the places where large institutions come into play. Note that knowing the subject of sentiment and volume, you will know more than others. Your movements will no longer be chaotic and your trades are likely to be market-based rather than random. We are extremely pleased that we can also provide you with this tool at an incredibly low price. A market worth billions of dollars a day will reveal cards to you, and you will get the tool for that for just a few dollars a month. Yes, you read that right! On our site you can purchase access to the real volume for just a few USD per month. Together with this publication, this tool will give you a powerful weapon. Undoubtedly, this publication will differ from others available on the market. Many authors describe and name all kinds of volume-based patterns. There are many pages of theory around these patterns. We do not approve of that. This book is not only another manifesto against expensive training, but also a manifesto against training theories. The materials in the book are based on about a year of collected interesting volume situations, which were partly traded by us, and partly analyzed in terms of education. These are not exclusive examples for the purposes of this publication. These are analyzes on base of which we ourselves gained experience. It will be a very practical publication. Let us, dear reader, not to create any theoretical chapters. The only exception will be the chapter on what volume is at all. However, all uses and important formations will be discussed directly, intertwining them between practical examples. Therefore, we present you with a practical publication. We don't make nonsense theories. We want to show you the logical mechanics of the market. Because the market, dear reader, contrary to appearances, is not complicated. It is people who complicate it. With us you will learn a very intuitive approach. Reading this ebook will not only give you tremendous knowledge, but will also trigger the Got it! reaction. Our approach to volume is so intuitive that you don't need to learn it, remember it, etc. Just read this book and you will automatically see much more in the charts. You re-enter the world of big money in a professional manner. So let's start without further delay. We invite you to read this ebook and good luck in discovering the secrets of large institutions!

AN INTRODUCTION TO THE WORLD OF VOLUME

In order for us to start with the practical side of volume, we need to introduce what volume is all about.

Seemingly green and red bars do not make a big impression. They basically look like any other indicator. However, once you get to know what is behind them, it is likely that your trade will never lack this indicator again. Let's start by discovering the importance of volume.

The real volume indicator is otherwise known as the trading volume. It means the number of contracts traded in a given time interval. All transactions between buyers and sellers are counted and reported within the volume we see. You are probably wondering now how it is possible that there is a real volume available for the FOREX market. We know well that the FOREX market is an unregulated market and does not have a main center. Well, the volume that we provide downloads actual data from the exchange. Thanks to this, we can see live how many contracts have appeared on a given instrument and I will emphasize it again! This is the actual number of contracts. In turn, the volume that is available on basic mode on the MT4 trading platform is the so-called Tick volume. The tick volume counts the number of ticks in a given time unit. Thus, the tick volume tells us rather about the frequency of transactions. It doesn't tell us much about the real number of contracts in a given unit of time. Therefore, it is important to use a real volume. It is worth noting that the volume that you can buy on our website shows live contracts appearing in the market, not only after the candlestick is closed. Thanks to this, you can see the balance of forces in the market before creating a new candlestick. To begin with, we will discuss some important facts from the volume theory.

One measure of volume assessment is whether the volume is increasing or decreasing for a given move. As you will find out later, this is not a key measure because you will often see that despite the growing volume, there is a return. However, for the general concept of how the volume works, we will discuss this measure.

USDJPY, M30

If, in a downward or upward move, the volume rises with each subsequent candlestick confirming the direction, then we are dealing with increasing market interest in a specific trade direction. We can then talk about strength. It does not matter whether the market is increasing or decreasing. In one move or the other, the strength of the market will be there as the volume increases with that move. However, remember that later in this ebook you will learn about situations where the opposite happens at big bars. This is especially true in times of panic or near key levels. Here we are talking about a simplified schema, and in the following part of the ebook we will develop it and teach you to distinguish between these situations.

GBPUSD, M30

Similarly, in the case of GBPUSD, we see a build-up in volume on an upward move. I took this example above on purpose. Well, in the chart, the higher and higher volume bars in the first example are indisputable. However, the second growth impulse gives food for thought. Do you know why? Well just like that... Despite the growing volume, we can see that these volumes are very small. It is, after all, a picture of weakness rather than strength. Please note that the background also counts for the volume !! If we see much higher volumes before and the later move is on much lower, it may be a weakening market. On the other hand, if the opposite is true, i.e. we see small volumes at the beginning, and then much larger ones, it proves that the market is interested in a given direction. I think the image of power is very visible to you, and then what is the volume image of market weakness?

USDJPY, M30

When the volume gets smaller along with the increase, the picture of market weakness appears, and its confirmation is the strength in the opposite direction. This can be seen in the chart above. The first two actions to try to continue the increases take place on declining volumes. On the other hand, the re-break of the level marked in red takes place on a large, growing volume. This may indicate a change in the balance of forces. Sometimes new highs or lows are created on small volumes, which also proves that new highs are not synonymous with a large number of contracts. Such a situation gives food for thought and prompts to remain alert, because force may soon appear, but in the opposite direction.

AUDUSD, M30

In the chart above, we can see that the first blow of supply is strong. The price is going down on large, growing volumes. However, after a short correction, the next two downward waves are not characterized by large volumes, and certainly not rising ones. This shows the weakness of the supply market. Even if we notice a growing volume in a certain period, it still looks pale compared to the market background, i.e. the previous force. This shows a picture of weakness and a high potential for a price reversal.

Now we will implement another important piece of information. The key to judging the strength / weakness of a move is the shape of the candlestick on the chart. If, together with a large volume, we see a full candlestick with a large body closed high in an uptrend and low in a downtrend, then there is strength. On the other hand, if the candlestick has a shadow and a narrow body, it may be a sign of great strength of the other side.

AUDUSD, M30

All 3 candlesticks on the chart show a strong upward market. The bodies in an uptrend close high, which proves the strength of the market. Before we move on to showing the weakness of the market, I would like to make an important point.

Important Notice

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The color of the volume bar does not indicate a specific signal. A bullish (upward) candlestick with a volume green bar may actually signify supply entering the market, and a bearish (downward) candlestick with a volume red bar may signify a buy rather than a sale. How is it possible? Take a look at the examples below.

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AUDUSD, M30

Please note that we have marked a black bearish (downward) candlestick with a relatively large red volume bar in the chart above. However, this candlestick has a small black body and a large shadow from the bottom. What does this mean? This means the supply has been trying its best downward. However, a demand appeared on the market which brought the price close to the opening price and it closed high. A shadow from below shows that price was there, but eventually demand prevailed and the candlestick closed high. This means that despite the declinig candlestick and the large red bar in volume, it is actually a candlestick that means a higher probability market demand advantage. Thus, the color of the volume bar and even the color of the candlestick does not necessarily indicate in a simplified manner what force we are dealing with. If this candlestick closed low, e.g. Near the end of the shadow, the situation would be radically different and we would be dealing with a supply market, not a demand market. A small nuance, but how important for navigating freely in the volume analysis and understand the intentions of market players.

GBPUSD, M30

The next example shows a large red bar on the volume. We have a rising volume, but what of it if the candlestick closes high. This means that demand wins this battle, the next candlesticks on the second arrow are also closed high. This is another great example that rising volume in a downtrend does not necessarily mean supply. If there is the highest volume of the move on the low, and the candlestick is closed high, there is undoubtedly a demand. At the very end, on the last arrow, you can see the entry of high demand. The increasing candlestick is closed high and the corresponding volume is very large. This is nothing more than a confirmation of gaining an advantage and the beginning of an upward movement. In such a case, there is no doubt that this is a large share of the buyer in the action. Contrary to appearances, it is not difficult, but very logical. Remember The volume itself is not enough. It is important to analyze the volume along with the corresponding candlestick on the chart. This set gives concrete answers in terms of market advantage.

GBPUSD, M30

The next chart is an example that not every green volume bar on an upward candlestick signifies demand. Notice that the candlestick marked with an arrow has a huge shadow on the top. This means that this candlestick was at some point in that time frame a high upward (bullish) candlestick. However, in the course of the ongoing trade exchange, an enormous supply entered, which crushed the demand, and the body of the upward candlestick was pulled close to the opening price. Later we see the price trying to rise again, but we call it a regular test. In fact, this growth is not being followed by a large volume. You can even say that the volume is minimal and then it starts to increase with the decreasing price. This proves the prevailing supply or downward market. Please note that such tests are not a bad thing. They're actually very useful. After such large candlesticks with shadows, the stop loss value would have to be at least above the shadow of the large candlestick. However, thanks to the test, we confirm that the demand market, as in the example above, is very weak, and we also get a chance to enter the position. Now you are probably wondering, but how is it possible that we get such a signal? Well, it results from looking for an entry into a transaction at a lower interval. The high interval confirms the market background, and going down to the lower interval, we often get very telling signals of entry of one side of the market! In the next chapter you will find out how it works and how to use it effectively.

We'll touch on one more point in this chapter. Of course, the volume can show interesting price action at any time. However, the most important thing is volume actions in specific places. These places are the support / resistance levels, which result from the subject matter of our ebook on market sentiment. If the market is interested in a given level, it is very likely that the fight for this level will take place at it and at this point we will see a large change in the balance of power, or a breakout of the level. Let me remind you that you can also purchase such ready-made levels on our website www.thespeculant.com. Every day you will receive a template for your Mt4 platform and you will be able to use the levels drawn immediately. These levels are updated on a daily basis by our team that sweat their brow searching for and figuring out the intentions of big market players.

AUDUSD, M30

In the chart above, we can see how the volume behaved when it reached the key level of 0.70. Initially, the first decrease was on a growing volume. However, the next ones are already a very small volume and suddenly the market tries to break the 0.70 level. How does it end? Well, buy transactions enter the market and the supply slows down. The price closes high and after the break there is only a long shadow from the bottom left. We also see that the volume itself on this candlestick is high and exceeds the volumes in the two previous downturns. Hope you can see that at this point the demand is taking the lead and the chance for an upward move shows. In addition, the key here is to know the intentions of the market and mention the key level in your plans or analyzes. In this case the level of 0.70 was crucial. WESTPAC analysts predicted a decrease in AUDUSD to 0.70, and then a rebound with potential in the medium term to even 0.75.

USDJPY, M30

The next example is a bit more difficult. Initially, the price hits the resistance level but again you can see that it is experiencing a supply entry at the very top. A clear shadow is formed from above. Then price creates another high! However, on clearly smaller volumes. This is nothing but an index divergence. Consecutive approaches to the top are already on clearly decreasing and smaller volumes until it comes to another top test! Again, the upward (bullish) candlestick closes low at a noticeably larger volume. This once again confirms that supply does not allow the buyer side to move to new heights. The difficulty with this example is that the price does not execute the volume indication right away. A test comes, followed by a reversal. However, it is important that the test also does not take place on larger and growing volumes. Actions at the highs are an additional important issue. Breaking a new High on a larger volume negates the supply system. On the other hand, large supply hits and candlestick closing low give concrete signals that this resistance will not break.

Dear reader, At this point, we will finish the chapter introducing the volume analysis. I wanted to give you the seed of knowledge about volume here. We have listed a few important issues, such as the strength and weakness of the market, i.e. the increasing and decreasing volume. You also learned about the importance of Japanese candlesticks in identifying the advantageous side of the market. You have learned what a volume test is and that the market does not always have to react immediately to the volume indicator. You also know that clear amplitudes in the volumes indicate that there is no one on the market at a given moment, and suddenly he appears