The forex market is one of the most efficient and profitable financial markets, along with the digital currency market. Day by day, there are various methods and tools that make it easier for traders to get more profit from the financial markets. But using these tools requires months of study about the forex market or digital currency, so using these tools is a bit difficult for novice traders. There are better and easier ways to make money from the forex market without the need for months of practice. Price action volume trading is one of the popular price action methods that can be used to earn money easily. The price action volume trading method gives traders the ability to predict the financial markets and make their transactions more successful and accurate.
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What is volume trading?
Volume trading means the volume and size of trades made. Now, this volume or size can be in a period of 1 minute or a day, which is displayed as a chart or graph. This method gives traders the ability to find the liquidity level of their desired assets and use it to determine when to enter or exit the market. Trading volume usually appears in the lower part of the chart, which represents the liquidity or number of shares offered for that asset. This feature appears vertically, and the larger the volume, the more the price will change.
Price action volume trading is a method that is obtained through observations and research on prices and transactions. This method is divided into Buying Volume and Selling Volume categories. In addition to the volume trading method, there is also the price action supply and demand method, which you can use to earn money from the digital currency and forex market. Selling Volume: It means sales volume, which represents the highest price that sellers pay for an asset. Buying Volume: means the purchase volume, which represents the lowest price that buyers pay for an asset.
Price action volume trading is one of the most widely used price action methods that Amzure traders use in their transactions. If you want to get to know some other price action methods, read the article comparing different price action methods.
Why price action volume trading?
By analyzing the volume of transactions, you can easily recognize the time of entry and exit from the market. Financial markets are not always what they seem, and large price changes can always be hidden beneath the downtrends and uptrends. Price action volume trading gives traders this feature to make a better decision on whether to accept or reject a market signal by using the volume of traded stocks. This method can be considered as the oldest method of analyzing financial markets, and on the other hand, it is the most practical method for checking transactions. You can find the volume trading index in most trading charts and easily make your decision to buy and sell using this technique. The price action volume trading method is the simplest price action method for checking and analyzing financial markets.
It is easy to recognize when to enter and exit the market using this method, but if the guesswork is not done correctly, it will lead to losses. The strength of loss and profit using this method is the same, so be more careful in analyzing. The thing about financial markets and price action volume trading is that an increase in liquidity or trading volume does not mean an increase in price. Also, by using the price action volume trading method, you cannot completely predict the market trend, but you can better understand the market price movement. Price action smart money is also one of the best methods along with volume trading, which together help traders a lot.
Volume trading patterns
Each price action method has its own formula and structure. Therefore, it is better for each trader to choose one of them based on his strategy and use it in his transactions. There is no need to learn volume trading patterns or volume trading indicators, but knowing and using them in trading will help you a lot. The patterns that will be mentioned below are mostly used in the forex market, if you are not familiar with this market and you cannot make good money from it, see the global market intelligence course.
On Balance Volume Pattern
OBV is a simple and convenient yet very user-friendly pattern that shows divergences and converging markets. This pattern shows when the market closes higher and begins to add volume, as well as when the market closes lower and trading volume decreases.
Read more: Price Action RTM
Chaikin Money Flow Model
The Chuckin Money Flow pattern focuses on increasing market volume, which usually increases market volume with increasing prices. This pattern shows trades when prices are below their daily range, low value and when prices are above their daily range, they are bullish. This pattern can be very useful for short-term traders.
How to use price action volume trading
Traders usually start trading when they are sure that the market is stable. Because if the market is in its fluctuating state, it is harder to predict and the probability of losing is higher. In the following, we will tell you some tips so that you can master and understand better this method of price action and financial markets.
Determining the market trend (Trend Confirmation)
For any market to be bullish, buyers must be eager to buy. Also, the higher the demand, the higher the price, which causes the market to rise. Therefore, if the market was in an upward trend, but the volume of market transactions decreased, it could indicate that the market may undergo a change in trend. The signal you get when the price drops or rises when trading volume decreases is not good. But when the volume is high and the price decreases or increases, it indicates a stronger signal from the market and the time to buy or sell.
Increase in volume and drastic changes in market trends (exhaustion moves and volume)
Markets that are going up or down are always facing a steep trend. For example, digital currency markets fell and fell sharply when Bitcoin fell. The trends that are formed in this way are mostly due to the decrease in the volume of transactions. When traders face this disaster, they hold their assets and trading volume decreases. After the price drops to a certain amount, the market stabilizes and forces traders to trade, at the same time the market may return and take an upward trend again. After this rise, the market will fail again and the volume of open transactions will decrease. You can predict what the market will be like in the following days using other methods.
Price action volume trading is also very useful in detecting bullish signs. To better understand this method, pay attention to the following example. Suppose that the market suffers a decrease in volume due to a price decrease and the price increases again. If the price decreases again and does not go below its previous price, and on the other hand, the volume of transactions also decreases, this trend is called Bullish Sign. Those who use these signs believe that the market will once again take an upward and growing trend.
Read more: digital currency technical analysis training
Volume and price changes
When the market has been in an upward or downward trend for a long time, the possibility of a price reversal with a large increase in trading volume is very high. In this case, it is the best time to invest, because the market has left a different behavior.
Trading volume indicators
In the continuation of this article, we are going to introduce to you indicators that are widely used in high volume transactions, which is price action volume trading, which means the integration of price action and volume trading style and is done by some traders. Volume trading is placed in a completely professional way as a part of technical analysis, the presence of volume indicators is the reason for this, and also keep in mind that volume trading is not just a trading method, but by means of which you can make your transactions both in the style of price action and Whether you use and confirm in the style of technical analysis.
Equilibrium volume indicator
The balanced volume indicator or OBV in the volume trading method is a simple but very practical and useful indicator that you can easily use. If by the end of the day your trades are closed at the higher part of the previous day, the volume of your trades will show a positive number that will be added to the volume of the previous day, and if it was contrary to this action, it means that the price will be closed lower than the previous day, in which case The volume of transactions will be negative and will be deducted from the volume of the previous day.
Chaikin money flow indicator
The CMF indicator, which stands for Chaikin Money Flow, is another very useful indicator in the volume trading method, which checks the increase in volume due to the low price, and it is better to know that the range in which this indicator moves is between -1 and + is 1. Also, positive numbers indicate buying pressure and negative numbers indicate selling pressure, and pay attention to these two points.
- When the volume increases when the closing price is above the daily range, the indicator shows more positive numbers.
- Also, if the closed price is placed at the bottom of the daily range, the volume is reduced and the indicator will show negative numbers. This type of indicator is used to observe divergence and also in short-term time frames.
Klinger oscillator indicator
Another volume trading tool is the Klinger Oscillator, and the Klinger Oscillator is formed when two Klinger lines and a signal occur.
- The trade entry signal is issued when the Klinger line is above the zero level and at the same time the Klinger line is above the signal line.
- Also, to see the exit signal from the transaction, whenever the signal line is above the Clinger line, the sell signal is issued from the transaction.
Sometimes a sudden price increase in the charts and volume makes traders optimistic and encourages them to enter their capital into the market. When the market experiences small changes in volume and price, the possibility of false breakouts increases. Therefore, we should be more careful not to suffer this tragedy in the financial markets.
Making money from the forex market and other financial markets requires a lot of information. Therefore, in order to get a good profit in the financial markets, it is better to have a little information about these markets. Traders with price action methods can easily profit with minimal knowledge. Because these methods are mostly obtained through observations and analyzing charts. The price action volume trading method, which is one of the oldest price action methods, gives traders the ability to check the market using the volume of transactions. In this article, we explained the price action volume trading method and also examined the volume trading patterns.