The
volume indicator is also a significant index aside from its own price. It is very
beneficial in the stock market because it shows how much stocks have been
traded (both selling and buying) at any given time. As it is systematized in Forex,
you cannot determine the figures as to the amount of money that has been bought
or sold during a particular time. You can determine the figures of the volume
indicator using the movement of the price as your base.
This
bar chart uses two different bars, the green, and the red bars. These bars are used
to show whether you have a greater value or a lower value. When you see a green
bar, it shows a greater value than what the bar previously indicated while the
red bar means the current value is lower than the previous value. With the bars
displaying a color green, it means that there are more people participating in
the stock market at that particular time.
The
volume indicator can analyze how strong the trend is. The price follows the trend,
whether it is going upwards or downwards. If the volume increases, it shows a strong
trend. However, when the price starts fluctuate while the volume begins to decrease,
then it shows a trend that is getting weaker and will probably stop. What follows
this is a reversal or a rather quiet market. Still, you will need other
indicators to confirm the current situation.
Volume
indicators are also used in sorting out the validity of breakouts. When a low
volume centralized market showed a single high bar in the volume indicator, it
can mean that a possible break out is expected at any moment. When it happens,
the volume indicator displays high values, which is considered more accurate.
When the indicator displays a low interest, the breakout is considered not
valid.
The
volume confirms the most significant movements in the market. When the traders’
activity becomes higher than usual, these are confirmed by having higher volumes.
Nevertheless, a volume indicator can be considered accurate and reliable if there
is access to the information from the actual turnover in the market.
