Knowing the transaction volume is very important in trading as it can be evidence that trading is active if there is a lot of volume. Volume generally increases when news is announced and decreases when there are no news and few market participants are active at that moment.
This indicator for MT4 is a moving average line of the volume data. This indicator makes it easy to see long-term volume changes for the underlying asset that you are trading.
If only the volume is used, changes in the volume may be difficult to understand. However, the moving average line is also displayed in this indicator, making it easier to grasp the volume change. This allows you to see at a glance when the volume is rising or falling.
Tips for using
There are many ways to use volume in trading. For example, the Dow theory states that a trend shift must be accompanied by an increase in volume. It is more reliable to use volume in addition to other indicators to grasp the trend.
Also, another siutation that can occur is the volume may be abnormally high even though there is no change on the chart. In this case, some movement may have occurred under the surface.
In addition, it is a good idea to use the volume to analyze when trading is active. For example, during the Asian trading sesion there tends to be less volume. It also means that “the volume is low = there are few market participants”. If the volume is too low, there is a risk that the market price will move too easily and too quickly.
Furthermore, the moving average line - unique to this indicator - can be used to capture short-term and long-term volume changes.
As you can see, the usage of this indicator can be diverse, but the volume in FX is a little different from the volume in the stock market. This indicator displays the volume of the Forex broker that you are using, and the volume values may change completely if you use a different FX broker.
Finally, it’s important to also note that the volume of the interbank market (where mainly professionals participate) and FX brokers (where mainly general investors participate) are quite different. Therefore, you should use this data with care.
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