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Volume in the financial markets shows how much of a financial asset has changed hands during a specific time period. Traders can assess overall market mood by comparing volume levels with price data. This volume data might provide them a competitive advantage in their trading methods. 

Forex trading, on the other hand, takes place in a decentralised market. There is no way to establish the actual quantity of money being traded at any given time in the absence of a central exchange through which all transactions are done. As a result, volume data may differ between broker systems. This is why traders in the FX market frequently miss this data. However, with the correct tools, it is feasible to use volume data to fine-tune trading methods.

Tick Volume 

A tick is a single change in the currency price quotation, either up or down. Because one tick equals one trade, a substantial increase in tick volume shows that many traders opened or closed their deals over a specific time period. 

When trading volume is high, it may be simpler to buy and sell currency pairs at predetermined prices since a big number of traders are on the other side of your deal. This is often referred to as market liquidity. Increased buying volume, along with a price increase, indicates that buyers are in command. Similarly, when prices are down, sellers have the upper hand.

Despite the fact that there is a difference between tick volumes and actual traded volumes in spot forex, research have revealed a strong positive association between the two. Correlations between price updates and real volume have been shown to be higher than 90%. As a result, it is possible to infer that tick volume data is a significant piece of information.

Forex Volumes and Institutional Players

Analysis of real-time tick volume activity can reveal the presence of large money flows fueled by institutional actors like as banks, hedge funds, and corporations. Knowing when these deals were executed might assist predict future price movements. Market fluctuations can be influenced by institutional traders’ actions. 

Individual tick volume candles can give a wealth of information that can be used to corroborate a price trend. These candles must form at the appropriate levels, leaving enough room to reach the next logical price goal. 

Volume alone gives little information unless recent price fluctuations and bar-by-bar volume analyses are excluded. 

If the price approaches a crucial decision level on low tick volume, this level is likely to be rejected. This price acceleration, which is not accompanied by increased volume, indicates that large traders have opted to avoid the move. As a result, market liquidity is minimal.

Traders might expect a continuance of directional bias if major players participate. The current trend is projected to continue as the price rises approaching crucial levels with growing tick volumes. 

Candlesticks may reflect huge quantities of trading activity when key data is issued, such as the US Non-Farm Payroll report or monetary policy decisions by central banks. This might be unusual, given that major traders often avoid trading before high-impact news releases. Unexpected losses might occur as a result of the chaotic environment and heightened volatility.

• On Balance Volume (OBV): On the charts, OBV shows as a line. If the current candlestick’s closing price level is greater than the previous one, the current volume is added to the prior volume, and the line ascends. Similarly, when the new candlestick’s closing price is lower than the previous one, the volume is deducted from the previous volume, and the line falls. This indicator anticipates market swings and can thus provide recommendations to enter a trade. 

• Accumulation/Distribution: As volumes increase, the price changes that occur throughout that interval have a larger influence in establishing the value of this indication. This is another useful price-volume indicator.
• Money Flow Index (MFI): MFI measures the rate at which money moves into or out of a currency pair. Traders frequently compare it to the Relative Strength Index (RSI), except that it considers volume. 
• Volumes: Volume bars are the easiest to understand and are often utilised. They display the total number of price changes (ticks). When a volume bar is larger than the preceding one, it becomes green; otherwise, it turns red. 

Volume indicators, in conjunction with other technical instruments, can be utilised for a variety of methods. 

1. Recognize early price reversals and promptly identify new trends. 

2. To assess the strength of a current trend. 

3. For breakout confirmations, because volumes are low during consolidation times. 

4. Recognize regions of strong support and opposition.