17 Jan The importance of volume
How could be volumes use in Forex? Can I use volumes in MetaTrader? Can I ignore volumes? Does volume really need? Does volume really work?
Well, I know these questions well, as I have these ones in 2009-2012 approximately. Here is my answer after years of daily chart following. Yes, volumes absolutely necessary and can not be ignored IF you are relying upon the Law of Supply and Demand. This is a universal Law for business and trading as well. It declares the relationship between price and… volume! So, there is no any other way to judge the demand/supply balances if you have no volume.
Can you use the tick volume from MetaTrader? More yes than no. The reason – tick volume does also represent the Activity as the real volume, however, the real volume from official regulated exchange has more common sense.
Do you need special software like ATAS? No. Actually, the pioneer traders like Richard Wyckoff, Jesse Livermore & company plotted their charts by their hands. Read the Wyckoff course, he teaches how to plot point-n-figure, vertical volume, and wave volume charts. And they reached success without any software. They use the ticker tape to read the supply and demand.
Does the ATAS-like special software provide an additional edge? Yes. Special software distributes you professional valuable information in the convenient visual form. Here is the chart of Brent Oil from stockchart.ru service using buy/sell horizontal volume.
And here is the same market/moment using the footprint (or cluster chart):
Note the explosion of red color around at 60.33 per barrel. This is some sort of panic selling. We will discover this sign of strength in greater details in the following lessons.
As the short conclusion to the questions asked above. The volume is important. The classic popular software distributes no volume OR a part of volume information. For example, TradingView platform does not deal with BUY/SELL volume. It collects from exchanges the total volume of trading without specification whether that volume relates to buy or sell executed orders. That is why there is no possibility of setting up the buy/sell volume indicator on TradingView.