Trading Volume Indicator Indicator For MT4
The Trading Volume Indicator Indicator For MT4 is a unique technical analysis tool that displays the percentage volume of buying and selling trades during any given price bar. Both volumes are shown simultaneously, with Green color representing buying volumes and Red color signifying selling volumes, respectively.
Trading ideas with the Trading Volume Indicator For MT4
This indicator can be used to great effect. It monitors the trading volume, constantly comparing the bullish and bearish trading volume expressed in the form of a percentage. This is a great resource to be attributed with - I say this because it brings so much light to the situation in terms of buying and selling volume.
One should value volume as pressure. So in essence - this indicator window or display shows you the comparison between the volume-types. If you were to look at support and resistance levels you will learn that resistance is defined by resistive selling volume whereas support levels are defined by supportive buying volume or pressure. These zones are clearly seen when we are in a consolidation phase or a sideways trend. Therefore, a good trading directive, with the use of the trading volume indicator, is to use this tool as a trend confirmation tool.
By this I mean you can use a top-down approach. So what you can do is switch to the 30-minute chart as I did in the picture below. Then after that, draw a trendline. In this instance, the trend line is an uptrend. Once that is done look at the indicator to confirm what is the volume parameter. As you can see, the volume is bullish.
Now we shall scroll or switch down to the 15-minute time frame to see if the volume on that particular chart is also bullish. The corresponding image thereof is shown below.
As you can see that the bullish volume is still dominant on the 15-minute chart. However, the market might have made a bearish fakeout or breakout below the support line of the uptrend line which was drawn on the higher time frame - 30-minute chart. This is some crucial insight being shown here because traders could fall victim to a high risk bearish or short trade that does not have the dominant bearish volume which goes along with their motives to go short. Therefore, you will need added-confirmation - so it is not ideal to rush into this trade.
Trading Volume Indicator Indicator For MT4 - Buy Entries
As you can see the trading idea is based on confirming if indeed there is enough dominant buying volume to support our idea to go long. The fifteen-minute and the 30-minute charts do stand in agreement with our motives to go long. However, we still need to switch down to the lower time frame - which is the 5-minute time frame.
The screenshot above, which was taken from the 5-minute chart, confirms that there is indeed dominant buying pressure. It may not be as strong as the higher time frames. This is due to the fact that the bears have caused the market to slip out of the uptrend to the downside which could hint at a bearish breakout. However, as indicated earlier that a sell would still be risky. So for our buy - we will patiently wait for the market to correct and go back into the uptrend trajectory. If the strength of the support line of the uptrend line maintains its support integrity then we can open a buy.
This is a straightforward use-case, I purposefully did not make mention of the currency pair being traded. The reason for this is that I just wanted you to grasp the concept of how you can go about using the trading volume indicator to your advantage. In this example, we looked at a bullish trend idea - however, the same but opposite rules are applicable to the sell entry.
Trading Volume Indicator Indicator For MT4 - Conclusion
To conclude, you have seen how you can go about using the trading volume indicator in a way that minimizes the risk of getting the trade wrong. You have also seen how easy it is to misread the market when trading high-risk breakouts that could turn into fakeouts as the volume-consensus does not necessarily agree with the direction of the prospective breakout. Essentially, now you should have a strong sense of what this trading tool can do for your trading in terms of making sound trading decisions.
Before you go on trading with this method, just always ensure that the volume-type, from all the charts that you choose to analyze, are in agreement with one another. When they are all showing the same sentiment throughout, then you have a pretty good chance that the market will work in your favor if you were to trade in the direction hinted by the trading volume indicator. Nevertheless, go through the process a couple of times and try other time frames if you wish - the process still remains the same.