Keltner channels are a type of volatility envelope, widening as prices become more choppy, and narrowing in quiet trading times. Successful trading means seeing in the future ahead of other players, and volume could help you achieve this. Volume comes in handy, especially when price action begins to plateau. If significant shifts in volume accompany price action plateaus but, you should read this as a signal for a potential reversal in price direction. The red line is the indicator line, and the blue line is the price line. The breakout of the indicator line by the price from top to bottom indicates a downtrend.

  • If the price rises and volume enlarges, then that is an explicit confirmation of trend formation.
  • This tells us that during this period, there are more traders willing to buy an asset.
  • This could signal to the investor that the bullish uptrend in ABC stock is beginning to lose momentum and may soon end.
  • Financial markets are places where traders buy and sell assets of different types.
  • The data are calculated by the exchanges, and then the information is posted on the analytical portals or websites of the exchanges for public access.
  • Enhance or build your brokerage business from scratch with our advanced and flexible trading platform, CRM, and a wide range of custom solutions. helps traders of all levels learn how to trade the financial markets. Using the trading strategy can help you make the transition from a smaller to larger position size in a less stressful trading environment. By taking just one position in a day, you can smoothly get used to the new position size without focusing on your trading account balance.

Foreign exchange market

Cryptocurrency exchanges with few website visits are reporting trading volumes that run into billions of dollars. According to Bloomberg, 40% of trades at the top 30 exchanges ranked by Coin Market Cap come from eight venues with the highest volume to visits ratio. For instance, institutional investors might cause the price of an asset to rise and then sell their holdings once other investors follow suit. Volume in the technical analysis should always be accompanied by other indicators. If the price of an asset – for example, a stock – is rising, this trend must be confirmed. Thanks to different types of charts, it is also possible to align the volume in the technical analysis with the support and resistance levels.

how to increase your brokerage trading volume

“While I never want to dismiss retail investors, there is a level of speculation that seems unsustainable,” he said. “When I look at bitcoin potentially rolling over, that doesn’t bode well because I consider that the bellwether for speculative fervor.” As for options trading, Sosnick notes that the same phenomenon — buying out-of-the-money call options that was so popular in 2020 — continues. Put it all together, Repetto said, and the evidence points to increased retail trading as the primary culprit in the overall increase in volume.

Why Trading Volumes Matter

The Volume indicator displays the volumes of assets bought or sold over a certain period. The green color of the histogram column means that the volume of the current candle exceeds the volume of the previous one. The red color of the column indicates that the volume of the current candle is less than the previous one. Horizontal volume indicators are not included in the standard set of platforms (they are added separately). It is better to back up such signals with additional information such as reversal patterns, key levels, etc. The results of volume analysis can be used to identify a trend or correction.

When considering what else to incorporate into a volume-based strategy, it is also worth questioning the chosen timeframe. Adjusting chart timeframes from one hour, to one day, to one week can offer a different view of the situation. Volume-based strategies don’t necessarily need to incorporate clever mathematical principles to be effective. The features on OBV and Volume by Price are nice to have, but even a higher-level view of volumes can help to identify trading opportunities. Here are some common ways to use volume to confirm a bullish price move, as well as an example of how volume can undermine a price trend. If you have three trading pairs (for example, BTC/USD, ETH/USD, and BTC/ETH) then trading BTC/USD is considered the same as making simultaneous trades between ETH/USD and BTC/ETH.

Volume Trading Strategy – Bottom Line

If the indicator is near zero and below, it indicates low trading volumes and confirms the flat on the daily interval. The coincidence of the VO growth with the price growth indicates an increase in the traders’ activity. Another common strategy that uses volume is to utilize the volume by price indicator.

how to increase your brokerage trading volume

Using the volumes indicator, we may be able to filter out some of those false signals. The MetaTrader 4 platform provides at least four of such indicators(as you can see in the table) by default, each of which is very important and has its own function. However, volume indicators are a good summary of what we need to know about such indicators. Price fluctuations are the result of coordinated buying or selling at a specific moment. There is a saying that if there are more buying than selling in the market, the market will rise; if there are more selling than buying, the market will fall. “The two natural options trades are call writers [sellers] and put buyers because that’s the way of insuring your portfolio,” Sosnick said.

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