Trading volume strategy | Forex indicator download- MT4/MT5 resources
I found an interesting article about volumes:
Part one
I use a lot of different indicators and methods, but the ones that show me consistent success are price and volume at support and resistance levels. Support or resistance areas are located at previous highs and lows (this is why stocks and indexes form trading ranges, they bounce off previous highs and lows). I'll show you how price and volume react to previous highs and lows, and why price breaks out or reverses at these points.
A stock or index's previous highs and lows define current areas of support and resistance. The previous high or low of a stock or index is called a swing . I draw a horizontal trendline from the previous swing high or low to see future price support or resistance. These previous swing highs and lows are where decisions for buy or sell orders are made. Horizontal lines drawn from previous highs and lows indicate possible future support or resistance.
Sometimes a picture is worth 1000 words. The line chart below for a stock or index illustrates what the highs and lows of volatility are.
http://images.tradingmarkets.com/2008/howto/0416ord.gif
The following rules I developed for price and volume were developed in part while studying the work of price and volume guru Richard Wyckoff. Mr. Wyckoff developed techniques in the 1930s to combine stock price and volume with price predictability. The techniques he developed have stood the test of time and are still effective today. I expanded on these ideas and came up with the following rules that I use every day in my trading. To keep this article short, I won't go into all the rules, but here are a few we can discuss. Here we will look at price history to see where buy and sell signals were formed.
The rules I follow when using price and volume to determine buy and sell signals for the Nasdaq Composite and NYSE Indexes
1. Volume drops 8% or more to test the previous high or low, and a close back below the previous high (or above the previous low) signals a reversal. The market would need to break above the previous high or low and then close back into the trading range to prove this.
http://images.tradingmarkets.com/200...o/0416ord2.gif
2. The volume shrinkage rate tests the previous high or low by 3% or less, implying that the high or low will be breached.
http://images.tradingmarkets.com/200...o/0416ord3.gif
3. Always compare volume relationships to the first high or low; even on the third and fourth retests. The volume buy and sell signal relationship remains unchanged.
http://images.tradingmarkets.com/200...o/0416ord4.gif
http://images.tradingmarkets.com/200...o/0416ord5.gif
Part one
I use a lot of different indicators and methods, but the ones that show me consistent success are price and volume at support and resistance levels. Support or resistance areas are located at previous highs and lows (this is why stocks and indexes form trading ranges, they bounce off previous highs and lows). I'll show you how price and volume react to previous highs and lows, and why price breaks out or reverses at these points.
A stock or index's previous highs and lows define current areas of support and resistance. The previous high or low of a stock or index is called a swing . I draw a horizontal trendline from the previous swing high or low to see future price support or resistance. These previous swing highs and lows are where decisions for buy or sell orders are made. Horizontal lines drawn from previous highs and lows indicate possible future support or resistance.
Sometimes a picture is worth 1000 words. The line chart below for a stock or index illustrates what the highs and lows of volatility are.
http://images.tradingmarkets.com/2008/howto/0416ord.gif
The following rules I developed for price and volume were developed in part while studying the work of price and volume guru Richard Wyckoff. Mr. Wyckoff developed techniques in the 1930s to combine stock price and volume with price predictability. The techniques he developed have stood the test of time and are still effective today. I expanded on these ideas and came up with the following rules that I use every day in my trading. To keep this article short, I won't go into all the rules, but here are a few we can discuss. Here we will look at price history to see where buy and sell signals were formed.
The rules I follow when using price and volume to determine buy and sell signals for the Nasdaq Composite and NYSE Indexes
1. Volume drops 8% or more to test the previous high or low, and a close back below the previous high (or above the previous low) signals a reversal. The market would need to break above the previous high or low and then close back into the trading range to prove this.
http://images.tradingmarkets.com/200...o/0416ord2.gif
2. The volume shrinkage rate tests the previous high or low by 3% or less, implying that the high or low will be breached.
http://images.tradingmarkets.com/200...o/0416ord3.gif
3. Always compare volume relationships to the first high or low; even on the third and fourth retests. The volume buy and sell signal relationship remains unchanged.
http://images.tradingmarkets.com/200...o/0416ord4.gif
http://images.tradingmarkets.com/200...o/0416ord5.gif
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