Tuesday, May 24, 2011

Volume confirm changes in prices

Volume Based Indicators
Difference between Tom and Equity Exchange Volume:
Volume is different in Forex than in shares. In each section shares traded are considered for 1 year, and sales of 100 shares, and conversely a purchase of these 100 shares is counted as 100 in volume. The forex market is decentralized and it is impossible to keep track of all quantities and sizes of contracts in a given day. Instead, the volume is measured way is to count how many ticks or price change has during the session. There should be a certain amount of contracts signed to move the price one way or another, and each tick represents this amount.
Because volume can still be measured, although it is a bit of a roundabout way compared to stock.
• Volume to be used as corroborative evidence of the trend, and not as primary evidence.
• Volume can be used to confirm changes in prices. When the trend starts, and there is no pick up in volume activity, which may mean that this trend is weak and no obligation.
• Second, if there is a pick up in volume, then it may mean a change in price may be approaching. Direction of movement during this increase in volume may be an indication of upcoming activities.

No comments:

Post a Comment

Powered by Blogger.