Is it important to use a volume indicator when trading forex?
I personally think this is very important to know if and when there is enough volume on the market to be able to make a good trade.
I mean we all know it and I think we’ve all experienced it that the moment when you have just taken a nice trade, the pair suddenly goes into consolidation.
And we don’t want that and we should of course prevent that as much as possible.
For that reason alone, the use of a volume indicator is very important.
There are several volume indicators you can use and we have plenty to choose from.
I only use 2.
These are also fully explained in my course and I also think it is very important that everyone learns to use them correctly because these are probably the only indicators that can allow you to trade Supply and Demand successfully.
I mean it can be a very useful tool.
Today I am going to give you a little more explanation which indicators I use and also recommend to use as an extra conformation when you want to enter a trade.
Unfortunately, I won’t be able to tell you everything in this blog, but if you want to know more, you can always join the course where everything is explained step by step.
1. Volume Profile
Volume profile is 1 of the indicators that I recommend to use and especially if you are a Supply and Demand trader this is a very handy tool.
The most important thing this indicator shows is the POC.
See that red line? That’s the POC!
I will tell you if you just use the POC in your trading you will definitely become an even better trader.
And it doesn’t matter which strategy you have, this indicator is always handy to use next to it.
But what exactly is the POC and why is it so important? POC means Point Of Control and it is important because it shows us at which point the most trading took place.
(Where the biggest trading positions were accumulated.)
But who accumulates these large trading positions?
That’s right! The big boys!
And when I talk about the big boys I am of course talking about the banks, hedge funds etc.
We all know these big guys are moving the market and.
And is it of course a big advantage if we know where and when they place their positions, don’t you think?
So to have an insight into that, we can use the volume profile where we can see the POC.
The big boys can’t hide where they place their big orders either.
Because we know “Big Guys” = “Big Positions” so they will always stand out on the volume profile.
Conclusion. In short, the POC is where the big boys are.
The big boys who move the market.
I think you can now imagine that you can make much better trading decisions by using this indicator.
Okay, I have already shown and explained the most important indicator above.
But there is another volume indicator that I sometimes use in my trading.
I’m going to show you this now!
I mainly use the volume indicator to see if there is enough volume on the market when I want to take a trade.
If this matches so I mean large volume when the price is at a Supply or Demand zone this gives me an extra conformation for a possible buy or sell.
(In this case, the colors of the volume indicator don’t matter).
This can also help you not to enter a trade that goes into consolidation.
Because the lower the volume, the greater the chance that price goes into consolidation.
And the higher the volume, the faster the price often moves.
You can also easily spot possible fake outs or a change in the trend with this indicator.
This is too much to explain in this blog but of course I also explain this completely in my course.
I hope I was able to help some of you with this blog to become even more successful in the forex market.
Or want to know more about forex volume indicators?
So if you are a beginner trader and to become a good professional forex trader.
Want to know more about forex volume indicators?
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In this blog I will talk about how you can trade Supply and demand.
Let’s start with structure.
If you want to learn how to trade Supply and Demand, it is also important to know the structure of the market well.
We are talking about a number of market phases through which the price passes.
I’ll tell you a little more about this now.
Accumulation: Accumulation is a sideways range in which institutional players buy carefully and skillfully, without moving the price.
Distribution: After a while, the uptrend ends and then changes to a distribution stage in which the smart money players sell the remainder to the small retail traders.
Now that we understand the different market phases, I will also explain the rules of Supply and Demand.
Laws of Supply and Demand.
Law of Demand: The higher the price, the less the demand. (Buyers are reluctant to buy at a high price.) And the lower the price, the higher the demand. (Buyers are eager to buy at a low price.)
Law of Supply: The higher the price, the higher the supply. And the lower the price, the lower the supply.
Supply and Demand zones.
When tradingSupply and Demand it is of course also very important to draw your zones correctly.
In my course I will tell you all about this. How do you find the perfect Supply and Demand zones.
But what are we actually looking for when we search for Supply and Demand zones?
What we want to find at the price zones where supply overwhelms demand and where demand overwhelms supply.
Supply zones: When the price enters the Supply zone, the price will likely fall. And you can earn with a Sell position. Demand zones: When the price moves into the Demand zone, the price is likely to rise. And can earn with a Buy position.
But of course it is not all as simple as described above.
We will look for a good Sell position when the price enters the Supply zone.
But please note that we also pay attention to all other aspects before we can take an entry.
We also have to keep in mind that a Supply zone can become a Demand zone.
Just look at the image below.
How to trade Supply and Demand?
Above we see an example of how Supply changes into Demand and that can also be done the other way around.
Demand changed to Supply.
I have already briefly explained how you can trade Supply and Demand.
Below I’ll give you some explanation in a video.
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The difference between supply and demand and support/resistance.
The difference between supply and demand and support/resistance seems very small.
But a Trader who understands the difference between both and knows how Supply and Demand work precisely can develop a trading strategy that’s great! I also use Supply and Demand in my own strategy.
Supply and Demand Analysis
Supply and Demand is a strategy that analyzes how the market moves. Price lists and areas where buyers and sellers get into action on each price chart.
These points are clearly visible and can be seen on each chart.
These areas are usually also called Supply and Demand areas.
The experienced trader can respond well to this, where the amateur trader often fails to recognize these points properly.
Often traders also think that the more often the price shows an area the stronger it is, but this is not entirely true. Just look at the example below.
supply and demand levels in forex
What makes the price go down is an imbalance between buyers and sellers and there is more selling activity than buying going on.
And when the price comes up there is more buying activity.
When price reaches the support level, buyers enter the market again and outnumber the sellers.
Then, the price goes up until sellers become interested again and drive the price down.
This is a very basic view but it explains how markets move.
Each time the price moves back to a support level, there will be fewer and fewer buyers because everybody who wants to buy execute there trades now.
This is called order absorption.
Supply and Demand Forex Education
If everyone has bought and there are no buyers left over then the support level will break and the price will fall at a price that the buyers are again interested in buying.
Think of order absorption around a price level like a ball that bounces off the floor. Each time the ball hits the ground, some of the energy is absorbed by the floor. Thus, each consecutive bounce will be lower than the previous one until all energy is gone and the ball comes to a standstill.