Some volume levels are marked with red lines for clarity:. Tick volume seems to be mostly uncorrelated with real volume in the futures market. Of course, there couldn't be a perfect correlation between spot and futures markets, but there should be at least some correlation between the two. As you have noticed, tick volume changes sometimes do not hold even between two brokers. Unfortunately, the high level of discrepancies between data feeds that form tick volume renders the tool unreliable in many applications that futures and stock traders would like to transfer from those markets to spot currency trading.
Even though the situation with tick volume improved greatly compared to several years ago, it might take some more time for the Forex tick volume to become truly consistent and meaningful as a data source for serious technical or sentiment analysis. If you want to share your opinion on how real trading volume can be estimated in spot foreign exchange market, please visit our forum for a discussion.
If you want to get news of the most recent updates to our guides or anything else related to Forex trading, you can subscribe to our monthly newsletter. What Is Forex? Please disable AdBlock or whitelist EarnForex. Thank you! EarnForex Education Guides. Why tick volume is bad? This could be used as a short-term indicator to exit long positions or enter short positions. The Tick Index is one example of how downticks can incorporated into a trading strategy.
The Arms Index TRIN is somewhat similar and looks at how many stocks are advancing versus declining, and on how much volume. Since this indicator incorporates volume, it is often used in conjunction with the Tick Index. A downtick is when a transaction occurs at a lower price than the prior transaction price. A tick is the smallest movement that a price can make, in either direction. However, a downtick is not limited to only moving one tick.
Transactions could be wide apart, representing many ticks of movement. The following chart shows a 1-minute chart of Meta FB , formerly Facebook. It does not show tick data, as most use traders use timeframes of one-minute or higher for analyzing charts, as opposed to looking at every single transaction. The chart shows an overall downtrend, yet by looking at price and volume a trader may notice the intensity level of the selling.
Given that the overall price movement was down, the volume tends to pick up as the price sells off. This pattern repeated several times throughout the day. This doesn't necessarily provide trade signals in and of itself, but may help a trader confirm trade signals based on other strategies, and note the overall bearishness of the day. Downtick and uptick volume is a very short-term measure of price movement strength.
It shows what happens transaction-by-transaction, and therefore can be quite erratic as an indicator. The information is historical. It tells us a transaction occurred, or cumulatively shows us what has happened, but unless very specific patterns are found in the data, having this information may not necessarily lead to knowing when is a good time to buy or sell.
Like any indicator, it is up to the trader to use profitably. Downtick volume is best used in conjunction with other forms of technical analysis. For example if the price is in a downtrend, downtick volume and the Tick Index and Arms Index may be helpful in sticking with a short trade until there is evidence that the stock or the stock market, as a whole, is losing momentum to the downside. As the price action and these indicators start to give positive signs, confirming each other, then it may be a good idea to get long.
Technical Analysis Basic Education. Trading Strategies. Your Money. Personal Finance. Your Practice. Popular Courses. What is Downtick Volume? Key Takeaways Downtick volume is the number of shares or contracts that change hands at a price lower than the prior transaction price. Downtick volume provides insight into the intensity of selling pressure. High volume on downticks indicates a strong desire for traders to sell.
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The tick volume indicator provides traders with this detailed breakdown of the trading activity at a given level. The tick volume indicator is critical for futures traders, because it is used to assess pivot points, since tick volume is not available for the futures markets. The 3 bar chart pattern is one of the more common trading setups.
Facebook LinkedIn Twitter Youtube. Day Trading Indicators Volume Indicators. Tick Volume Definition What is tick volume? Well maybe you would, but it does not hurt to know what is going on at this critical level. Table of Contents. Breadth Indicators. I began trading the markets in the early s, at the age of sixteen. I had a few hundred British pounds saved up I grew up in England , with which I was able to open a small account with some help from my Dad. I started my trading journey by buying UK equities that I had read about in the business sections of newspapers.
The s were a bull market, so naturally, I made money. I was fortunate enough in my early twenties to have a friend that recommended a Technical Analysis course run by a British trader who emphasized raw chart analysis without indicators. Having this first-principles approach to charts influences how I trade to this day. Sign Up Enter your email. Did you like what you read?
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Hi There, is there any technique using tick volume and forex indicators tools like fiobananci help to predict the price. Your Name. Email address Required. Hi nswpro, Send me an email on huzefa theforexroom. Thanks :. Thanks for sharing, waiting for your next article in this series!
What is tick volume? The tick volume indicator is. The computation for the tick volume study simply counts the number of ticks during the interval specified on the Intraday chart. For example, if you are. The low tick volume is caused by the professional money staying away from participating in the move. The absence of this big money riding the move results on.