What Is The On-Balance Volume Indicator?

Strategies for working with the volume indicator

Your hunt for the Holy Grail is over. With more than 30 years of trading experience combined, our team at Trading Strategy Guides has put together this step-by-step trading guide so you can take advantage of analyzing the strength of a trend based on volume activity.

It will define what the On-Balance Volume Indicator is, it will provide a trading strategy that traders can use with the indicator, it will explore bullish divergence and bearish divergence, and much more! Back in those days it was a revolutionary indicator, and today, many professional financial market traders use this leading indicator for analysis and trading. The indicator considers volume as well as whether the volume is pushing prices up or down.

The Forex market, like any other market, needs volume to move from one price level to another. The Forex market is the largest and the most liquid market in the world, with 6 trillion dollars worth of transactions performed on a daily basis. If you can master volume analysis, a lot of new trading opportunities can emerge.

Naturally, it's the 'Volumes' folder in the navigator that we are interested in: Source: Admiral Markets MetaTrader 5 - Volumes Folder As you can see from the image above, there is more than one volume indicator available in this folder. The 'Volumes' indicator is the one we are focusing on, as it purely concerns itself with tick volume.

When we have a lot of activity and volume in the market, as a consequence, it produces volatility and big moves in the market. While you can still make money even in tight range markets, most trading strategies need that extra volume and volatility to work.

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If we look at any trading platform like TradingView, they have a volume attached to their chart. Each retail Forex broker will have their own aggregate trading volume. We can see that the volume in the Forex market is segmented, which is the reason why we need to use our best volume indicator. The Chaikin Money Flow indicator was developed by trading guru Marc Chaikin, who was coached by the most successful institutional investors in the world.


The reason Chaikin Money Flow is the best volume and classical volume indicator is that it measures institutional accumulation-distribution. Typically on a rally, the Chaikin volume indicator should be above the zero line.

Conversely, on sell-offs, the Chaikin volume indicator should be below the zero line.

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The Chaikin indicator will dramatically improve your timing and teach you how to trade defensively. Before we go any further, we always recommend taking a piece of paper and a pen and take notes of the rules of this entry method.

The MetaTrader Volumes Indicator

You can also read a million USD forex strategy. The Importance of Buying Volume and Selling Volume Volume trading requires you to pay careful attention to the forces of supply in demand.

Volume traders will look for instances of increased buying or selling orders.

For the Forex trader, volume trading strategies are a bit more complicated than others.

They also pay attention to current price trends and potential price movements. Generally, increased trading volume will lean heavily towards buy orders.

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These positive volume trends will prompt traders to open a new position. You also need to pay attention to the relative volume—regardless of the raw number of transactions occurring in a trading period.

  1. Volume Indicator — Technical Indicators — Indicators and Signals — TradingView
  2. Following Unfollow Volume Indicator Volume points to the amount of a financial instrument that was traded over a specified period of time.
  3. Build your trading muscle with no added pressure of the market.

Ask yourself how is the prospective asset performing relative to what was expected? Step 1: Chaikin Volume Indicator must shoot up in a straight line from below zero minimum When the Volume goes from negative to positive in a strong fashion way it has the potential to signal strong institutional buying power. Basically, we let the market to reveal its intentions.

Conclusion – Best Volume Indicator

When the volume indicator Forex goes straight from below zero to above the zero line and beyond, it shows accumulation by smart money. Chances are that institutions have more money and more resources at their disposal. Odds can be stacked against you, so if you want to change that, just follow the smart money. There is one more condition that needs to be satisfied to confirm a trade entry. The price needs to remain above the previous swing low.

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Once we spotted the elephant in the room, aka the institutional players, we start to look for the first sign of market weakness. Here is how to identify the right swing to boost your profit. Second, as the volume decreases and drops below the zero, we want to make sure the price remains above the previous swing glow.

This will confirm the smart money accumulation. The Volume strategy satisfies all the required trading conditionswhich means that we can move forward and outline what is the trigger condition for our binary options volodin strategy.

See below: Step 3: Buy once the Chaikin Forex indicator breaks back above the zero line. Wait for the candle to close before pulling the trigger.

Indicators and Strategies

Now that we have observed real institutional money coming into the market, we wait for them to step back in and drive the market back up. When the Chaikin indicator breaks back above zero, it signals an imminent rally as the smart money is trying to markup the price again. We would strategies for working with the volume indicator to wait for the candle close to confirm the Chaikin break above the zero line.

Here is an example of a master candle setup. This brings us to the next important step. We need to establish the Chaikin trading strategies for working with the volume indicator which is finding where to place our protective stop loss.

Forex Volume Indicator - MT4 Trading Strategies - ForexBoat

Never underestimate the power of placing a stop loss as it can be lifesaving. Never use a mental stop loss, and always commit an SL right at the moment you open your trades.

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Trading with a tight stop loss can give you the opportunity to not just have a better risk to reward ratio, but also to trade a bigger lot size. Last but not least, we also need to learn how to maximize your profits with the Chaikin trading strategy.

See below: Step 5: Take profit when the Chaikin Volume drops below We always can get back into the market later if the smart money buyers show up again. Use the same rules for a SELL trade — but in reverse. In the figure below, you can see an actual SELL trade example. Any market moves from an accumulation distribution or base to a breakout and so forth.

This is how the markets have been moving for over years. Smart money always seeks to mask their trading activities, but their footprints are still visible.

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We can read those marks by using the proper tools. Here is another strategy on how to apply technical analysis step by step. Make sure you follow this step-by-step guide to properly read the Forex volume.

The Chaikin indicator will add additional value to your trading because you now have a window into the volume activity the same way you have when you trade stocks. Thank you for reading!

4 Simple Volume Trading Strategies

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