Profitable forex trading strategy by volume at FBS - VSA
Trading volumes are an independent tool that allows you to find good points to enter the market. Volume shows how many assets are bought or sold over a period of time. The larger the trading volume, the more intense the transactions and the greater the market tension. When conducting technical analysis of the price chart, FBS traders never leave this indicator unaccounted for. I use the volume strategy with FBS no deposit bonus and at FBS metatrader the trading was profitable. Volume is, in this case, an indicator of trading activity in the financial market. In other words, it tells the trader to increase or decrease the volume of buying or selling.
Volume is an indicator in the form of a histogram located below the chart. Market activity is determined by volume. The bigger it is, the more active the market is, the smaller it is, the less interested the market is in trading.
Trading in volumes through FBS is an important strategy for working in the Forex market, but many traders in the initial stages of work miss this episode to the analysis of the attention. We understand why and how to analyze trading volumes. I know that many FBS traders use this strategy and recommend it to others. But for some reason, not on one resource dedicated to binary options, I did not find a complete explanation of how to use this strategy: what candlesticks you need to look at, what should be a large volume and many other nuances.
Therefore, I will try to write my review very clearly and in detail. What is the essence of this binary options strategy, you ask? And I will answer that we will focus on large volumes of goods (gold, silver, copper and so on) that enter the market. Watching the chart in the future, you will notice that after the release of a huge volume, the price of the goods can jump or fall sharply. It is on such races that we will EARN with you! Depending on the activity of traders, the rate of change of quotations on the stock exchanges then slows down, then accelerates, changing or keeping the direction.
Thanks to the volume of transactions, you can predict the moment when the price will turn around or continue to move with force on the trend.
For example, if the price overcomes the level of support or resistance, while the volume increases, it can be considered a breakout. If the price overcomes an important level with a fall in volume by 50-70% from the previous movement, it is better not to enter the market, as there is a high probability of a false breakout. Novice FBS traders often notice that the market seems to deliberately "break" their stop losses before moving in the right direction. It's very unnerving when you make the right forecast, but you still get a loss. All has happened because of too many traders (as if conspiring) set their stop losses in obvious places. As a rule, these are previous extremes.
Trading fake breakouts implies that the insidious market is interested in activating the stop-loss "crowd". So an important player can grab liquidity and improve their positions. That's the way the market works. The volume histogram is used in the financial market for trading both Forex and binary options. The application of the indicator is very simple.
Most often, the volume indicator is compared with its moving average. For example, if you consider the daily chart of the price of the underlying asset, then most often take a 20-period moving average of the volume. within 5 minutes, look at the chart and the lower part with the volume. If there was a very large volume compared to the previous ones (for me, a good volume is all that is above the mark of 5 thousand, ideally above 6 thousand) while a green candle was formed, we open a deal to lower the put for the next 5-15 minutes.
VSA (Volume Spread Analysis) - analysis of trading volume in financial markets in combination with price movement. In this case, the term "spread" means the amplitude of price fluctuations for the analyzed period (in fact - the size of the Japanese candle from the maximum to the minimum). When working with the VSA method, FBS traders analyze the volume of transactions and the shape of the candle. Why can not be limited only to graphical analysis of Japanese candlesticks?
To assess market tension, traders simultaneously take into account the direction of the trend and the volume of transactions. If the quotes of an asset are rising, it is obvious that the influence of buyers is greater than the influence of sellers. If, during an uptrend, the volume of trades begins to decrease, it may mean that the movement is coming to an end. It does not matter the direction of the trend – it is ascending or descending. The main thing is that the high volume confirms the trend.
In the latter case (low volume), the price behavior in the aggregate should be considered. Usually, when the volume is small, the market enters a sideways trend.
In this case, you must look for continuation or reversal of a specific candlestick patterns that help to predict future price movement.
accurate information about the absolute volumes of trading on the foreign exchange market will not be found. This is due to the decentralized nature of the market - all bidders are simply physically impossible to take into account. However, the authors of the VSA theory believe that it is not necessary to know the exact figures - it is enough to learn how to calculate the relative trading volumes. The critical value is the dynamics of trading volume: medium, low or high. growth rule, which is easy to remember-volume confirms the trend.
Applying it in conjunction with other knowledge about the behavior of the price (support and resistance levels, patterns, patterns of continuation or reversal of the trend) to any trader will bring a fantastically profitable result. A trader should remember that a strong trend is always confirmed by trading volume. A sharp jump in volume usually leads to a trend reversal. If a new extremum appears on the chart, and the volume does not show a maximum, then you should wait for a reversal. Increasing volume in a sideways movement can be perceived as the preparation of the market for a strong movement.
Trading volume should not be used as a signal to open a position at FBS metarader. It is an important characteristic that allows you to better understand the mood of traders, so it works well together with other technical and fundamental instruments.
There is a downside to this tough game for the world's biggest money. Earn where others lose. Therefore, the ability to trade false breakouts (mass activation of stop losses for obvious extremes/levels) allows you to profitably enter the market where most come out with a loss. Despite the lack of information about the absolute volume of trading on the Forex market, we can use tick volumes to analyze and predict price movements. You can use the data on volumes in the futures market, you can use the built-in indicators in the terminal.
More advanced FBS traders add a simple and intuitive better Volume indicator to the terminal, allowing you to effortlessly correlate the price and volume in the market and make your forecast.