Volume indicator work on two different colour bar graph that represent trade of given security for a time frame usually in green and red. Red colour represent low price move or low lower oversold volume and green colour represent high price move or high higher overbought volume.
Volume Indicator for Meta Trader 4
Volume indicate the amount of any asset that is traded for any specified time period it contains any security or instrument. High buying volume show support level and high selling volume shows resistance level. Volume indicator is most common and old indicator for trading.
Over spread volume in simple words it is a way of trade by identifying potential buyers in the market for certain stock that where they are trading. This is key secret hidden and also key of success.
Signal of Volume indicator:
Volume indicator show all signals weather buy, sell, closing price and all signals that can be Breakouts, Trending Stocks, Volume Spikes, False Breakouts.
Buy: when the price is at low and volume increases at high level which make price to move in upward direction this is time to buy stock. Volume moves toward trends directions and indicate stock which is to purchase.
Sell: when the price is at top and volume decreases at low level which make price to move in downward direction this is time to sell stock.
Reverse: reversal of high and low price can be spot when the level of stock move to deprecate levels for certain time.
Put a stop or exit: when trend is at its peak and still growing and abnormally increase in volume indicate that trend is going to change its direction. This is an opportunity for traders to take higher profit and stop. But main focus is right time and right place. Place your stops directly above the high or low of the first candlestick.
Important point and conclusion:
Volume Indicator for Meta Trader 4 and 5 is best indicator working for public offering or securities it cannot provide you buy and sell signals directly so most traders combine it with Fibonacci indicator to confirm signals. Volume indicator can give information how strong a trend is by identifying potential buyers. It works with the relation of price and volume of security. The best thing in this indicator is it predict markets ups and downs that is key success factor of trade. Volume indicator is developed to find market strength with the help of overspread, and important thing to keep in mind is but that a price drop or rise on small volume is not a strong signal. Comparing volume to past data can be helpful in identifying market movement.
Drawbacks of Volume Indicator:
Some trades failed just because of false signals and stock volume is reacting differently.
Validity of signals depend on range of stock stronger the volume stronger signals are generated.
False out is major fear in trade professional trader know how to avoid them but new trader focusses on trade and do no go after small moves.