For the pairs he studied he calculated the correlation between tick volume and actual volume is over 90. If you are a day trader or a short term swing trader tick volume analysis will assist you in sizing up the market on an intraday basis.
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The tick charts are usually accompanied by some explanation on why theyre so much better than traditional candlestick charts.
Forex what is tick volume. In this article we will see whether tick volumes can be reliably used in forex. At first glance it seems to be a good approximation of real volume but in reality it is a poor substitute which can only serve as a simulated measure of something. Many forex traders assume there is no volume in the foreign exchange market.
And they would be correct. He used data from esignal ebs and hotspot. In 2011 caspar marney head of marney capital and ex ubs and hsbc trader conducted an analysis of actual volume and tick volume in forex.
How you should really use volume in the forex market. As price changes back and forth volume adds up. Some traders also refer to tick volume as on balance volume.
Volume is calculated based on price ticks. But also the correlation between tick volume and actual volume traded is incredibly high. Many traders dismiss volume as not being reliable and to some extent this belief is true. !
Tick volumes in forex have sparked much de! bate among trading communities on what information they provide and how they compare to regular volumes. Tick volume is measuring every trade whether up or down and the volume that accompanies those trades for a given time period. The proposed precise strategy of tick volume analysis is another alternative to short term trading and the opportunity to earn with the market makers.
The volume we see on our charts is not the true actual volume its the tick. There is no central exchange not yet anyway. Volume indeed cannot be calculated based on the number of contracts traded and the size of those contracts since forex market is decentralized by its nature.
Once youve been trading for a while you might have come across forex tick charts. High volume will have lots of such simple tick shifts while low volume very little. 1 tick is 1 volume.
In todays article i want to spend a little bit of time explaining how we ca! n use volume to get a better understanding of whats going on in the market. Proper use of the volume correlation mechanism allows to catch the moment of large smart money entering the market. Tick volume that is present in every metatrader platform is based on the number of price updates ticks that come during the formation of a given bar.
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