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Forex is a very dynamic market that moves according to supply and demand. The Forex volume trading indicators are simply a visualization of that supply/demand movement. Furthermore, the indicator helps us filter through rather vague information that can be received from just looking at the total number of sellers and buyers.
For example, when the market is moving upwards, it means that there are more buyers than sellers. When it’s going down, that means there are more sellers than buyers. However, there are moments when this logic is incorrect. The volume indicator helps us find the details in the numbers of sellers and buyers.
For example, let’s say there are 100 buyers of 0.5 lots in USD/JPY, but only 1 seller for 100 lots of USD/JPY. What top Forex volume indicators do here is showcase how much is being traded, rather than how many people are doing it. In our example, there are more buyers than sellers, so the market should go up, right? No, because the amount being sold is not the amount being bought, so there is still some surplus, thus the exchange rate needs to go down.
In this guide, you will learn how to use the Forex volume indicator to potentially see these loopholes in the market and use them to your advantage.
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