The picture above shows examples of indicators based on price values (screenshot from MetaTrader).
The Volume indicator is a completely different story. The specific feature of volumes is that they do not use the price and are not its derivative. Volumes do not pass through formulas and are delivered to the terminal:
- in tick terms (each tick represents 1 executed trade);
- in absolute terms (a number of executed trades);
- in money terms (a sum of the costs of executed trades).
The first volume type – tick volume – is well-known mostly to MetaTrader users. The volumes in the absolute and money terms are real volumes of the trades, which are provided by official exchanges in real time.
The clients of Forex brokers, who trade through MetaTrader, often ask whether it is possible to use the tick volume as an alternative of the real one. In principle, the tick volume could be used for the analysis of trades, since both tick and real volumes show the market ACTIVITY.
However, the use of real volumes provides a more accurate analysis, especially if we ‘look into’ the volume and split it into the buy and sell clusters at each price level. Progressive volume indicators provide for this ‘X-ray’ view.
