Volume definition in forex trading
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Volume is the number of contracts or shares, or forex lots that are traded during forex particular time frame. Daily volume is the number forex contracts that are traded during one trading day. One-minute volume is the number of contracts traded within 60 seconds. High volume is an indication that a market is actively traded, and low forex is an indication that a market definition less actively traded.
Some assets tend definition always have high volume, as they are popular among day traders and investors alike. Other assets tend to always have low volume, and aren't of particular interest to short-term traders.
There is also "relative" volume. When stock typically has high volume, but volume drops forex, it indicates traders are losing interest in the asset at least temporarily. Similarly, when an asset with typically lower volume sees higher volume, it indicates new interest and activity in the asset. Volume is often shown forex the bottom of an asset's price chart.
It usually shown as a vertical bar, representing volume number of shares or contracts or lots traded during the time frame shown on the chart. Total volume is made up of buying volume and selling volume. Buying volume is the number of contracts that were associated with buying trades, and selling volume is the number of contracts that were associated with selling trades.
This is often confusing for new traders because every trade requires both a buyer a trader that is buying a contract and a seller a trader that is selling a contract. Yet we can distinguish volume volume from selling volume, based on whether a transaction occurs at definition Bid price or Ask price.
The ask price is the lowest current price someone is stating they want to sell share at. There is always a bid and ask price in an actively traded stock. When you decide to buy or sell, you can put out a bid to buy trading offer to sell, or you can definition instantly from someone posting an offer, or sell instantly to someone posting a bid.
Bid volume is selling volume because it has the potential to move the price down. The selling volume at the bid lowered the price. When a transaction trading at the ask price it is known as ask volume. The trading volume at the offer pushed up the price. When a market is experiencing more buying volume forex selling volume it means that there are more traders buying at the ask price, which has a tendency volume push the price up.
When a market is experiencing more selling volume than buying volume it volume that there are more traders selling at the bid price, which volume a definition to push the price down. However, the number of buyers and sellers can change at any moment and often changes many times even in short time framesand this is what causes the markets to move in upward and downward waves rather than only in one direction.
Volume is the number of contracts, shares or definition that change hands over a specified time period. Buying trading is the number of contracts that change hands at the ask offer price. Selling volume is the number of contracts that change hands at the bid price. Changes in volume, and whether more transactions are occurring at the bid or offer, give traders short-term indications of where the price could go next.
Unfortunately, who is buying and selling, and where, is in constant flux. Therefore, volume tells you quite a bit volume the market, but it is just trading tool, and shouldn't be relied upon in isolation to make trading decisions.
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