mnandii wrote:Thanks 4r ua trade ideas guys. I've been trying my hand on forex for s'time. Cud u guide me as to which indicator(or resource) from where I can get info on real time trade volumes of forex pairs. If, for example, GBPUSD is rising can the volumes sustain the rise. I use oanda.com
Volume information is one of the most important components of technical analysis of markets. Volume indicates the quantity of money flow into a particular investment instrument. An increase in volume often precedes an increase in price, and a decrease
in volume is considered early identification of weakness. The best equity traders could not conceive of trading without volume data.
Yet there is no volume data for spot forex
prices when trading through spot forex firms.This lack of volume data makes many indicators offered irrelevant. Because volume and changes in volume are highly related to indicators of sentiment and market psychology,
the forex trader needs to rely on technical indicators that act as a substitute for volume data. For example, knowing that a currency pair is probing a daily support level for a few days represents a great deal of volume at that daily support level. The position of the currency pair price in relationship to support and resistance and how close it is to either level becomes a good substitute for volume. Additionally, when economic data releases comes out, the entire market focuses on the report, and the trader knows that maximum volume is at these news events. Therefore, one of the best ways to overcome the lack of volume data is to trade where there is certainty on maximum volume.
However, for those traders who want the best of all worlds, there is a way to obtain volume data for the spot forex trader.
Futures on currency trading include volume data in the form of open interest contracts. This means that all of the technical indicators on the futures side that include volume are valid. While trading the euro-U.S. dollar (EURUSD) through the spot market, a serious trader could also observe the volume data of the futures on the EURUSD contract. While this is cumbersome and involves extra cost,those traders who favor using volume data to gain an edge in their trading are able to overcome this gap. The limiting factor is that the maximum benefit of such volume data
occurs during U.S. trading hours only.
An additional volume-related data involves the Commitment of Traders (CoT) Report. This is a weekly report from the Commodity Futures Trading Commission(CFTC; available at
www.cftc.gov/cftc/cftccotreports.htm) providing a breakdown of
each Tuesday’s open interest for markets in which 20 or more traders hold positions equal to or above the reporting levels established by the CFTC. Open interest is broken down by aggregate commercial, noncommercial, and nonreportable holdings. While the data provided by the CoT Report is lagging (the Friday report reflects the previous Tuesday’s data), when extremes are reached in positions by the noncommercials, it is a situation that is especially noteworthy for the forex spot trader. The trader can gain greater confidence in aligning his or her next trade in the direction of the noncommercials, which are representative of the sentiment of the “smart money.”
Until Forex firms provide the CoT data more conveniently, spot traders need to access this information on their own. It is available at many web sites, as well as from third-party software providers. One such provider, Track ’n Trade, generates CoT charts with effective visualizations of the data.
An emerging source of volume data is exchange-traded funds (ETFs) on currencies. One of the leading traders , John Person, effectively uses these volume data sources. ETFs on currencies are fairly new opportunities for forex and equity traders.
Source:The_Forex_Trading_Course_A_Self Study_Guide_To_Becoming_a_Successful_Currency_Trader, Abe Cofnas, (pg. 107-109)
“small step for man”