Volume is often viewed as an indicator of liquidity, as stocks or markets with the most volume are the most liquid and considered the best for short-term trading; there are many buyers and sellers ready to trade at various prices. Volume indicators are mathematical formulas that are visually represented in most commonly used charting platforms.
Each indicator uses a slightly different formula, and traders should find the indicator that works best for their particular market approach. Indicators are not required, but they can aid best forex in advisory company the trading decision process.
There are many volume indicators to choose from, and the following provides a sampling of how several of them can be used. On Balance Volume (OBV) OBV is a simple but effective indicator. Volume is added (starting with an arbitrary number) when the market finishes higher, or volume is subtracted when the market finishes lower.
This provides a running total and shows which stocks are best forex advisory company being accumulated. It can also show divergences, such as when a price rises, but volume is increasing at a slower rate or even beginning to fall.
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Rising prices should be accompanied by rising volume, so Chaikin Money Flow focuses on expanding volume when prices finish in the upper or lower portion of their daily range and then provides a value for the corresponding strength. When closing prices are in the upper portion of the days range, and volume is expanding, the values will be high; when closing prices are in the lower portion of the range, values will be negative. Chaikin money flow can be used as a short-term indicator because it oscillates, but it is more commonly used for seeing best forex divergence advisory company. Fluctuation above and below the zero line can be used to aid other trading signals. The Klinger oscillator sums the accumulation (buying) and distribution (selling) volumes for company forex advisory xtreempoint forex review best a given time period. Volume is a advisory company forex best handy tool to study trends, and as you can see, there are many ways to use it. Basic guidelines can be used to assess market strength or weakness, as company best advisory forex well as to check if volume is confirming a price move or signaling that a reversal might be at hand.
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