Looking for the best volume trading strategy ? Your hunt for the Holy Grail is over. With a 77% win rate, this is possibly one of the best Forex trading strategies you will ever find on the Internet and it is completely FREE.
With over 30 years of combined trading experience, our team at Trading Strategy Guide has put together this step-by-step trading guide so you can take advantage of trend strength analysis based on your activity. volume motion.
The Forex market, like any other market, needs volume to move from one price level to another.
The Forex market is the largest and most liquid market in the world, with $6 trillion worth of trades executed daily. If you can master volume analysis, a lot of new trading opportunities can arise.
As we have a lot of activity and volume in the market, so it creates volatility and big moves in the market. That’s really what most traders need to make a profit trading on the Forex market or any other market be it stocks, bonds or even cryptocurrencies .
While you can still make money even in narrow range markets, most trading strategies require extra volume and volatility to work.
Forex Volume Indicator
In the Forex market, we do not have a centralized exchange of total volume because we are trading over the counter. If we look at any trading platform like TradingView, they have a volume attached to their chart. But, since we don’t have a centralized exchange, the volume comes from the feed that TradingView uses. Each retail Forex broker will have their own aggregate trading volume .
We can see that the volume in the Forex market is segmented, that’s why we need to use our best volume indicator.
The Forex Volume Indicator used to read a volume in the Forex market is the Chaikin Money Flow (CMF) indicator.
The Chaikin Cash Flow Index was developed by trading guru Marc Chaikin, who has been coached by the most successful institutional investors in the world.
The reason Chaikin Cash Flow is the best classical and volume index is because it measures the institutional cumulative distribution.
Usually during a rally, the Chaikin volume indicator should be above the zero line. Conversely, on bearish selling, the Chaikin volume indicator should be below the zero line.
Volume trading strategy
This volume trading strategy uses two very powerful techniques that you won’t see written anywhere else. These are trade secrets that we are only taught to professional traders.
The Chaikin indicator will greatly improve your timing and teach you how to trade defensively. Having a good protection when trading is extremely important to keep the profits you make.
Before we go any further, we always recommend that you take a piece of paper and pen and note down the rules of this entry method. You can also read million dollar forex strategy
In this article, we will look at the buying aspect.
The importance of buying volume and selling volume
Volume trading requires you to pay careful attention to the forces of supply in demand.
Volume traders will look for instances of increasing buy or sell orders. They also pay attention to current price trends and potential price movements.
In general, increased trading volume will favor buy orders. These positive volume trends will prompt traders to open a new position.
On the other hand, if money flow and volume dips, we should see a “bearish divergence,” which means it might be a good time to sell.
You also need to pay attention to relative volume regardless of the raw number of transactions that occur in a trading period. Ask yourself how is the performance potential relativeto what is expected?
By learning how to use Chaikin cash flow and other related metrics, it will be easier for you to identify which buyer or seller is currently in control.
With practice, a volume trading strategy can give your portfolio a win 77% of the time!
Step #1: The Chaikin Volume Indicator should shoot up in a straight line from below 0 (min. -0.15) to above 0 (min +0.15).
When Volume turns from negative to positive in a dramatic way, it has the potential to signal strong institutional buying power. That’s our heavy base lift signal!
Basically, we let the market reveal its intentions.
When large amounts of money enter the market, they leave a mark because their orders are too large to be concealed. When the Forex volume indicator goes straight from below zero to above zero and beyond, it shows smart money accumulation.
We are a firm believer that you get the maximum amount for your coin when you trade in parallel with smart money. Chances are that organizations have more money and more resources at their disposal. The odds can be stacked on you, so if you want to change that, just follow smart money.
There is one more condition that must be satisfied in order to confirm a trade item.
See below:
Step #2: Wait for the Forex Forex volume indicator to slowly recede below the zero line. Price needs to sustain above the previous low.
When we spotted the elephant in the room, aka institutional players, we started looking for the first sign of market weakness. Here is how to determine the right swing to increase your profits.
We will let the Chaikin Money Flow indicator slowly drop below the zero line. The key word here is “slowly”. We don’t want to see a rapid drop in volume as this would invalidate the previously recorded accumulation.
Second, when the volume drops and drops below zero, we want to make sure the price stays above the previous glow. This will confirm the accumulation of smart coins.
The Volume Strategy satisfies all the necessary trading conditions , which means we can move forward and map out what the triggering conditions for our entry strategy are.
See below:
Step #3: Buy once the Chaikin Forex indicator breaks back above the zero line. Wait for the candle to close before pulling the trigger.
Now that we have observed institutional money actually entering the market, we wait for them to come back and push the market back.
When the Chaikin indicator breaks back above zero, it signals an impending bull run as the smart currency is attempting to retrace the price.
We will need to wait for the close candle to confirm the Chaikin break above the zero line. Once everything is stable, we are free to open our long position. Here is an example of a master candlestick setup.
* Note: The trigger candle needs to have a closing price above 25% .
This brings us to the next important step. We need to set up a Chaikin trading strategy looking for where to place a protective stop loss.
See below:
Step #4: Hide your protective stop loss below the low of the previous pullback
Using a stop loss is very important if you want to get an idea of how much you will lose on your trade. Never underestimate the power of placing a stop loss as it can be lifesavers.
Just hide your protective stop loss below the low of the previous pullback. Never use a mental stop loss and always commit to SL the moment you open a trade.
Trading with a tight stop loss can give you the opportunity to not only have a higher risk to reward ratio, but also trade on a larger scale.
Last but not least, we also need to learn how to maximize your profits with the Chaikin trading strategy.
See below:
Step #5: Take Profit when Chaikin Volume drops below -0.15
When Chaikin volume drops below -0.15, it shows that sellers are coming in and we want to take a profit. We don’t want to risk returning some of the profits so we liquidate our position at the first sign of smart money entering the other side of the market.
We can always come back to the market later if the smart money buyer shows up again.
**Note: The above is an example of a BUY trade using the best volume indicator. Use the same rules for SELL trades – but in reverse. In the image below you can see an example of an actual SALE transaction.
Conclusion – The best volume indicator
The Volume Trading Strategy will continue to work in the future as it is based on how the market moves up and down. Any market that moves from accumulation (distribution) or base to breakout and so on. This is how the markets have moved for over 100 years.
Smart money always finds a way to hide their trading activities, but their footprint is still visible. We can read those signs using the right tools. Here is another strategy on how to apply technical analysis step by step.
Make sure you follow this step-by-step guide to get an accurate reading of Forex volume. The Chaikin indicator will add additional value to your trade because you now have the same window into volume activity as you would when trading stocks.