Volume

What volume is

Volume is the number of units that changed hands in a given period of time. In forex it is the total amount traded in terms of the currency, in the stock market the number of shares, in futures the number of contracts, and in crypto the number of coins. Volume always shows liquidity and market movement, and the key word is interest: how much interest does this currency, or this trade, have right now. It sits at the bottom of the chart and updates live.

Reading the bars

Each bar shows how much was traded in that candle's period. A red bar means price closed below where it opened in that period, so a red candle formed above it; a green bar means price closed above its open, so a green candle formed. Red bars are selling volume, green bars are buying volume. Size is what matters: a buyer taking 10,000 shares a dollar above the current price is far more bullish than one taking 100.

Three ways to use it

The first is direction. Buying volume looks like a reversal at the lows followed by a shift in momentum and consistent buying pressure; selling volume looks like a downtrend with the volume rising into it, high interest to sell moving the market down.

The second is confirmation. In an ideal trend the corrections, the moves against the trend, come on lower volume, and the volume picks up again when price turns back into the direction of the trend. That is a strong indication the trend is going to continue. Check the volume in the pullbacks: an uptrend whose buying bars are shrinking is a trend weakening, and a downtrend whose selling bars are shrinking is losing the interest that drove it, which opens the door to a reversal.

The third is reversal. When a whole trend is about to turn, the volume starts to even out, and then you see a range forming in both the volume and the price, a potential reversal or shift in momentum.

Who is positioned

Forex has no single exchange, so no single volume figure. The closest thing to seeing who is really positioned is the weekly Commitments of Traders report, and the COT page shows it per currency, so you can set the interest you read on the chart against the positions the large players actually hold.