All Volume Average Indicator
A great helper in forex volume analysis. The All Volume Average indicator contains MA Volumes and alerts! Compatible with all markets. It doesn’t repaint.
Description
The All-Volume Average is a super simple forex Indicator for analyzing volumes.
When you add it to the chart in Metatrader 4, the indicator displays a volume histogram in different colors, as well as two moving averages (MA Volume).
Light green bars on the volume histogram are displayed when the price goes up, and the fast MA Volume < the slow MA Volume.
Bright green bars are displayed when the price goes up and the fast MA Volume > the slow MA Volume.
Yellow bars are displayed when price goes downward and the fast MA Volume < slow MA Volume.
Bright red bars are displayed when price goes down and fast MA Volume > slow MA Volume.
What is MA Volume indicator?
It is a traditional moving average, but it is not calculated based on price values, but on volume values.
How do you add the average on a volume indicator?
In Metatrader 4, it may be a problem to add MA to the volume indicator, the standard features do not allow doing this. The chart below shows that the classic volume indicator (bottom panel) does not have an average.
Fortunately, there is The All Volume Average Indicator (upper panel). It may be the best for this purpose because it contains two MAs at once.
How to use the indicator for trading
The All Volume Average Indicator does not give simple buy and sell signals with arrows, as novice forex traders would like it to.
This tool serves as an assistant for traders who use volume analysis, a large section of technical analysis.
To understand how to use volumes, you need to read at least a few books from authors such as Tom Williams, Anna Couling, David Weis, James Dalton. The first master of volume analysis is considered to be Richard Wyckoff, a legendary trader of the early 20th century.
Buy Signals
The example below (forex chart USDJPY, M30), shows how volume analysis helps the trader to come to a conclusion about opening a long position.
Volume analysis is closely related to the interpretation of the activity of major players, who are able to change forex prices by huge volumes of their orders.
Arrows 1 and 2 point to bearish candlesticks, but whose bodies become narrower, while volumes are high. They may indicate that major players are using falling prices to accumulate large long positions. Therefore, prices are slowing down and then reversing upwards.
This should give the idea that the major players are preparing for a significant bullish market, so trading up would be a reasonable decision.
Sell Signal
Here is a simple example (GBPUSD forex hourly chart – below) of how volume analysis can lead trader to open a short position.
Bar number 1 corresponds with a sharp price rise on high volumes – it looks like the amount of demand was sharply exceeding the amount of supply.
However, on bar number 2, growth has slowed sharply, even though volume has increased. This could mean that a large amount of supply has entered the market.
Plot a supply zone using the high and close points of this candle, and then wait for price to rise to test this zone. Then you might get a setup to trade a bearish reversal, or a false bullish breakout.
Conclusion
The All Volume Average Indicator for Metatrader 4 provides more convenience in such a complex task as volume analysis.
Advantages of the indicator:
- Non-repaint.
- It provides
- Simple settings.
- It is applicable for intraday trading as well as for opening investment positions on daily/weekly/monthly charts.
- It is applicable to any markets: forex, stocks and others.
Disadvantages of the indicator:
- It does not give buy or sell signals. Indicator just helps to analyze volumes, and to do that you have to put a lot of effort into theory and practice.
To use All Volume Average Indicator for MT4, study the books on Volume Analysis – this method is closely related to the law of supply and demand and the interpretation of the actions of the major players.
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