Forex daily volume
Although many traders know how to use volume in their technical analysis of stocks, interpreting volume in the context of the futures market may require more understanding because considerably less research has been conducted on the volume of futures than that of stocks. Here we take a general look at some of the things you should know for looking at volume in the futures market. Volume Reports The volume of each futures contract where individual contracts specify standard delivery months is widely reported along with the total volume of the market, or the aggregate volume of all individual contracts. These volume figures are reported one day after the trading day in question, but estimates are regularly posted throughout the current trading day. For certain contracts, such estimates may be posted as regularly as hourly. Volume and Liquidity The most basic use of volume on futures markets is to analyze it in relation to liquidity. Futures traders will receive the best execution fills where there is the greatest liquidity, which occurs in the delivery month that is most active by volume. Yet, as contracts move from second month out, traders move their positions to the closest delivery month, causing a natural increase in volume. By contrast, volume declines as the delivery date gets close. Looking at volume of only one delivery month, therefore, garners a one-dimensional picture of market activity. Looking at Total Volume: Tick Volume Traders must analyze the volume of the aggregate of all contracts to give their analysis more than one dimension. The measurement of total volume will level out the patterns of increasing and decreasing participation based on the coming and going of individual delivery months. Volume stock market terms, using total volume to garner an overall picture of the market would be to add together the volume for all stocks in a similar group, perhaps for a specific industry group. This smooths over the periods when the volume of one particular contract was very low. Volume total volume may not be immediately available on the futures market, even as an intraday estimate, tick volume is used as a substitute. Tick volume is the number of changes in price regardless of volume that occur during any given time interval. The reason why tick volume relates to actual volume is that, as markets become more active, prices change back and forth more often. For example, for a chart of minute volume patterns, the tick volume of each interval the number of ticks during the minute period can be compared to the first 30 minutes of the day and recorded as a percentage of the initial tick volume. This establishes a baseline volume forex the day to which all subsequent ticks can be related. The Beginning and End of the Day It should be noted that volume is expected to be clustered on both ends of the trading day. In the morning, orders are entered into the market early as traders are reacting to overnight news and events as well as the previous day's data that is calculated and analyzed after the close. The end of the day is active due to traders juggling for position based on today's price movements. Closing price is typically the most dependable value of the day. Chart Patterns The volume of intraday trading displays typical chart patterns, such as a rounded bottom formation demonstrating lowest volume in the late morning when the traders take their breaks. The patterns of individual issues, however, may differ from these patterns. European currencies, for example, show more sustained high volume through late morning due to the prevalence of European traders in the markets at that time. To account for such patterns, compare today's minute volume for a specific time period with the previous average volume for the same period. Interpreting Volume using Open Interest Open interest is the measurement of those participants in the futures market with outstanding trades. Open interest is the net value of all open positions in one market or contract and portrays the depth of volume that is possible in that market. A market with a low number of contracts per day but also a large open interest tells the trader that there are many participants who will enter the market only when the price is right. New interest in a market brings new buyers or sellers, which increases the value of open interest. When the open interest increases with a correspondingly quick rise in prices, more traders are likely entering long positions. That said, for every new buyer of a futures contract there must be a new sellerbut the seller is likely to be looking to hold a position for a few hours or days, hoping to profit from the ups and downs of price movement. The open interest is attributed to the position traderbut such a trader is willing to hold the long position for a much longer period of time. If the prices keep rising, the longs will have the ability to hold their position for a greater period of time while the shorts are more likely to be forced out of their positions. Some rules of thumb for interpreting changes in volume and open interest in futures market are as follows:. These rules, however, have exceptions, especially on days or at times when volume is expected to differ from the "norm". For example, volume is usually lighter on the first day of the week, on the day before a holiday and during the entire summer period. Also volume may actually be heavier on Fridays and Mondays during a trending market. Liquidation of positions often occurs before the weekend, with positions being re-entered on the first day of the week. Finally, volume is heavier on a triple witching day, when stock-index futures, stock-index options and stock options all expire on the same day. The Bottom Line Volume and open interest are integral measures to guide one's trading decision on the futures markets, but as always, these indicators should be considered in relation to extraneous market events. To get the clearest picture of the market conditions, one must consider as many factors as possible. Dictionary Term Of The Day. A statistical technique used to measure and quantify the level of financial risk Latest Videos PeerStreet Offers New Way to Bet on Housing New to Buying Bitcoin? This Mistake Could Cost You Guides Stock Basics Economics Basics Options Basics Exam Prep Series 7 Exam CFA Level 1 Series 65 Exam. Sophisticated content for financial advisors around investment strategies, industry trends, and advisor education. Interpreting Volume For The Futures Market By Jason Van Bergen Share. Futures Trading Volume Reports The volume of each futures contract where individual contracts specify standard delivery months is widely reported along with the total volume of the market, or the aggregate volume of all individual contracts. Some rules of thumb for interpreting changes in volume and open interest in futures market are as follows: A rising volume and a rising open interest are confirmation of a trend. A rising volume and a falling open interest suggest position liquidation. A falling volume and a rising open interest point to a period of slow accumulation. A falling volume and a falling open interest depict a congestion phase. Volume and open interest can be used in a practical sense to guide one's trades as follows: Open forex increases during a period of an exhibited trend. During the accumulation phasevolume may decline while open daily builds, but volume occasionally spikes. Rising prices and a declining volume or open interest indicate a pending change of direction. The basic guidelines daily analyzing volume may not apply in all situations, but overall, they can help direct entry and exit decisions. Volume is a simple yet powerful way for traders and investors to increase profits and minimize risks. Use this indicator to validate a change in price direction and daily averages. Measure the flow of intraday volume to estimate the emotional intensity of the crowd. Options traders should look at daily trading volume and open interest to find ideas they might otherwise overlook. Volume should inform your use of this indicator in confirming trends and reversals. Microsoft and GE are two of the biggest names on this list of stocks that have a consistently high trading volume. Find out why volume analysts and traders keep track of uptick volume to better assess the momentum of a stock's price Learn about trading volume, its importance and how investors analyze volume to confirm a trend or reversal in a security. Find out why the Time Segmented Volume TSV indicator is considered unique among other types of volume oscillators used Learn more about options, what options' volume and open interest are and the difference between volume and open interest Understand the basics of On Balance Volume and the Money Flow Index, including their similarities and differences in terms Learn what falling open interest on a stock signals. Open interest is like volume for options. It is considered a leading A statistical technique used to measure and quantify the level of financial risk within a firm or investment portfolio over Net Margin is the ratio of net profits to revenues for a company or business segment - typically expressed as a percentage A measure of the fair value of accounts that can change over time, such as assets and liabilities. Mark to market aims A simple, or arithmetic, moving average that is calculated by adding the closing price of the security for a number of time An investment that is not one of the three traditional asset types stocks, bonds and cash. The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories No thanks, I prefer not making money. Content Library Articles Terms Videos Guides Slideshows FAQs Calculators Chart Advisor Stock Analysis Stock Forex FXtrader Daily Prep Quizzer Forex Worth Calculator. 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