The Better Volume Indicator is a technical analysis tool that is used to track the volume of trading activity in the foreign exchange (forex) market. The indicator is designed to provide traders with a clear view of the volume of trades that are being executed in a particular currency pair or market.
The Better Volume Indicator is based on the concept of cumulative volume, which is a measure of the total amount of trading activity that has taken place over a specific period of time. This is calculated by adding up the total volume of trades for each day, and then plotting the resulting data on a chart.
What is the Better Volume Indicator?
The strategy of the Better Volume Indicator is based on the idea that changes in volume can be used to identify potential trends and shifts in market sentiment. Some key points that support this strategy include:
Volume is a leading indicator of market trend
Changes in volume can often precede changes in price, making it a useful tool for identifying potential trend reversals.
Volume can help confirm trends
When volume is high and trending in the same direction as price, it can be used to confirm the strength of a trend.
Volume can indicate potential reversal points
When volume spikes and then drops off sharply, it can be a sign that a trend reversal may be imminent.
Volume can be used to identify breakout points
When volume increases significantly at key levels of support or resistance, it can indicate a potential breakout from these levels.
Better Volume Strategy
Buy Signal
- Look for a bullish divergence between the Better Volume Indicator and the price chart, which can indicate a potential reversal of a downtrend.
- Look for a breakout above key levels of resistance, with high volume as confirmation of the breakout.
- Look for a strong uptrend with increasing volume, which can indicate the strength of the trend.
Sell Signal
- Look for a bearish divergence between the Better Volume Indicator and the price chart, which can indicate a potential reversal of an uptrend.
- Look for a breakout below key levels of support, with high volume as confirmation of the breakout.
- Look for a strong downtrend with increasing volume, which can indicate the strength of the trend.
Better Volume Indicator Pros & Cons
Pros
- The Better Volume Indicator can provide traders with a clear view of trading activity and trends in the forex market.
- It can be used to confirm trends and identify potential reversal points.
- It can be a useful tool for identifying breakout points and key levels of support and resistance.
Cons
- The indicator is based on historical data, so it may not always accurately predict future market movements.
- It may not be as effective in markets with low volume or in thinly traded currency pairs.
- It may produce false signals in certain market conditions.
Conclusion
The Better Volume Indicator is a useful tool for traders looking to track volume and identify potential trends and reversals in the forex market. While it has its limitations, it can be a valuable addition to a trader’s toolkit when used in conjunction with other technical analysis techniques.
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