OHLC Volume

OHLC volume is a type of chart used in technical analysis that represents price movements in a specific financial market. It is a combination of two different types of charts: the OHLC (Open, High, Low, Close) chart and the volume chart. In this article, we will discuss the basics of OHLC volume charts, how they work, and their benefits.

OHLC Volume
OHLC Volume

What is an OHLC Chart?

The OHLC chart is a type of financial chart that displays the opening, high, low, and closing prices of a security or financial instrument over a specific period. Each OHLC bar represents a trading session, and the height of the bar represents the price range between the high and low. The left dash of the bar represents the opening price, while the right dash represents the closing price.

What is a Volume Chart?

A volume chart, on the other hand, displays the total number of shares or contracts traded during a specific time frame. The height of the volume bar represents the total number of shares traded during that time frame.

Combining OHLC and Volume Charts

When the OHLC and volume charts are combined, the resulting chart is called an OHLC volume chart. This chart displays the price movements of a financial instrument, along with the volume traded during that time frame. An OHLC volume chart consists of vertical bars that represent each trading session. The height of each bar represents the price range, and the width of the bar represents the total volume traded during that session.

Benefits of Using OHLC Volume Charts

OHLC volume charts provide traders and analysts with several benefits, including:


  1. Clear and Easy-to-Read: OHLC volume charts provide a clear and easy-to-read visual representation of price movements and trading volume, making it easier for traders to analyze and interpret market trends.
  2. Improved Technical Analysis: The combination of OHLC and volume data allows for more accurate technical analysis, enabling traders to make better-informed trading decisions.
  3. Better Understanding of Market Sentiment: OHLC volume charts can provide traders with a better understanding of market sentiment, allowing them to gauge whether buyers or sellers are in control of the market.
  4. More Accurate Trading Signals: OHLC volume charts can provide more accurate trading signals, as they take into account both price movements and trading volume. This can help traders make more profitable trades.

How to Read an OHLC Volume Chart

Reading an OHLC volume chart is relatively easy. Each bar on the chart represents a trading session, and the height of the bar represents the price range for that session. The left dash of the bar represents the opening price, while the right dash represents the closing price.

The width of the bar represents the total volume traded during that session. The higher the volume, the wider the bar will be. A narrow bar with high volume indicates that there was a lot of trading activity, but the price range was relatively small. Conversely, a wide bar with low volume indicates that there was a large price range, but trading activity was low.

Conclusion

OHLC volume charts provide traders and analysts with a clear and easy-to-read visual representation of price movements and trading volume. By combining OHLC and volume data, traders can perform more accurate technical analysis, better understand market sentiment, and make more profitable trades. Reading an OHLC volume chart is relatively easy, and traders can use the information displayed on the chart to make better-informed trading decisions. If you’re interested in using OHLC volume charts to analyze financial markets, it’s essential to familiarize yourself with the basics and practice reading charts regularly.

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