Tick Volume Indicator

The tick volume indicator is an indicator that emphasizes displaying a currency pair’s volume. It creates a wave-like structure on the chart by forming several bars. The bars are available in a variety of colors. The indicator draws red and gold color bars when there is little or no volume. When there is a significant volume, the indicator will display blue and green colors. When the volume changes from low to high, the indicator alerts you, indicating that you can go long or short.

What is the Tick Volume Indicator?

The Tick Volume Indicator is an indicator which tries to measure every trade, whether up or down, as well as the volume associated with those trades over a given time period. If you are a day trader or a swing trader, tick volume analysis can assist you when you assess the market on an intraday basis. Tick volume is also known as on-balance volume by some traders. When analyzing the market as a whole, traders frequently look for changes or continuation of trends at pivot points. These are signficant price levels where big market moves can happen. To trade this effectively, a trader will need an edge that will help them determine whether a pivot has the strength to hold the current trend.

Setting up the Tick Volume Indicator
Setting up the Tick Volume Indicator

Tick Volume Strategy

The Tick Volume Strategy functions based on the trading volume of the asset being traded. Volume of the market being traded determines the strength of a currency pair. As a result, tick volume is useful because it gives a picture of where the pair is headed.  When the volume is high, the pair tends to offer more trading opportunities. Hence, the tick volume indicator may tell when there is a significant volume.

The indicator takes the shape of a wave. The high waves on the upside indicate that the uptrend volume is high, and we could take long positions. On the other hand, the indicator shows waves on the downside, indicating that we could sell.

Buy Signal

The following could be your checklist for a buy trade:

  • When the tick volume shows green and blue waves.
  • When the volume rises along with the price action.

Once these two events occur:

  • You could open a buy position after two or three upside bars appear on the tick volume and you get your signal confirmation.
  • You could set your stop loss just below the nearest swing low.
  • You could set your take profit at the nearest resistance zone.
  • For good risk management, I would only consider trades with a risk to reward ratio of at least 1:2.
Tick Volume Indicator Buy Setup
Tick Volume Indicator Buy Setup

Sell Signal

The following could be your checklist for a sell trade:

  • When the tick volume shows red and golden waves.
  • When the volume dips along with the price action.

Once these two events occur:

  • You could open a sell position after two or three downside bars appear on the tick volume and you get your signal confirmation.
  • You could set your stop loss just above the nearest swing high.
  • You could set your take profit at the nearest support zone.
  • For good risk management, I would only consider trades with a risk to reward ratio of at least 1:2.
Tick Volume Indicator Sell Setup
Tick Volume Indicator Sell Setup

Tick Volume Pros & Cons

Pros

  • The Tick Volume Indicator shows its users trade volume levels of the asset being traded which a trader can confirm before buying or selling an asset.
  • This indicator can be useful in knowing how strong a trend is so that traders can ride trends and not exit positions very quickly.

Cons

  • The Tick Volume Indicator may not meet expectations when scalping.
  • Knowing how to identify pivot points in the market is important, hence some extra knowledge of technical analysis is required.
  • In contrast to the stock market, there is no centralized exchange for spot Forex. As a result, true accurate volume data in spot Forex is simply unavailable.

Conclusion

There is no set timeframe for the tick volume indicator; you can use it on whatever timeframe that works best for you. The indicator can give you an idea of when to enter a trade and when to avoid it; however, you should always confirm the signals and not rely solely on the signals provided by the indicator. You can also combine it with other indicators such as the RSI or MACD.