The Volume binary options’ indicator helps determining the activity of the particular market players for the certain period of time. It is not recommended to trade based on only this one indicator because it doesn’t show a direction of the market’s movement. However, it helps determining all possible points where the market’s movement achieves its maximum or minimum, as well as to understand whether the certain trend is backed by the true volumes or not. In order to work with this indicator, it is better to use other auxiliary tools for a trader.
The Volume binary options’ indicator, as well as the other similar indicators, shows an interest of the market players to the certain trading tool. Of course, the definition of the volume, for example, in the Forex market, which is also represented among the binary options, is quite relative. On a chart, the Volume binary options’ indicator is displayed in the form of diagram, which consists of columns and appears in a new window. When we consider this indicator, we can conclude that only the tick volumes are present.
This type of volume is the some sort of voting. And all votes are equal. The tick down will be followed by the tick up. Nevertheless, the usage of the volume indicators is quite provisory because you can’t know for sure what amount of money is being invested in the particular asset currently. For this reason, it is difficult to say whether the indicator displays the true situation in the market or shows it approximately.
For this reason, usage of these binary options’ indicators with the currency pairs as the assets is not as important, as usage them with the stocks as the assets. It is also important to understand that the tick volumes, used for the calculation of this indicator, and volumes, applied for the stock trading, are absolutely different things.
The Volume binary options’ indicator employs its own formula for calculation of its value. It is important to understand that if you trade binary options using this indicator, the time change of the absolute value is calculated instead of the calculation of this value itself in the market. For this reason, those traders who use this binary options’ indicator consider the divergence between the volume and the market price. However, the main benefit of this auxiliary tool consists in the fact that it allows determining whether there is the strength of the particular group of players behind the certain market movement.
For example, if there is the ascending trend in the market, volumes of the asset’s buyers have to grow too. And when the retracement for this trend comes, the values decrease. When the retracement finishes, the minimal value has to be on the volume’s indicator. After this, volumes grow again and the ascending movement continues. As for the points where the trend reaches its peak value, the volume has to reach maximum there. If the Volume binary options’ indicator doesn’t show growth during the period of growth, then the trend is not backed by volumes. Therefore, the trend will not be forming.
The same can be applied the descending trend too. The growth of the sellers’ number lowers the asset’s value. At the same time, volumes grow too. The beginning of a retracement to the descending trend is accompanied by the lowering of volumes. And the peak attainment by the bearish trend is accompanied by the maximum values of the indicator.