We offer our readers the interesting volume indicator VROC, which works quite well in the financial markets. As it appears from the indicator’s name, the Volume Rate of Change indicator operates with this particular showing. The developers of the indicator have set pretty serious goals for it, which consist in the provision to a trader the opportunity to determine the current trends based on the trade volumes in the market.
Description of Volume Rate of Change binary options’ indicator
Before we move to the description of this tool, we would like to note that it is based on the simple idea that any movement in the market is accompanied by the volume growth. Technically, no one can remonstrate against this, especially when it comes to the financial markets.
For example, if a price in the market starts moving up and reaches the maximums, it will be necessarily accompanied by the volume growth. The same can be said about the situations when the price moves in the opposite direction and reaches the bottom of the market. At this point, the volumes grow too. Also, it is needed to note that the changes of volumes in the market can be fairly sharp and unexpected.
If you consider this indicator in terms of mathematics, it will appear to be the difference between the volume of the candle which is currently forming in the market and the volume of the candle which was forming several periods ago. If it sounds complicated to you, we will provide a simple example. If the volume of the candle exceeds the volume of the candle which was forming several periods ago, then this volume has the positive rate of change.
The opposite can be said about the situations when the volume of the current candle is smaller than the volume of the candle which was forming several periods ago. In this case, the volume rate of change will be negative with all the consequences that come with it. From all of the above-mentioned it becomes clear that the period in this case plays a critical part in the work with the Volume Rate of Change binary options’ indicator.
It appears that when the periods are shorter, for example, 10-15, you can see the upsurges of volumes in the market. But they don’t show the market image in general. For this reason, many people recommend using periods which exceed thirty bars. In this case, the market image turns out to be smoother. But the signals will slightly lag.
Signals of Volume Rate of Change binary options’ indicator
Working with this indicator is pretty easy. But it is important to stress one point. It is simple to calculate volumes for the stock market, but there is no clear vision regarding volumes in the Forex. For that very reason, traders who work with the currency pairs have to use this indicator at their own risk.
If you have a look at the indicator’s window and then on the price chart, you can roughly imagine how this indicator is used. Any growth or decline of a price is accompanied by the volume growth. For this reason, the other tools, for example, trend indicators or oscillators, are frequently used along with the binary options’ indicator.
For example, you can buy the Call option when the trend indicator shows that the ascending trend is forming in the market, and the Volume Rate of Change binary options’ indicator shows the volume growth in the market. And, if there is no signal from this indicator, it is better not to enter into the market because neither growth nor decline is possible if there is no volume.