Volume indicators are a histogram that displays the number of shares or contracts traded at a certain point in time and allows you to see the total trading volume.
Since in the Forex market, namely on currency pairs, it is not possible to determine trading volumes, you can use tick volumes, which are built by the Better Volume indicator:
Better Volume indicator in binary options
Volume analysis is a type of analysis that is used on stocks, futures and cryptocurrencies , but can also be successfully used for trading binary options . The advantage of this approach to analysis is that, compared to standard technical analysis tools, volume analysis uses trading volumes, and since real volumes do not exist in the Forex market, you can use the Better Volume indicator.
The Better Volume 1.5 indicator allows you to see the preponderance of forces in the market (preponderance of buyers and sellers), as well as the overall picture of the current situation due to volumes. Large volumes emerging in the market clearly indicate the interest of “large players” in the market or trading asset, which is reliable confirmation of the powerful potential of the existing bullish or bearish trend , since it is precisely such players (financial organizations, banks, hedge funds) who begin and end trends in the market in most cases.
The Forex currency market is decentralized and it is very difficult to accurately determine the volumes of transactions made on a specific trading instrument over a certain period of time, therefore real volumes and tick volumes differ significantly from each other. In order to qualitatively analyze the possible behavior of currency pairs, the Better Volume tick volume indicator was developed, which uses a completely different algorithm in contrast to the standard Volumes indicator in the MetaTrader 4 terminal. This indicator builds its values based on ticks, which are available in each terminal and therefore there is no need to supply real exchange volumes. A tick is the minimum amount of movement of the instrument (usually the last decimal place). Thanks to the Better Volume indicator algorithm, it becomes possible to assess the current situation on the market and the potential for future movement.
Installing and configuring the Better Volume indicator for binary options in MT4
The indicator is installed as standard in the MetaTrader 4 terminal.
MetaTrader 4 instructions for installing indicators:
In the indicator settings, you can change various settings and, for example, remove the display of a certain color on the histogram (the meanings of colors will be discussed later) or enable/disable alerts:
Trading rules and description of the Better Volume indicator for binary options
In standard volume indicators, the histogram bars can be colored in one color or two colors depending on the bullish or bearish candle, while the Better Volume indicator colors some bars in different colors:
The Better Volume 1.5 indicator paints bars in different colors according to certain parameters, which can be used to analyze any market and any asset.
Types and meanings of colors of the Better Volume indicator:
- Blue. This color indicates that nothing unusual is happening in the market at the moment and the price is moving without the participation of “big players”.
- Yellow. Columns with this color are most often smaller than others and this color indicates that the volume is currently very small. Such situations are typical for the end of corrections or the end of trends.
- Green color. Columns with this color usually mean the presence of a large volume, although they themselves may not be larger than the previous values. When green bars appear, many traders or “big players” can close or open positions. However, you should not think that the price will immediately reverse, since there are many other factors in the market that affect the price.
- Red color. This color means that the market is now dominated by buyers and there is a clear preponderance of forces, so such bars will be higher compared to previous values. After the red bars you can often see a reversal or correction.
- White color. This color means the advantage of sellers in the market and has the same algorithm as the red color. After such bars, you can also most often observe a reversal or correction.
Since Better Volume is an indicator that does not give accurate signals, it is more difficult to trade with than other indicators, but if you understand how it works, you can easily carry out qualitative analysis and trade using only this indicator.
Examples of binary options trading using the Better Volume indicator
As an example, we can consider some possible situations for purchasing options using the Better Volume indicator. The most effective are the red and white histogram bars:
In this case, it is clear that as soon as there was an advantage of buyers in the market, the price reversed.
When sellers have an advantage, a reversal can also be expected, but it will not always be strong and the analysis needs to be carried out more comprehensively:
Note: it is worth noting that although these signals are quite strong on their own, it would be best to use them together with other signals from other indicators or from your own analysis.
You can also conduct a more complex analysis, which involves considering several types of volumes:
And as you can see, the price did not reverse immediately after the red bar (preponderance of buyers), but went lower after the appearance of large volume (green bar).
Conclusion
As a result, I would like to note that using the Better Volume 1.5 indicator as the only generator of trading signals is very risky. To trade binary options, it is better to combine analysis with other strategies for binary options or with other types of analysis.
You should also definitely apply the rules of money management and risk management to protect your deposit from large losses.
Download Better Volume indicator 1.5
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