Volume Indicators

Volume indicators analyze trading activity to confirm price movements, identify accumulation/distribution patterns, and reveal the strength behind market moves. Volume often leads price, making these indicators essential for complete market analysis.

Available Volume Indicators

Volume

Volume represents the total number of shares or contracts traded during a specific period. It's a crucial indicator that confirms price movements and reveals market participation.

Overview

Volume is the fuel behind price movements. High volume confirms trend strength, while low volume suggests weak conviction. Unlike price-based indicators, volume provides insight into market participation and trader commitment.

Types of Volume Display

Raw Volume

Basic volume bars showing trading activity for each period.

Volume with MA

Volume bars with a moving average overlay to identify above/below average activity.

Colored Volume

• Green: Close > Open (buying pressure)
• Red: Close < Open (selling pressure)

Configuration

indicator: Volume
ma_period: 20       # Moving average period
ma_type: SMA        # MA type for overlay
color_bars: true    # Color based on price direction

Parameters

Interpretation

Volume Principles

• High Volume + Price Rise: Strong bullish conviction
• High Volume + Price Fall: Strong bearish conviction
• Low Volume + Price Rise: Weak rally, potential reversal
• Low Volume + Price Fall: Weak selloff, potential bounce

Volume Patterns

• Increasing Volume: Trend continuation likely
• Decreasing Volume: Trend exhaustion possible
• Volume Spike: Significant event or reversal
• Volume Dry-up: Consolidation or indecision

Trading Signals

Breakout Confirmation

Valid Breakout = Price breakout + Volume > 150% of average
False Breakout = Price breakout + Volume < average

Volume Climax

• Buying Climax: Extreme high volume at tops
• Selling Climax: Extreme high volume at bottoms

Volume Divergence

• Bullish: Price down, volume decreasing
• Bearish: Price up, volume decreasing

Volume Analysis Techniques

Volume Profile

Shows volume distribution at different price levels:

• High Volume Nodes (HVN): Strong support/resistance
• Low Volume Nodes (LVN): Potential quick movement zones
• Point of Control (POC): Most traded price level

Volume Spread Analysis (VSA)

Analyzes relationship between volume, spread (range), and close:

• No Demand: Up bar with low volume
• No Supply: Down bar with low volume
• Stopping Volume: High volume reversal

Common Volume Patterns

Accumulation/Distribution

Accumulation:
  - Price: Ranging or slowly rising
  - Volume: Increasing on up days
  - Pattern: Smart money buying

Distribution:
  - Price: Ranging or slowly falling
  - Volume: Increasing on down days
  - Pattern: Smart money selling

Volume Precedes Price

Volume often increases before significant price moves:

1. Volume surge
2. Price consolidation
3. Breakout in volume direction

Best Practices

Market-Specific Considerations

Stocks

• Focus on regular trading hours
• Watch pre/post-market volume
• Consider options volume

Crypto

• 24/7 trading affects patterns
• Exchange-specific volume varies
• Consider aggregate volume

Forex

• No central volume data
• Use tick volume as proxy
• Focus on session overlaps

Volume Strategies

Volume Breakout

strategy: Volume_Breakout
indicators:
  - Volume:
      ma_period: 20
conditions:
  - Price breaks resistance
  - Volume > 2 × 20-period average
  - Enter with stop below breakout candle

Volume Reversal

strategy: Volume_Reversal
indicators:
  - Volume:
      ma_period: 20
  - RSI:
      period: 14
signals:
  - Extreme volume spike (3× average)
  - RSI overbought/oversold
  - Reversal candle pattern

Advanced Volume Indicators

Related Indicators

• OBV: Cumulative volume flow
• Volume Oscillator: Difference between two volume MAs
• MFI: Volume-weighted RSI
• Chaikin Money Flow: Accumulation/distribution oscillator
• VWAP: Volume-weighted average price

Advantages

• Leading indicator (often precedes price)
• Confirms price movements
• Reveals market participation
• Identifies accumulation/distribution

Limitations

• Quality varies by market
• Can be manipulated
• Needs price context
• Different interpretation for different assets

Combining with Price Action

Wyckoff Method

1. Accumulation: Volume increases on rallies
2. Mark-up: Steady volume in uptrend
3. Distribution: Volume increases on declines
4. Mark-down: Steady volume in downtrend

Volume + Support/Resistance

• High volume at support = Strong support
• High volume at resistance = Strong resistance
• Low volume break = Likely false breakout

AI Agent Configuration

agent_config:
  indicators:
    - Volume:
        ma_period: 20
        color_bars: true
  prompt: |
    Volume analysis rules:
    
    1. Breakout Trading:
       - Only enter if volume > 1.5× average
       - Avoid low volume breakouts
    
    2. Reversal Signals:
       - Watch for volume climax (3× average)
       - Confirm with price rejection
    
    3. Trend Confirmation:
       - Rising price + rising volume = Strong trend
       - Monitor volume MA for trend health

Quick Reference

Related Indicators

• On Balance Volume (OBV)
• Money Flow Index (MFI)
• Volume Profile
• VWAP

Further Reading

• Volume Indicators Overview
• Creating Volume-Based Strategies

OBV (On-Balance Volume)

Cumulative volume indicator that adds volume on up days and subtracts volume on down days to track money flow.

Overview

OBV is based on the principle that volume precedes price movement. By tracking the cumulative volume flow, it helps identify whether money is flowing into or out of an asset.

Configuration

indicator: OBV
# No parameters - cumulative calculation

Interpretation

Volume Flow

• Rising OBV: Accumulation phase (bullish)
• Falling OBV: Distribution phase (bearish)
• Flat OBV: Equilibrium between buyers and sellers

Confirmation Signals

• OBV confirms price: Strong trend continuation
• OBV diverges from price: Potential trend reversal
• OBV leads price: Early trend change signal

Trading Signals

Basic Signals

1. Buy: OBV makes new highs with price
2. Sell: OBV makes new lows with price
3. Bullish divergence: Price falls but OBV rises
4. Bearish divergence: Price rises but OBV falls

Trend Confirmation

• Uptrend: Rising OBV confirms bullish momentum
• Downtrend: Falling OBV confirms bearish momentum
• Sideways: Flat OBV suggests consolidation

Best Practices

Divergence Analysis

• Look for significant divergences: Minor ones may be false signals
• Confirm with other indicators: Don't trade on OBV alone
• Volume context matters: Higher volume divergences more reliable

Example Strategies

OBV Trend Confirmation

strategy: OBV_Trend_Confirm
indicators:
  - OBV
  - Moving_Average:
      period: 50
      type: EMA
rules:
  - Buy when price above 50 EMA and OBV rising
  - Sell when price below 50 EMA and OBV falling
  - Exit on OBV divergence warnings

OBV Divergence Trading

strategy: OBV_Divergence
indicators:
  - OBV
  - RSI:
      period: 14
rules:
  - Watch for bullish divergence (price down, OBV up)
  - Confirm with RSI oversold (<30)
  - Enter long position with volume confirmation
  - Set stops below recent swing low

Advantages

• Simple and reliable volume analysis
• Excellent for divergence identification
• Works across all timeframes
• Cumulative nature shows long-term trends
• Easy visual interpretation

Limitations

• Lagging indicator (cumulative)
• Can remain divergent for extended periods
• No absolute overbought/oversold levels
• Requires volume data quality
• False signals in low-volume periods

Combining with Other Indicators

Works excellently with:

• Price action: Trend confirmation
• RSI/Stochastic: Divergence confirmation
• Moving averages: Trend direction
• Support/resistance: Key level analysis

AI Agent Configuration

agent_config:
  indicators:
    - OBV
    - Moving_Average:
        period: 50
        type: EMA
    - RSI:
        period: 14
  prompt: |
    Use OBV for volume-confirmed trend analysis:
    
    Buy when:
    - Price above 50 EMA (uptrend)
    - OBV is rising (accumulation)
    - RSI between 40-70 (not extreme)
    - Recent volume above average
    
    Sell when:
    - Price below 50 EMA (downtrend)
    - OBV is falling (distribution)
    
    Watch for divergences:
    - Bullish: Price makes lower low, OBV makes higher low
    - Bearish: Price makes higher high, OBV makes lower high
    
    Exit on significant OBV divergence from price trend

Related Indicators

• Volume
• Accumulation/Distribution
• Money Flow Index

MFI (Money Flow Index)

Volume-weighted version of RSI that incorporates both price and volume to measure buying and selling pressure.

Configuration

indicator: MFI
period: 14

Parameters

Interpretation

• MFI > 80: Overbought with volume
• MFI < 20: Oversold with volume
• Rising MFI: Money flowing in (accumulation)
• Falling MFI: Money flowing out (distribution)

Trading Signals

1. Buy: MFI rises from oversold (<20)
2. Sell: MFI falls from overbought (>80)
3. Divergence: Price vs MFI divergence signals

Related Indicators

• RSI
• OBV

Volume Profile

Displays the amount of volume traded at each price level over a specified time period.

Configuration

indicator: Volume_Profile
rows: 24
period: 100

Parameters

Interpretation

• High volume nodes: Strong support/resistance
• Low volume gaps: Potential quick moves
• POC (Point of Control): Highest volume price level

Trading Applications

• Support/resistance: High volume areas
• Breakout targets: Low volume areas
• Fair value: Point of Control level

Related Indicators

• Volume
• VWAP

Accumulation/Distribution

Cumulative indicator that uses both volume and price location within the period's range to assess money flow.

Configuration

indicator: Accumulation_Distribution
# No parameters - cumulative calculation

Interpretation

• Rising A/D: Accumulation (bullish)
• Falling A/D: Distribution (bearish)
• Divergence with price: Potential reversal

Trading Signals

1. Buy: A/D line rising with price
2. Sell: A/D line falling with price
3. Divergence: A/D contradicts price movement

Related Indicators

• OBV
• Chaikin Money Flow

Chaikin Money Flow

Measures the amount of money flow volume over a specified period to determine buying and selling pressure.

Configuration

indicator: Chaikin_Money_Flow
period: 20

Interpretation

• CMF > 0: Buying pressure dominant
• CMF < 0: Selling pressure dominant
• Values near +0.5/-0.5: Strong pressure

Trading Signals

1. Buy: CMF crosses above zero
2. Sell: CMF crosses below zero
3. Extreme readings: Reversal potential

Related Indicators

• Accumulation/Distribution
• MFI

Chaikin Oscillator

Applies MACD calculation to the Accumulation/Distribution line to show momentum in money flow.

Configuration

indicator: Chaikin_Oscillator
fast_period: 3
slow_period: 10

Interpretation

• Above zero: Accumulation phase
• Below zero: Distribution phase
• Zero line cross: Phase change signal

Related Indicators

• Accumulation/Distribution
• MACD

Ease of Movement

Combines price change and volume to determine how easily an asset's price is moving.

Configuration

indicator: Ease_of_Movement
period: 14
scale: 10000

Interpretation

• High positive: Easy upward movement
• High negative: Easy downward movement
• Near zero: Difficult price movement

Related Indicators

• Volume
• Elder's Force Index

Elder's Force Index

Measures the amount of power (force) used to move the price of an asset by combining price change and volume.

Configuration

indicator: Elder_Force_Index
period: 13

Interpretation

• Positive values: Bullish force
• Negative values: Bearish force
• Larger absolute values: Stronger force

Trading Signals

1. Buy: Force Index turns positive
2. Sell: Force Index turns negative
3. Divergence: Force vs price divergence

Related Indicators

• Volume
• Ease of Movement

Klinger Oscillator

Long-term volume-based momentum oscillator designed to identify long-term money flow trends and institutional activity.

Configuration

indicator: Klinger_Oscillator
fast_period: 34
slow_period: 55
signal_period: 13

Interpretation

• Above signal line: Bullish volume momentum
• Below signal line: Bearish volume momentum
• Divergence: Potential trend reversal

Related Indicators

• MACD
• Volume

Mass Index

Uses the high-low trading range to identify potential reversal points based on range expansion patterns.

Configuration

indicator: Mass_Index
period: 9
sum_period: 25

Interpretation

• > 27: Potential reversal setup
• < 26.5 after spike: Reversal confirmed
• Between 26.5-27: Monitor closely

Trading Signals

1. Reversal warning: Mass Index > 27
2. Reversal confirmation: Drops below 26.5
3. Combine with trend: For direction bias

Related Indicators

• ATR
• Bollinger Bands

Net Volume

Calculates the cumulative difference between up volume and down volume to show net buying/selling pressure.

Configuration

indicator: Net_Volume
period: 20

Interpretation

• Rising: Net buying pressure
• Falling: Net selling pressure
• Divergence: Potential price reversal

Trading Signals

1. Buy: Net Volume rising with price
2. Sell: Net Volume falling with price
3. Divergence: Net Volume contradicts price

Related Indicators

• OBV
• Volume

PVT (Price Volume Trend)

Similar to On-Balance Volume but uses percentage price changes instead of absolute price changes.

Configuration

indicator: PVT
# No parameters - cumulative calculation

Interpretation

• Rising PVT: Bullish volume flow
• Falling PVT: Bearish volume flow
• Divergence: Potential price reversal

Trading Signals

1. Buy: PVT rising with price
2. Sell: PVT falling with price
3. Divergence: PVT contradicts price movement

Related Indicators

• OBV
• Accumulation/Distribution

Volume Oscillator

Shows the percentage difference between a fast and slow volume moving average to identify volume momentum changes.

Configuration

indicator: Volume_Oscillator
fast_period: 12
slow_period: 26

Interpretation

• Above zero: Rising volume trend
• Below zero: Falling volume trend
• Extreme readings: Volume climax signals

Trading Signals

1. Buy: Volume Oscillator rising with price breakout
2. Sell: Volume Oscillator falling with price breakdown
3. Climax: Extreme readings suggest exhaustion

Related Indicators

• Volume
• MACD