Volume Trading Strategy

My Volume Trading Strategy that takes into account the volumes.
Most recently, I did not know how to determine the volume traded currency pair in the market
Forex. Indeed, the forex market is a decentralized market. Unlike the stock market and other regulated markets, where you can learn on the amount of one or the other traded instrument, the forex trader is customary to find out pretty hard. If only a particular trader has close relationships with people with a brokerage company, and they can tell him about orders that are placed in one or another pair. However, this is not the fact that other brokerage companies the number of orders for a particular pair is the same as in the company.
But is it really is. Traders in the courses we exactly and presented. However, there is a very simple way to find out what the currency pair is currently the highest volume and in which direction most likely to go to a course in the near future.
However, you must first look at history.

Volume Trading Strategy Reserve currency and hard currency.
In the financial world there are now five reserve currencies, which have the highest volume of trading in the forex market. It is the American dollar, euro, Japanese yen, British pound. And the Swiss franc. However, I do not agree with the latter. In the past three years, to fifth place came the Australian dollar, due to high interest rates. And, therefore, in recent years more active in their central bank reserves. And also, thanks to favorable economic situation in Australia, many traders are buying it, hoping for further rate hikes by the Bank of Australia.
Before the Second World War, the British pound has been the main reserve currency, which along with the gold kept most of the world's central banks.
Decisions of the conference at Bretton Woods (USA, 1944) was introduced gold exchange standard based on gold and two currencies - the U.S. dollar and British pound. According to the new rules, the dollar became the only currency tied to gold itself.
In my opinion, this was due to the fact that during World War II, the Nazis established edition of counterfeit pounds, the volume of which exceeded four times the available notes. And also the fact that the UK economy has suffered significant economic damage from the war.
1976 as a result of agreements Jamaican currency Conference (m Kingston, Jamaica) was officially sanctioned Jamaican currency system, which included the float. As a reserve currency have been used German mark, Japanese yen, Swiss franc.
In 1983, the Australian dollar was floating against a reserve currencies. Hard currencies were recognized Canadian, New Zealand dollar. . And, most recently in 2007, South African Rand cohort has become increasingly popular among traders. After taking eighth place among the major currencies of the forex market.

So, now it is clear for some currencies in the forex market, the highest volumes.

Statistics.

USD / EUR 2010 Percentage 27.66% USD / EUR 2007 Percentage 26.82%
USD / JPY 2010 Percentage 14.26% USD / JPY 2007 Percentage 13.19%
USD / Oth 2010 Percentage 11.19% USD / Oth 2007 Percentage 14.99%
USD / GBP 2010 Percentage 9.06% USD / GBP 2007 Percentage 11.56%
USD / AUD 2010 Percentage 6.25% USD / AUD 2007 Percentage 5.57%
USD / CAD 2010 Percentage 4.57% USD / CAD 2007 Percentage 3.8%
USD / CHF 2010 Percentage 4.22% USD / CHF 2007 Percentage 4.53%
EUR / JPY 2010 Percentage 2.78% EUR / JPY 2007 Percentage 2.59%
EUR / GBP 2010 Percentage 2.74% EUR / GBP 2007 Percentage 2.08%

In the third column is written the word percentage of the total volume of trading in the forex market.
Thus, we see that the percentage of pairs traded little changed, although only slightly. But whether this really is. This table is average data for the year.
But how to determine when the activity of a pair of the most high?


The method of Volume Trading Strategy, observation and inference.
You probably know that the greatest volume of trading accounts at the London session, after it is American session. But this statistic is beneficial to anyone who trades within the day. And when the chief factor is the important economic, political events, then the activity increases many times, and speculative transactions with a high volume observed is not dependent on time of day.
If you examine the history of the charts in 1999 at when the euro currency, you can see that the EUR-USD pair is clearly visible to all graphic figures, the continuation and reversal. After this pair of activity and volume is a pair of USD-JPY. It also clearly visible image formation. However, the further we go through the list of currency pairs down, the less clearly visible image formation is more difficult to define trendy, and it becomes harder to make deals. And because they are more tired due to a greater risk, trading and productivity falls. Note that if you had a pair of AUD-USD has been very difficult to do technical analysis and wave, then in the last two years to do it became much easier. Since the volume of trade on this pair to increase year by year.
Thus, the higher the volume of trades in currency pairs in the forex market, the easier it is to recognize different pricing models.
But how does it apply when you create a trading strategy.

Graphical models reflect the increasing amount of the currency pair.
When the forex market offers very significant event, the first many traders, knowing the likely outcome of this event, begin to open up the deal. Thus, a specific graphical model that can tell exactly where to go the market, regardless of the outcome of the event. However, it is not so. Sometimes formed a graphical model, which has a neutral attitude towards the upcoming event. And, depending on the outcome of this event, it determines the direction of the market is based on the results of this event. Therefore we can conclude the following: if there is no graphical model, there is no appropriate volumes in the trade. And so any other strategies that are not associated with the models are doomed to failure.
You may ask, why? Yes, because if you trade on a different strategy, a non-graphical models, or in other words with the volume, then the important news you will remove with a sharp movement of the market that will affect your stop - loss. Or, as we know, market makers, (large banks, trading in the forex market) would easily move the market to pick up the foot. This sometimes happens during the news, if there is no definite chart pattern. Since these players know the location of customers in their orders the bank.

Volume Trading Strategy Reliability of graphic models.
The more taymfrem, the more reliable chart pattern. This is due to the fact that large timeframes, it timeframes major players. State banks decide to purchase some foreign currency for its reserves.
Average timeframes (mainly daily chart), it hodzhfondov timeframes, or hedge funds. Who make certain decisions about selling or buying of an asset. As well as can be seen here of manufacturers exporters.
The more significant pair, the models are less risky. Since the action of individual players, harder to move against the trend rate, or beyond a certain graphical model. And so the probability of triggering the planned loss is reduced. But this is not always the case.

Volume Trading Strategy The rule of alternation of waves.

In the wave analysis is the notion of rule of alternating waves. Who is not familiar with the principle of Elliott Wave, I would say easier. If at this stage, the first figure to continue to be challenging, it will continue posleduschaya figure simple. If the first figure to continue to be a deep correction, then Next to continue the figure will be a shallow pullback.
If the current trend is rather complex, the next trend will be more simple.
Conversely, if the current trend is simple, the next trend will be difficult. If the current trend was very powerful, strong. The next trend might be not so strong.
By the above, I would like to add. If in a certain period of history in one of the key pair is trading very difficult. Or very complex chart patterns and trends in posleduschie few years to trade on this pair bulet very easily. Look at chart USD-JPY
since 1994. As well as schedule EUR-USD since 1999. And compare. You see for yourself.
In 2002, all traders were optimistic about the new currency, the euro, and as private traders, since institutional buying Euros, selling the dollar. And central banks in many countries replenish their reserves of the new currency. Then at that time neither of which do not tell about the second currency pair in Forex: USD-JPY. The graph shows that there is no clear trend for higher timeframes. There is also no clear visible grafichekskoy model. Since all transaction volumes are concentrated on the euro.
But after 2008 the situation changed dramatically. The international financial crisis has affected not only U.S. but also most of the big advantage. And the chart EUR-USD is now no clear graphical models. Moreover, as it turned out that the crisis affected the very periphery of the country euro zone, especially Greece, doubtful graphical models began to wear a nervous tone of the crisis of the peripheral countries of the euro area.
So, on the daily chart are the hallmark of the expanding triangle, a sign of the uncertainty out of the situation. Or that at the moment is more important for traders; solution to the crisis in the euro area, or problems in the U.S.. Therefore, the formation formtsiii "bottom-up flag" at the exit of bad news for the euro zone, this flag is immediately transformed into an expanding formation. While removing the bottom of the foot. All of this suggests that for this pair in the post crisis period was very difficult to sell, even if the forecast for the pair is correct, it does not guarantee receipt of such a significant profit on this pair. Since the graphs reflect the peripheral nervous tone of the crisis countries in the euro area. And all this because the trading volume or liquidity in a given period of time is very low.

The Japanese yen - the currency of refuge.
Since the euro has become a risky currency traders began to buy Japanese yen, selling the U.S. dollar, as well as selling the euro. Thus, the volume of the pair began to increase, and graphs are clear and comprehensible form the descending flags. As can be seen from the table, the pair volumes rose much more than a pair of EUR-USD.
Initially, large foundations, began to buy Japanese yen, forming on the weekly chart flipped flag. And then more small investors, seeing the downward trend began just buying yen, forming a downlink in shape to continue, but on smaller plots, daily, and intraday.
After the earthquake in March this year, the inverted flag has become a widening triangle, a sign of uncertainty. And now the Japanese currency was trading difficult. The volume began to fall. But where does this money went out. In other assets: Stocks, gold. Look at the growth of gold over the past few months. This is the only asset of refuge, to which all trust.

Practical application of the Volume Trading Strategy chart patterns.

Now I have proved that in the forex market trading will be effective. If you know the volume of the traded pair. Ways to recognize - is the emergence of clear graphical models.
Now I shall argue, both by the contrary can be traded in the first place to consider graphs H on them to find out where the highest volume among the major currency pairs and crosses, which are formed on the daily, weekly chart. As well as intraday charts. Please do not confuse a graphical model in the day, and noise. Noise is a false breakdown a certain level of support or resistance that are the models. This occurs because of the small number of orders or a model that can be questioned. The model does this in other words the base, where there is active trading. With a significant excess of purchases over sales or vice versa sales over purchases, there is a breakthrough of this model. This is because of the players close their positions, thus increasing the advantage of the opposite side. In other words, surrender to the opposite side.
Let's look at three pairs: EUR - USD, USD - JPY and EUR-JPY. Since the last couple affects the behavior of the first two. At first glance, everyone thinks that EUR - JPY is only seventh in terms of trading volumes. But this average figure for the year. And this is what is not said about a particular activity at a specific time period. I would say that this cross, as well as other cross can be a good trade, but much less than the major pairs.
That is why cross distinct models, or much smaller deals with large volumes than in the major pairs, and not because they are always lower trading volumes. Pay attention to it. On the next example I will prove it. Let's got bad news for the euro area. Reaction of traders was to sell the euro, with the purchase of the dollar. As well as buying the yen as the currency of refuge against the american dollar. As well as selling euro for the Japanese yen.
Now look carefully at the timing of these three pairs 2011.05.16 to 2011. 07. 04.
It clearly shows that the pair EUR JPY demonstrates a clear easily predictable model "inverted flag." Can not be said about the pair EUR-USD. Why. After all, it seemed that
trading volumes on the major pairs higher than the crosses. This is evident from the graph we statistiki.No tells a different story. And here's why. At this period of time the euro - was the weakest currency among the three. And the Japanese yen was the strongest among the three. So the Japanese yen should be more than just buy orders, and in most euro sell orders. That is the whole focus. Dollar because here in this deal is not the weakest. As well as not very strong currency. Therefore, it is against a purchase (against the euro) and selling against the yen. And if we add the length of the downtrend in EUR-USD and dlinnnu downtrend USD-JPY, the amount will be equal to the long trend in EUR-JPY. So no need to blindly trust statistics about the volume of currency pairs.

Volume Trading Strategy Conclusions.
To work with trednom need to find a graphical model, which says its possible origin. The clearer the model, the volume on it will be higher. Regardless of the traded pair. True, they need to make a reservation. On the major pairs to work much easier than on the crosses. If the main couple have a clear model, it will work without any influence from the other pairs. If the same model will be on the crosses, there may be dorisovki it in the form of additional corrections. These adjustments, the impact of traffic on the major pairs crosses. Since USD-JPY pair with a strong influence on the movement in the yen crosses all. And this, as I said, would be weary trader. Since it will call into question this model may deviate from the trading plan and prematurely close the position. Only in rare cases, the major cross can count on success. As in the above example.
If there is no clear model that can be taken without reservation, but instead there are some options that appear questionable. That such a graphical model to ignore. Since the lack of volume of transactions can be disrupted by various exceptions (statements), in the hope of a different scenario. And then the reaction to this statement, there will be additional orders that may change this model.
When there is a clear and beautiful model, a continuation or reversal pattern, there are clearly visible levels of support and resistance. Beyond these levels there is no false breakouts, which can trigger the stop orders. Therefore, one can assume a minimum Ryskov. And to get the maximum profit from a fundamental point of view. warrants that could be exhibited, is exhibited, since. that the market is very clear.
Profit targets as very clear.


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