Volume Moving Average Indicator

Do you know what is the most simple volume indicator in foreign exchange trading? In my opinion the most simple volume technical indicator is Volume Moving Average Indicator. This indicator is more like moving average as its name, and yes you can use this indicator not only in forex trading but you can also use it for stock trading, commodity over a time period. We use volume moving average in chart trading platform to smooth volume movement and smooth whipsaw movements.

Just like market price actually, volume also can be move so high or so low. If you are using volume moving average indicator you can easily smooth the fluctuations so with this analysis we can easily analyze the main movement or the main direction of the trend just like price analysis. Volume moving average indicator also has different types such as simple volume moving average, exponential volume moving average and etc. But the most used VMA is SVMA.

As I mentioned before the VMA indicator is the easiest trading tool in forex trading analysis. This volume indicator is quite accurate among other volume indicators in forex trading like On balance volume, accumulation / distribution and etc.

The main calculation in VMA is to analyze changes in its direction. Usually when the market price is trending bullish and we find a big increase in the volume, so we can assume that the market is in bullish sentiment, and when the volume begins to moving down after touching high we can assume that the number of buyers has started to decrease. When the volume starts increase we can open buy trading position and if the volume starts decrease we can open sell trading position.

We can say when the volume move high and then turn to move bearish, it is signalling that the number buyers has been decreased and we can see a reversal in the trend direction. And if the volume move bearish and then turn to move bullish, it is signalling that the number sellers has been increased and we can see a reversal in the trend direction also.