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Volume indicators are typically taken as the way a good one acknowledges the way they trade and the most preferred asset that individuals are working on, and also their final goals. On-Balance Volume (OBV) is one of the popular volume indicators among traders. OBV is a dynamic gauge of buying and selling pressure and operates based on a cumulative sum of volume. The OBV concept is simple: if a security finishes higher or lower than its previous close, the volume for this day is defined as bullish or bearish correspondingly. Traders use OBV to either agree with or contradict the price movements as an indication of a possible trend reversal. Another indispensable instrument is the Accumulation/Distribution Line (A/D Line), which is the power of money and volume to clarify whether a security is being accumulated (bought) or distributed (sold). The measure of volume and its relation to price give a strong point of view such as with protesting an acquisition or an abandonment of a commission. The more prices escalate in line with higher volume, the more it is an indication of strong buying pressure, while constant or fluctuating price trends of volume represent no serious buyers of the commodity and the stock price may fall. Moreover, if Volume Weighted Average Price (VWAP) is not calculated, it can be a handicap for day traders. Based on volume, VWAP is a tool that tells investors which price level is the average price of a stock for the specific trading day and can compare price behavior over time. Every signal provided by these indicators with their different focuses on the market is excellent and serves as support when combined, they seem to be the language in which one can have a comprehensive global market perspective, within his/her grasp, and of course, closely related to the price movement.
One of the common and very important question to the traders especially newbies in stock market is what indicators do I need to use for trading and what among them are best?
During my starting days of trading I used almost every indicator. Either I will watch a YouTube video or I will go through some article about an indicator and in my next trading day it will be in my chart and you know what, I book loss because of using the indicator. Immediately I will get rid of that indicator and will pick another indicator and same repeats every day. So what is the solution for this?
First I identified the problem which is, when I apply any indicator I look for answers from the indicators to give me sell or buy signal instead of applying those indicators as a confirmation to my trading edge because I don’t have any edge. Its like what is the point of having a race car when you don’t know how to drive?
When trading gold, one of the key advantages is the utilization of volume indicators which, if implemented bravely, can lead to significant profit. The Klinger Volume Oscillator is a good fit. It traces money moving in and out of the long-term period while retaining the ability to detect small and rapid price changes.
Money Flow Index (MFI) is the second indicator in the list. This means that it is mainly trading from both price and volume and it also has the ability to recognize any overbought or oversold conditions. In the event of the MFI draining while gold is up, it probably suggests that the market is losing strength thus, giving traders a signal to watch out for a pullback even before it happens.
The Ease of Movement (EOM) indicator is the third one that could be taken into account. If it is not so difficult for price to move, meaning the volume here plays a really big role. This gives investors the advantage to get a clear picture of the market in the right manner.
