What You'll Learn in This Section:
- What volume is and why it matters in trading
- The difference between Forex volume (tick volume) and Crypto volume (actual volume)
- How to read volume bars on your chart
- Volume confirmation: high volume vs low volume moves
- Volume patterns: what volume tells you during breakouts, consolidations, and reversals
- Volume spikes and what they mean
- How to combine volume with your MA, RSI/MACD, and price structure
- Common volume mistakes and how to avoid them
6.1 What Is Volume? (Simple Explanation)
Let's start with the absolute basics.
Volume is the amount of trading activity (buying and selling) that happens during a specific time period.
In simple terms:
Volume = How many trades happened during that candle.
🏪 Public Market Analogy
Imagine you're at a public market (like a palengke or farmers market).
High volume = Busy market
- Lots of people buying and selling
- Long lines at every stall
- Loud, active, energetic atmosphere
- Prices moving quickly because of all the activity
Low volume = Quiet market
- Only a few people around
- Most stalls are empty
- Slow, sleepy atmosphere
- Prices barely moving because there's little activity
In trading, volume works the same way:
- High volume = Lots of traders are participating—buying and selling actively
- Low volume = Few traders are participating—most people are sitting on the sidelines
Why Does Volume Matter?
Because volume shows you the conviction and strength behind a price move.
Here's the key principle:
Price moves with HIGH volume = Strong, credible moves (lots of people agree)
Price moves with LOW volume = Weak, questionable moves (few people care)
Imagine Bitcoin breaks above a major resistance level at $65,000.
Scenario 1: High Volume Breakout
- Volume spikes to 3x the average
- Millions of dollars traded in minutes
Interpretation: "This breakout is REAL. Lots of buyers are jumping in. This move has conviction."
Scenario 2: Low Volume Breakout
- Volume is below average
- Barely anyone participated
Interpretation: "This breakout looks weak. Barely anyone cares. This might be a false breakout (fakeout)."
Volume tells you whether to TRUST the price move or be SKEPTICAL.
6.2 The Difference Between Forex Volume and Crypto Volume
Here's something important you need to understand:
Volume works differently in Forex vs Crypto.
Let's break it down.
A. Crypto Volume (Actual Volume)
In the cryptocurrency markets, exchanges like Binance, Coinbase, and Kraken report actual volume traded.
What this means:
When you see a volume bar on a Bitcoin chart, it shows the total dollar value (or BTC amount) of all trades executed during that time period.
On a 1-hour Bitcoin chart, if the volume bar shows $500 million, that means $500 million worth of Bitcoin was traded during that 1-hour period.
This is real, accurate volume.
Different exchanges have different trading volumes.
Example:
- Binance might show $2 billion in daily Bitcoin volume
- Coinbase might show $800 million
- A smaller exchange might show $50 million
Why? Because each exchange only reports its own trading activity. Binance is the largest crypto exchange, so it has the highest volume.
What this means for you:
When analyzing crypto volume on TradingView:
- Use data from a major exchange (Binance is the most popular)
- Don't switch between exchanges—stick with one for consistency
- Volume on Binance BTCUSDT ≠ Volume on Coinbase BTCUSD
But overall, crypto volume is REAL and RELIABLE.
B. Forex Volume (Tick Volume - A Proxy)
In the Forex market, things are different.
Forex is a decentralized market—there's no single exchange where all trades happen. Trades occur across banks, brokers, and institutions worldwide.
This means:
Most retail brokers (like the ones you'll use) don't have access to actual global Forex volume.
So what do they show instead?
They show "tick volume."
What Is Tick Volume?
Tick volume = The number of price changes (ticks) during a time period.
In simpler terms:
Every time the price moves (even by 1 pip), that's counted as a "tick."
On a 1-hour EURUSD chart, if the volume bar shows 5,000 ticks, that means the price changed 5,000 times during that hour.
Is tick volume the same as actual volume?
No—but it's a good proxy.
Why? Because when more traders are active (high actual volume), the price moves more often (high tick volume).
So tick volume generally correlates with actual trading activity.
What This Means for You as a Forex Trader
You can still use volume in Forex—just understand it's not showing exact dollar amounts traded.
It's showing price activity, which reflects participation.
- High tick volume = Lots of price movement = High activity
- Low tick volume = Little price movement = Low activity
For practical trading purposes, this works just fine.
Quick Comparison Table
Bottom line:
- Crypto traders: You have real volume—use it confidently
- Forex traders: You have tick volume—it's not perfect, but it's good enough to identify high/low activity
6.3 How to Read Volume on Your Chart
Now let's learn how to interpret volume bars on your TradingView chart.
Where Is Volume Displayed?
Volume appears in a separate panel at the bottom of your chart (below the price chart and below any indicator panels like RSI or MACD).
It looks like a bar chart—vertical bars of different heights.
Each bar represents the volume for one candle.
Volume Bar Colors (TradingView Default)
By default, TradingView colors volume bars based on whether the candle closed up or down:
- Green bars = Volume during a bullish candle (price closed higher)
- Red bars = Volume during a bearish candle (price closed lower)
This helps you see at a glance: Was the high volume on an up-move (bullish) or down-move (bearish)?
Interactive Volume Visualization
This represents a typical volume panel. Tall bars = high activity, short bars = low activity. Green = bullish candle, Red = bearish candle.
Reading Volume Bar Height
The height of the volume bar tells you how much activity there was.
- Tall bars = High volume (lots of trading activity)
- Short bars = Low volume (little trading activity)
Average volume:
Most volume bars will cluster around a similar height—this is the average volume for that market.
What to look for:
- Bars that are significantly taller than average (volume spikes)
- Bars that are significantly shorter than average (volume drying up)
These extremes tell you something important is happening.
6.4 Volume Confirmation: The Four Key Patterns
Now let's learn the most important volume patterns you need to recognize.
Pattern 1: Rising Price + Rising Volume
= Strong Bullish Confirmation ✅
What it looks like:
- Price is moving up (green candles)
- Volume bars are getting taller (increasing volume)
What it means:
Buyers are in control, and more buyers are joining in. The uptrend has conviction behind it. Lots of people believe price should go higher, so they're actively buying.
Pattern 2: Falling Price + Rising Volume
= Strong Bearish Confirmation ✅
What it looks like:
- Price is moving down (red candles)
- Volume bars are getting taller (increasing volume)
What it means:
Sellers are in control, and more sellers are joining in. The downtrend has conviction behind it. Lots of people believe price should go lower, so they're actively selling.
Pattern 3: Rising Price + Low Volume
= Weak Bullish Move (Warning) ⚠️
What it looks like:
- Price is moving up (green candles)
- But volume bars are short (below average volume)
What it means:
Price is rising, but few people are participating. This suggests the move is weak and lacks conviction. It might be driven by a small group of buyers, or it could be a "slow drift" with no real interest.
Pattern 4: Falling Price + Low Volume
= Weak Bearish Move (Warning) ⚠️
What it looks like:
- Price is moving down (red candles)
- But volume bars are short (below average volume)
What it means:
Price is falling, but few people are participating. This suggests the move is weak and lacks conviction. It might be a slow drift lower with no real selling pressure.
EURUSD breaks above a resistance level at 1.1000.
The breakout candle is green, and the volume bar is 2x the average height.
Over the next several candles, price continues rising, and volume stays elevated.
Interpretation: "This is a STRONG bullish move. High volume confirms buyers are committed. The uptrend is credible."
What to do:
- If you're looking to buy, this is a good confirmation
- If you're already long, hold your position—the trend has strength
- This is a low-risk long setup
BTCUSD dips from $65,000 to $63,000 over several days.
But volume during the entire decline is below average.
Interpretation: "This dip looks weak. Barely anyone is selling. This could be a temporary pullback before the uptrend resumes."
What to do:
- Be cautious about shorting
- If you're looking to buy, this might be a good pullback entry (especially if price is still above the 50 SMA)
- Low-volume declines in an uptrend often reverse quickly
Quick Reference: Volume Confirmation Patterns
Look to buy or hold longs
Look to sell or avoid buying
Be cautious, tighten stops
Possible pullback, watch for reversal
The Key Principle:
High volume = Trust the move
Low volume = Be skeptical
6.5 Volume During Breakouts (Real vs Fake)
One of the most powerful uses of volume is confirming breakouts.
Breakouts happen when price breaks above resistance or below support.
But here's the problem: Many breakouts are FALSE (fakeouts).
Volume helps you tell the difference.
✅ High Volume Breakout = REAL
What it looks like: Price breaks above a resistance level, and volume spikes (2x-3x average).
What it means: Lots of traders believe this breakout is real, so they're jumping in. The breakout has conviction and is more likely to continue.
High volume breakouts have a much higher success rate.
❌ Low Volume Breakout = FAKE
What it looks like: Price breaks above a resistance level, but volume is below average (short bar).
What it means: Very few traders participated in the breakout. Most people don't believe it's real. The breakout lacks conviction and is likely to fail.
Low volume breakouts fail more than 50% of the time.
Rule of thumb: Only trade breakouts that are confirmed by HIGH VOLUME.
Before entering a breakout trade, ask yourself:
- Did price break above/below the key level? ✅
- Was there a volume spike on the breakout candle? ✅
- Is volume staying elevated on the follow-through candles? ✅
If the answer is YES to all three → The breakout is credible.
If volume is low or average → Wait. It could be a fakeout.
6.6-6.7 Volume During Consolidation & Volume Spikes
Volume During Consolidation
Consolidation is when price moves sideways in a tight range—neither trending up nor down.
During consolidation, volume often drops.
🏟️ Crowd Before the Game Analogy
Imagine a crowd watching two teams about to play a game. Everyone is quiet, waiting for the whistle to blow. Once the game starts (breakout), the crowd erupts (volume spikes).
In trading:
- Consolidation = Quiet period, low volume, market waiting
- Breakout = Action starts, high volume, traders jump in
What to watch for: When price is consolidating and volume is shrinking, it means a big move is coming soon.
Volume Spikes: What They Mean
A volume spike is when a single volume bar is significantly taller than the surrounding bars (2x-3x average or more).
Common causes of volume spikes:
- Major Support/Resistance Test - Buyers and sellers battle it out
- Breakout or Breakdown - Traders rush to enter the new move
- News Events - Major economic news causes traders to react
- Trend Reversal - Climactic volume spike as final wave exhausts
6.8 Combining Volume with Your Other Tools
Now let's put it all together: Volume + Moving Average + RSI/MACD + Price Structure. This is where volume becomes the final confirmation in your trading system.
The 4-Layer Analysis Framework
Here's the complete system:
Layer 1: Trend (Moving Average)
Is price above or below the 50 SMA? Direction bias: Bullish or bearish?
Layer 2: Momentum (RSI or MACD)
Is momentum confirming the trend? RSI above 50? MACD above zero?
Layer 3: Price Structure (Support/Resistance)
Is there a key level nearby? Is price breaking out or pulling back to support?
Layer 4: Volume (Participation & Conviction)
Is volume confirming the move? High volume on breakouts/trends? Low volume on fakeouts/weak moves?
When all four layers align → HIGH-PROBABILITY TRADE
✅ Layer 1: Trend (MA) - Price above 50 SMA, MA sloping up = Uptrend
✅ Layer 2: Momentum (RSI) - RSI at 58 (above 50, not overbought) = Bullish momentum
✅ Layer 3: Price Structure - Price bounced at 1.0950 support with bullish engulfing = Support holding
✅ Layer 4: Volume - Volume on bounce candle is 2x average = High conviction
All four layers align → ENTER LONG TRADE
- Entry: 1.0960 | Stop Loss: 1.0920 | Take Profit: 1.1050
- Risk:Reward = 1:2.25 (excellent)
6.9-6.10 Volume Tips & Common Mistakes
Practical Tips
For Crypto Traders
- ✅ Use volume confidently—it's real
- ✅ Stick to one exchange (Binance popular)
- ✅ Watch for volume spikes on major levels
- ✅ Avoid small exchanges (fake wash trading)
For Forex Traders
- ✅ Understand it's tick volume (proxy)
- ✅ Compare to average on same chart
- ✅ Focus on patterns (high vs low)
- ✅ Trade during London/NY sessions for best volume
Common Mistakes to Avoid
❌ Mistake #1: Ignoring Volume
The trap: Focus only on price/indicators, never looking at volume
The fix: Always check volume before entering a trade. Make it part of your routine.
❌ Mistake #2: Trading Every Volume Spike
The trap: "Big volume = big move coming! I'll buy now!"
The fix: Volume is CONFIRMATION, not a signal. Use it to confirm moves suggested by other tools.
❌ Mistake #3: Comparing Volume Across Markets
The trap: Looking at Bitcoin volume vs EURUSD volume and thinking one is "better"
The fix: Only compare volume within the same market. Apples to apples, not apples to oranges.
❌ Mistake #4: Expecting High Volume 24/7 in Forex
The trap: Trading EURUSD at 3 AM and wondering why volume is low
The fix: Trade during London/New York sessions for highest volume. Avoid Asian session unless trading JPY/AUD.
- What it is: Trading activity during a time period. Shows conviction behind price moves
- Why it matters: High volume = strong credible moves | Low volume = weak questionable moves
- Crypto vs Forex: Crypto = actual volume (real data) | Forex = tick volume (proxy for activity)
- Four key patterns: Rising price + high volume ✅ | Falling price + high volume ✅ | Rising price + low volume ⚠️ | Falling price + low volume ⚠️
- Breakouts: High volume = real breakout | Low volume = likely fakeout
- The key principle: High volume = trust the move | Low volume = be skeptical
- 4-Layer system: Use volume as final confirmation after checking Trend + Momentum + Price Structure
Practice Tasks (Complete These!)
- Open TradingView, go to BTCUSDT on 1D timeframe
- Ensure 50 SMA and RSI/MACD are visible
- Volume should appear at bottom of chart automatically (Volume does NOT count toward 2-indicator limit!)
- If not visible: chart settings (gear icon) → enable "Volume"
- Look at last 50-100 candles. Estimate average volume bar height
- Find 3 volume spikes (significantly taller) and 3 low volume bars
- For each volume spike: Was candle green/red? Did price break out? What happened after?
- Find high-volume breakout: Price broke level + volume 2-3x average + price continued → REAL
- Find low-volume fakeout: Price broke level + volume below average + price reversed → FAKE
- Mark both spots to train your eye
- Find consolidation where volume decreased, then observe breakout volume spike
- Switch to EURUSD 4H: Compare volume bars (tick volume). Find one high-volume move
- Find complete setup where all 4 layers aligned: Trend + Momentum + Structure + Volume. Mark entry/stop/target
- Write: "Today I learned that volume..." Complete with 3-5 key takeaways
- Example: "Volume shows conviction behind moves. High volume breakouts are credible. I should always check volume as final confirmation before entering trades."
You've just completed one of the most underrated and powerful lessons in technical analysis.
Most beginners completely ignore volume. They focus only on price and indicators. But you? You now understand how to read volume, interpret it correctly, and use it as the final confirmation layer.
Volume is your "lie detector."
It tells you whether a price move is real (high volume = lots of people agree) or fake (low volume = barely anyone cares).
Professional traders check volume on EVERY trade. And now, so will you.
In Section 7, we'll bring everything together: Putting It All Together — A Simple Trading Plan.
You've learned four powerful tools:
- ✅ Moving Average (trend direction)
- ✅ RSI (momentum strength)
- ✅ MACD (momentum changes)
- ✅ Volume (participation and conviction)
Now it's time to combine them into a complete, step-by-step trading system.
You'll learn:
- How to create a simple, repeatable trading plan
- Step-by-step examples of demo trades using all four tools
- Entry rules, stop loss placement, and take profit targets
- How to manage trades once you're in
- How to journal and review your trades for continuous improvement
This is where everything clicks.
You'll have a real, professional trading system that you can practice on a demo account.
You've done incredible work. Keep going—the next section ties everything together! 💪📈