FXCM new Real volume transactions indicator

rubb said:
FXCM launches FX real volume indicator
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You are correct, sir :)

Real Volume and Transactions indicators used to be hard to come by for forex traders. Previously, we had to make do with approximations such as tick volume which, while useful, only tell part of the story. As you can see from a 1-minute chart below of the recent ECB announcement there's definitely a correlation between Real Volume (top), Tick Volume (middle) and Transactions Volume (bottom).


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However, there are notable differences when there is a large spike in real trading volume. This reveals a limitation with tick volume in that it has no way of showing when a large amount of volume trades at a single price, since that would only be counted as a single tick. Real Volume and Transactions indicators can thus provide new perspectives on what traders are doing during major news events, especially since they work even on 1-minute charts.


To summarize:
  • Real Volume shows you how many currency units traded
  • Transactions show you how many orders executed
  • Tick Volume shows you how many times the price updated

While each of them can be valuable in its own way, they can be even more powerful when used in combination!
 
rubb said:
Thank you very much, will check it out asap. :)

Warm regards,
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It's rare that NFP would be released on a Thursday, but this week's July 4 holiday has pushed the release ahead a day. And the ECB rate decision also happens to be coming out on Thursday as well. Should make for an exciting day of trading!

x8tXZmx.png


Do you think Real Volume and Transactions will be even higher than last NFP as a result?

vHoHC0f.png
 
Here's an interesting chart heading into tomorrow's ECB/NFP doubleheader:

C0me1Na.png

GBP/JPY is trading close to the 174.833 high from January 2nd with the Speculative Sentiment Index (SSI) at -4.53. That means there are 4.53 traders who are short for every single trader who's long.

SSI_2014-07-02_3623462_body_Picture_9.png

Since SSI is a contrarian indicator to price action, the fact that 72% of traders are short gives signal that GBP/JPY may continue higher.
 
Jason Rogers said:
It's rare that NFP would be released on a Thursday, but this week's July 4 holiday has pushed the release ahead a day. And the ECB rate decision also happens to be coming out on Thursday as well. Should make for an exciting day of trading!

x8tXZmx.png


Do you think Real Volume and Transactions will be even higher than last NFP as a result?
More...

As it turns out, Real Volume reached 135 million, and Transactions reached 5,500 for EUR/USD during the minute NFP was released today which is less than last month's NFP on both counts.

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The latest reading from the Speculative Sentiment Index (SSI) for EUR/JPY stands at 1.29 as 56% of traders are long (1.29 long positions for every short position). Yesterday the ratio was 1.17; 54% of open positions were long.

SSI-Dont--Try-to-Call-GBPUSD-Top-Until-Retail-Crowd-Flips-Sides_body_Picture_1.png

Long positions are 8.7% higher than yesterday and 0.0% below levels seen last week. Short positions are 1.8% lower than yesterday and 7.2% below levels seen last week.

Since SSI is a contrarian indicator to price action, the fact that the majority of traders are long gives signal that EUR/JPY may continue lower.

SSI-Dont--Try-to-Call-GBPUSD-Top-Until-Retail-Crowd-Flips-Sides_body_x0000_i1040.png

The trading crowd has grown further net-long from yesterday and last week. The combination of current sentiment and recent changes gives a further bearish trading bias.

ncylKaG.png

Notice in the EUR/JPY chart above how Real Volume (top) spiked to over 2.4 billion on April 22nd while Transactions (middle) and Tick Volume (bottom) did not have a corresponding spikes.

What could this indicate?
 
Some believe that most technical indicators are similar in that they are derived from the same thing: price. Volume, however, is a unique and separate appraisal of the market that can meaningfully improve our analysis of the market or individual trade opportunities.

In today's strategy video, John Kicklighter, Chief Strategist for DailyFX, discusses how this information can be used to give us greater insight into broader market conditions as well as shape more distinct trade setups - with a reference to risk trends, the S&P 500, EUR/USD, GBP/USD, USD/JPY and others.

<iframe width="640" height="480" src="//www.youtube.com/embed/hFFavtQ13R4" frameborder="0" allowfullscreen></iframe>​

Talking Points:
  • The FX market is decentralized, meaning there is no market-wide volume measures
  • However, Real Volume and Transaction indicators can give a good measure of speculative activity
  • We can use volume as both an overview analysis technique and as an individual trade filter
 
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