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I've been spending quite a few hours fooling around with the FX market because I plan on adding it to my trading repertoire. As of now, my plan is to trade 4 to7 pairs at once with small position sizes, wide stops, in the direction of the trend at daily or weekly support and resistance. During my studies, I’ve conducted a lot of demo trades also attempting to use the volume in the futures market to help me trade the spot market. So far my tests have had good results.
I used to think that you couldn’t use the futures volume to trade the spot market, but I have proven to myself with my trading results that I can. Not only can I use the volume, but it works surprisingly well. Just like any other market indication, it’s best analyzed at areas of support and resistance, and accompanied by chart pattern recognition. What volume does is give you REAL confirmation on future price movement. Volume can’t be faked out but it can easily be misread. Don’t let anyone fool you. Proper volume analysis takes time and practice to learn to use correctly and efficiently.
Volume analysis is something I work on constantly and is one of the main reasons for my trading success in futures. I must say though, it’s got me seriously considering trying my hand at day trading the forex spot market. I must admit, I’m really becoming quite fond of this whole forex thing but for now, futures is still my baby.
I know most of you guys will still continue just doing whatever it is you do to speculate, but I just thought I would share this knowledge with you anyway. I just wanted to show you guys what I’ve been doing and if not for anything else, hopefully you guys find it entertaining.
FOREX Volume Analysis Video
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