TradingView Volume Indicator: Introduction, Settings, Readings and Strategies

TradingView Volume Indicator is a vital tool for tracking market activity and analyzing price movements. It helps traders identify trend strength, potential reversals, and optimal entry or exit points. This article will explore the Volume Indicator’s introduction, settings, readings, and effective trading strategies—read on to master its application.

In Forex and stock trading, the TradingView Volume Indicator is a powerful tool for traders to monitor market activity. This article at FOREX89 will guide you on how to set up, interpret signals, and effectively apply the Volume Indicator in your trading strategy.

What is TradingView Volume Indicator?

The TradingView Volume Indicator allows traders to track the number of transactions within a given period. Trading volume reflects the strength of a trend and provides key signals for determining entry or exit points. This tool is widely used across major trading platforms, including Forex.com, to enhance market analysis and improve decision-making accuracy.

The Volume Indicator is one of the most popular technical analysis tools, helping traders evaluate market sentiment and detect potential trend reversals. When trading volume spikes, it may indicate trend continuation or a possible reversal.

Examples of Volume Indicator on TradingView:

• When the price rises sharply along with high volume, the uptrend is likely to continue.
• If the price declines but volume remains low, the downtrend may weaken and reverse.
• When the price reaches a resistance zone and volume surges, a breakout or reversal may occur.

After understanding what the Volume Indicator is and its crucial role in trading, the next step is to set up this indicator on TradingView and start analyzing trading volume effectively.

How to Set Up the Volume Indicator on TradingView

Setting up the Volume Indicator on TradingView is simple and only takes a few steps. Below is a detailed guide to help you configure and optimize this indicator.

Log in to TradingView and Open a Trading Chart

• Go to TradingView and log into your account.
• Select the currency pair, stock, or asset you want to analyze.
• Open the trading chart by clicking “Chart” in the main menu.

Add the Volume Indicator to the Chart

• On the chart, click the “Indicators” icon at the top of the screen.
• Search for “Volume” in the search bar.
• Select “Volume” from the list, and the indicator will appear below the price chart.

Customize Volume Indicator Settings

• Right-click on the indicator and select “Settings”.
• Adjust the parameters:
  • Color: Customize the color of the volume bars to distinguish between buy volume (green) and sell volume (red).
  • Moving Average: Add Moving average strategies to smooth the volume data.
  • Scale: Switch between absolute value or percentage for easier comparison.

Once the Volume Indicator is set up on TradingView, the next important step is to analyze the signals provided by this indicator to support your trading decisions.

How to Read Signals from the Volume Indicator on TradingView

The Volume Indicator on TradingView displays trading volume as colored bars below the price chart, helping traders assess the strength of market trends. Below is how to read signals from this indicator:

• Volume increases when price rises: If the price is rising and volume also increases, this confirms a strong uptrend and suggests that the trend may continue. → Buyers are in control, and the market has strong upward momentum.
• Volume decreases when price rises: When the price rises but volume decreases, this signals that the uptrend may be weakening. → The trend could be losing Momentum or preparing for a reversal.
• Volume increases when price falls: If the price drops sharply and volume rises, this indicates strong selling pressure and suggests that the downtrend may continue. → This could be a sign of a strong sell-off.
• Volume decreases when price falls: When the price declines but volume is low, it shows weak selling pressure. → This may just be a short-term correction. → If the price reaches a support level with low volume, it may signal a potential reversal.
• Sudden volume spikes: A sudden surge in volume can signal an important event, such as major news or a breakout from a key price level. → If a breakout occurs with high volume, the new trend is more likely to be confirmed.

Once you understand how to read signals from the Volume Indicator, the next step is to apply these signals to trading strategies to optimize performance and manage risks effectively.

Trading Strategies with Volume Indicator on TradingView

Volume Indicator is an important tool that helps traders confirm trends, detect reversals, and assess the strength of a breakout. Below are some effective trading strategies based on the Volume Indicator on TradingView.

Confirming Trends with Volume

• When price rises and volume also increases → Strong uptrend, likely to continue.
• When price falls and volume increases → Downtrend is strengthening.
• If price moves but volume is low → Warning of a weak trend, prone to reversal.
• Application: Only enter trades in the trend direction when trading volume confirms the price movement

Trading Breakouts with Volume

• When price breaks resistance/support with high volume → Breakout is likely reliable.
• If price breaks out but volume is low → Warning of a false breakout, potential reversal.
• Application:
  • Enter trades in the breakout direction if volume is high.
  • Place stop-loss just below (for an upward breakout) or above (for a downward breakout) the broken level.

Identifying Reversal Points with Volume

• When price is trending but volume gradually decreases → Warning that trend momentum is weakening.
• When price reaches a peak or bottom with a sudden volume spike → Possible reversal signal.
• Application:
  • When a reversal signal appears, prepare to enter trades in the new trend direction.
  • Combine with other indicators (RSI, MACD) to improve accuracy.

Identifying Entry Points with Volume Spike

• If a candlestick shows a sudden volume surge compared to previous bars → It may signal the start of a new trend.
• If a Volume Spike appears but price does not change significantly → It may be a distribution signal (Reversal).
• Application: Monitor Volume Spikes at support/resistance zones to find good entry points.

Combining Volume with Other Indicators

• Moving Averages + Volume: Helps confirm trends and identify entry points.
• RSI + Volume: Identifies Overbought/oversold signals for early trade entries.
• MACD + Volume: Confirms the reliability of MACD crossovers.

Notes When Using Volume Indicator

• Volume is only meaningful when combined with price action and should not be used alone.
• High volume does not always indicate a strong trend.
• Always monitor the market context for more accurate evaluations.

Volume Indicator on TradingView is a crucial tool that helps traders gain deeper insight into market dynamics through volume analysis. By combining the Volume Indicator with other technical indicators like RSI, MACD, or Moving Average, you can enhance trend predictions and optimize trading strategies. To succeed in financial markets, always update your knowledge, manage risk carefully, and continuously refine your trading approach.