How to interpret volume - page 3
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I ALWAYS recommend retail traders to ignore volume as a standalone indicator, because all it really says is that a large number of trades were conducted at a given time, that's it. How often have people at the "bottom" of a market gone long because of a volume spike, only to see the price tumble even further and vice versa? Hedge funds and the FX departments of investment banks intentionally do this to confuse the retail trader and profit that way. So please never interpret anything other than "more than an average # of trades were done than usual" when you see massive volume spikes and don't act on that indicator alone. Stay safe and happy trading guys :-)
Although I'm not exactly in love with Wall Street, I don't believe that wholesale FX traders who generally place single 50 million to 100 million USD orders spend much time concerning themselves with retail traders who (a) have much less capital, and (b) only constitute 5.5% of the global FX market as of 2023. I firmly believe that wholesale traders would eat each other for lunch at any opportunity, and that retail traders caught up in the melee are merely collateral damage. As aforementioned in this thread, the industry has other ways of making money as long as everyone keeps on trading.
I agree that lone volume, e.g., the DOM, is pretty much useless in off-exchange markets although heavyweight traders do scalp the DOM in exchange-based markets. One of the best ways to use top-of-book volume is to incorporate it into price-based indicators or bars. The VWAP indicator immediately comes to mind and is rather reliable whether real volume or tick volume is input into it. Interestingly, the settlement prices of most exchange-based options contracts are expressly defined as the VWAP of the underlying asset's price.
When you say "wanna buy" are you referring to for example pending buy orders? Because I can see how that could possibly skew volume readings in a bad way