Why volume matters
Day 15 of 26 · 9 min read · By DT Terminal
Volume shows how much participation a move had behind it. This lesson explains why spot forex has no central volume and what tick volume really counts, how to read volume at breakouts, fakeouts and liquidity sweeps, why it follows the sessions, and how to write it into your strategy as a confirmation rule you can test.
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What volume is
Volume is how much traded during one candle: shares or contracts on an exchange, something rougher on most forex charts. It shows as a bar under each candle, taller when more happened.
Price tells you where the market went. Volume tells you how much participation it took to get there. Moves with few traders behind them are easier to reverse.
| Price does this | Volume is | A common reading |
|---|---|---|
| Closes beyond a level | Well above average | Many traders took part; follow-through is more likely |
| Closes beyond a level | Below average | Few joined in; the break is more likely to fail |
| Wicks through a level, closes back | Very high | Stops being filled: a sweep, not a break |
| Trends on and on | Fading bar by bar | The push is thinning; not a reversal on its own |
Not the same word: in MetaTrader 5's order window, Volume is your own order size in lots, as in Day 7, Placing your first trade.
Why spot forex has no central volume
Stocks and futures trade on exchanges, which count every share or contract. Spot forex has no exchange: banks, electronic networks (ECNs) and brokers trade directly, over the counter, so nobody can print the total.
The volume bar on your EURUSD chart is almost always tick volume: how many times the price changed during that candle, in your broker's or data provider's feed. It tends to rise and fall with real activity.
| Market | Where it trades | What the volume bar counts | Read it as |
|---|---|---|---|
| Stocks | Exchanges, reported to one tape | Shares traded | Real volume |
6E, gold and index futures | One exchange | Contracts traded | Real volume for that contract |
| Spot forex | Over the counter | Ticks in your feed | A proxy: compare bars, not numbers |
| CFDs on gold and indices | Your broker | Usually ticks in its feed | A proxy, like forex |
| Crypto | Many exchanges | That exchange’s own trades | Real, but one venue’s share |
So read it as relative volume:relative volume = bar volume / average of the last 20 bars
How big the market is, and the futures check
The euro future on the CME (its code is 6E) publishes exactly how many contracts traded in each bar. Spot forex trades about $9.6 trillion a day in the Bank for International Settlements' 2025 survey, and nobody sees all of it.
When more people trade, the price updates more often. One study that compared tick counts with real traded volume from two large ECNs found the two closely matched hour by hour, and left shorter bars as an open question. That is why many forex traders use tick volume as a stand-in for the volume they cannot see.
Some forex traders check the matching future, 6E for EURUSD, to see real contract volume. It helps, with limits: the future is a different instrument with its own price (it carries the interest rate difference), its own hours, and only part of the market.
Two brokers can print different tick counts for the same candle, but both will usually show the London open bar as bigger than the Asian bars before it.
Volume at breakouts and fakeouts
A breakout needs new orders beyond the level. A close beyond on heavy volume means many traders took part. On thin volume few did, and once their orders fill there may be nothing left to carry it.
DT Terminal ChartsEURUSD · M15BreakoutDT Terminal ChartsGBPUSD · H1FakeoutThe EURUSD break came at the London open on 3.9x the average volume, and held. The GBPUSD break came at 16:00 in New York on 0.6x, and 2 bars later price was back inside the range.
Example 01, and the fakeout in detail
Worked example
Example 01: The London open break, read with volume
The worked example, with every number walked through, is in the app.
The GBPUSD candle closes 13.0 pips above a day's range at 1.26873, at 16:00 in New York, the quiet hour before the daily rollover. By price alone it is the same kind of break as the EURUSD one. The volume says otherwise: 0.6x the average, about half the usual.
A common working line is a break bar of at least 1.5x the recent average.
Breakout or fakeout: your call
Now call four breaks yourself. Each one closes or wicks through a range high: read the volume, make your call, and see the next three bars.
Interactive tool
Breakout or fakeout
This interactive tool runs in the app, with your own numbers.
Watch volume at the opens in the backtester
EURUSD on M15, and mark the Asian high and low before each London open. For every close beyond one, note the relative volume and whether the next four candles held. After 30 breaks, compare the heavy ones with the thin ones.Volume and liquidity sweeps
Stops gather above highs and below lows (Day 13, Liquidity). A stop is a market order, so when price reaches the pool they fill at once, and a sweep often prints one of the heaviest bars of the session.
Volume never says which side won. The close does: huge volume that closes back where it came from is big effort, no result.
DT Terminal ChartsEURUSD · M15SweepThe sweep candle wicks 3.7 pips under the equal lows on 4.1x the average volume, then closes 9.0 pips back above them.
The sweep in numbers
The two lows sit at 1.08106 and 1.08095, only 1.1 pip apart. The sweep candle wicks 3.7 pips under the lower one, to 1.08058, on 5,796 ticks against an average of 1,416: 4.1x, and more than three times the busiest bar before it (1,728). Then it closes 9.0 pips back above the lows.
Every trade has a buyer and a seller, so a huge volume bar is not strength on its own. When it closes back where it came from, someone large took the other side of all those stops. A heavy bar that closes beyond the level is a break.
Volume through the day
Tick volume follows the clock, for the reasons in Day 5, Market sessions: the market is busiest while the big financial centres are at their desks. On a major pair the shape repeats nearly every day.
So the first London candle, compared with the quiet Asian bars before it, will almost always look heavy. A break at the open on "three times the volume" may simply be an ordinary open.
Worked example
Example 02: One London open bar, read two ways
The worked example, with every number walked through, is in the app.
Other ways the clock catches people out
The honest comparison is with the same hour on earlier days, or with bars from the same session. The GBPUSD fakeout earlier in this lesson closed above its range in the hour before the New York rollover, when volume is near its lowest, and quiet hours are where thin breaks are most common. And on bank holidays in London or New York the whole day runs thin. Economic releases, from Day 6, Key news events, do the opposite: a burst of volume in seconds, often in both directions, which is a reaction to the number, not commitment to a direction.
What volume cannot tell you
Volume has hard limits:
- It has no direction. The close tells you who pushed.
- On forex it is a proxy. Never compare tick counts across feeds.
- It follows the clock. Compare like with like.
- News distorts it. A release spikes volume whatever happens next.
- It confirms; it never triggers. A spike alone is no reason to enter.
So use it as a confirmation rule you can test: for example, a break bar of at least 1.5x the average of the same session's last 20 bars.
Write the volume rule into your strategy
Testing the rule, and the limits in full
Every trade has a buyer and a seller, so a heavy bar is as much selling as buying. Tick volume differs by broker and data provider, so never treat a raw tick count as a level. Busy hours always look heavy and quiet hours always look thin. A volume spike is a check on a setup your rules already found.
To find out whether the rule helps, take the same setups with the rule and without it, and compare the win rate and the average R of each group. If the filtered group is no better, the rule is costing you trades for nothing. Measure it on trades you can trust: fills synced from your broker, not the trades you remember.
Check yourself
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