Trading Basics You Should Know
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Foreign exchange trader definition is an aggregated cost of all trading deals in a specified time period. In technical analysis the turnover measures efficiency and intensity of assets allocation.
Experienced bear investors know about that inertness of the market and may catch the right moment to buy. Turnover is the second important indicator after a price in the Foreign Exchange technical analysis. For graphical interpretation of foreign exchange trader definition feature special diagram — trading volume histogram — is constructed.
It foreign exchange trader definition of columns of different height, each representing its own time frame depending on the diagram scale it may be 1 minute, 5 minutes, 15 minutes etc. Elevation of the column corresponds with trade volume level — higher column stays for bigger trade turnover.
Usually histogram is plotted together with the price graph so each histogram column complies with relative graph point or bar or candle. Thus trading volumes for each price level become clearly visible.
Trading volume histogram does not give any information if bulls or bears prevail on the market, i. But this is not that important for turnover analysis cause this information could be easily received from price dynamics. If price goes up along with rising turnover and afterwards turnover foreign exchange trader definition then normally the price will run up for some time and only after losing its momentum the trend will turn downwards. The price diagram should always be accompanied with trading volume histogram.
It is very important for financial market turnover analysis to look not only foreign exchange trader definition total trading volumes but also at open interest — sum of all open positions at the end of trading period.
And only variations of this index are really matters, not absolute value. If positions are kept open it means that traders support existing trend in long term perspective.
Exact figures of Foreign Exchange trading turnover are inaccessible even for official statistic authorities so tick volume or number of quotations within specified time frame is widely used for Forex turnover estimations. Its highest, almost absolute liquidity smooth out differences foreign exchange trader definition makes tick volume dynamics to replicate general turnover dynamics.
All abovementioned indicators and trading strategies are useful only for profiting from short-term fluctuations — within one hour — and they only cover trade volume and price dynamics within one trading session Japanese, European or American. On longer time scale one day and longer total trade turnover balance around more or less constant level and depends more on time of a day in Japanese session trade volumes are at minimum and they reach their maximum at border of European and American sessions.
This page is part of archived content and may be foreign exchange trader definition. Following rules should be considered for trading turnover indicators treatment: Decrease of turnover is a signal of slump in current trend support: