Hello,

Today we will cover a new topic named 'Volume Underlay'. It works right as its name. By using this indicator, we can detect the direction of the chart just with the help of volume. Firstly, we should look at the main points we are covering today. So, let's see.

Points to be covered

Introduction
What is volume?
How can volume be used as an indicator?
How to apply it?
How does it work?
Its compatibility with the other Indicators.
Pros and Cons.

Introduction

Today, we will cover this topic without leaving any single point that is important for you to know. You may be wondering how this thing will help me understand the chart's direction. So, let's not hide this topic anymore and reveal it to you.

What is volume?

So, what does the word 'volume' mean here? Is it the same we learned in secondary classes? Absolutely, no!

Here, 'volume' means the transaction of shares in a fixed time. Now one question rise in our mind. What is the meaning of the transaction of shares? It simply means to buy or sell shares.

E.g. Let's say you buy or sell 20 shares, then the volume of that day is 20.

How can volume be used as an indicator?

In the market, volume plays a significant role as an indicator. Especially in technical analysis, 'Volume' tells us the Relative Worth of stock. In general, the higher the volume higher the market's direction. Sometimes, we may see some divergence between the prices and the 'volume'. And at that specific point in time, the chances of trend reversals are high.

How to apply?

Open your broker account.
Go to the specific chart of the stock you want to trade in.
Enter the indicators list and select 'Volume Underlay'.
You can choose the colour for your Up and Down Volume.
At last, now you will see this indicator placed on your chart.

How does it work?

When the indicator is applied successfully in the graph, you can see it in the form of a bar graph. You can see two different bars with different colours - one red and one green (if you didn't change the default colour for Up and Down volume).

The red bar shows you the number of sellers active for that particular stock. And the green bar represents the number of buyers at that specific time. When the volume goes too high, it is understandable that the buyers are more active than sellers. And when the 'volume' turns low, the number of sellers is more than buyers.

Let's look at the different aspects of understanding the work of this indicator, which is the value of that stock. Whenever you see an increase in the price of that particular stock, you will notice a mass increase in its volume too. And when its price gets down, we can see a high decrease in its 'volume'.

Now, you will be able to trade with the help of this indicator. You can place trade according to your convenience.

Compatibility with other indicators.

You can use this indicator with the other 'indicators' too. You have to go to the indicators list again and select any other 'indicator' you want to add with this one.

Advantages:

By doing so, you can increase your confirmation level.
There will be fewer chances of gaining a loss.
The accuracy rate will increase.

Pros and Cons

Pros

Easy to apply on the chart.
Easy to understand.
Higher accuracy.
Compatible with other indicators.

Cons

Does not give 100% accuracy (No indicator can do so).
Needs high attention.

Thank You,

Volume Underlay: The Keen Indicator