Importance of Volume for Trading Binary Options

volumePrice is an essential point in trading, which is why weve mainly focused on its mechanics up until this point. However, trading binary options has other important aspects and volume is one of them.

What is Volume?


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How Important is Volume?


Lets set an example in order to visualize this more easily. Imagine that a companys stocks rise in value with 5% in one trading day after a long-term drop. We have the price aspect, but it cannot tell us if were looking a trend reversal or a random fluctuation at the given time. For a more relevant conclusion, we should look at the volume of the asset for the same day. If the volume is higher than average, then this might very well mean that we are looking at a trend reversal (remember that technical analysis isnt an exact science, which means that this is not conclusive; its telling us what we might be looking at but we are still working with possibilities). However, if the volume is lower, then its probably not a trend reversal at all.



Volume and Chart Patterns


Volume Precedes Price


This is an overall important aspect of technical analysis and will help us in our further studies of the this splendid activity called trading. The better your understanding of the basic concepts is, the better you will be able to grasp the overall concept, the ideas that tie the whole venture together, the immense opportunities related to trading. In the end, all of this is crucial for your understanding of the market and the modern economic mechanics. Now that weve covered some of the basics, its time to move on to something a bit more complicated – charts.
