With the help of REAL VOLUME, traders can monitor the volume of all FXCM trades in an instrument during a given period. It is generally accepted that volume foreruns and influences price changes. The greater the volume is, the greater the instrument's price changes, and the greater it changes, the stronger its trend is. Thus, traders can see a price trend's presence, evaluate its strength, and anticipate possible trend reversals.
For these purposes, REAL VOLUME retrieves currency volume from the trading server for every period. On a chart, REAL VOLUME is drawn in the form of a histogram with bars rising above the zero line. The bars become taller when volume grows. The greater a period's volume is, the taller the period's bar is, and vice versa. Thus, when the bars are tall, it confirms a trend's presence. Conversely, when the bars are low and remain as such for a noticeable period of time, a sideways market presence is confirmed. The taller the bars are, the stronger the trend is. As all oscillators, REAL VOLUME is always drawn in an additional area below the market price chart.
On the following picture, you can see an example of REAL VOLUME drawn in an additional area below the market price chart.
Please notice that REAL VOLUME uses the volume data that belongs to the past. But we know that volume changes precede and influence price behavior. Thus, REAL VOLUME is one of the few technical analysis tools that can serve as a leading indicator foreshadowing price changes.
REAL VOLUME is not often used as a stand-alone oscillator. It works best in conjunction with a market price chart and some other indicators as a confirmation or denial tool of their trading signals.
To apply a REAL VOLUME oscillator to a chart, a trader needs to follow the procedure common to all Marketscope indicators. For more information, see the Add Indicator article.