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<b>Direct from the desk of Dane Williams.</b>

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I’m always on the lookout for trading indicators that can give me an edge. 

[Forex volume](https://labs.inleo.io/@forexbrokr/what-is-forex-volume-trading-with-bonus-example-strategy), a metric often used in other financial markets, is a tool that some traders consider. 

However, as you’ve seen me talk about over the last couple of days on this blog, my take on using forex volume as an indicator is that it *CAN’T be the sole reason* for making trading decisions. 

Why?

Well once again, [the forex market's decentralised nature](https://labs.inleo.io/@forexbrokr/is-the-forex-market-decentralised) makes volume indicators unreliable. 

They merely offer a snapshot of what’s really going on, showing data from a single forex broker or source.

Obviously [making volume in forex not as reliable](https://labs.inleo.io/@forexbrokr/is-forex-volume-useful-in-any-way) as say the volume data from stock markets which is centralised on a single exchange.

With that being said, I want to offer five major factors you need to consider when using forex volume as an indicator in your trading strategy.

## 1. Data discrepancies between different broker’s and their price feeds
It's important to acknowledge that different brokers can report varying volume figures for the same currency pair at the same time. 

This can create disparities and confusion between your analysis and the analysis of others. 

With technical analysis relying so heavily on what the crowd is doing, you need everyone to be pulling in the same direction.

Therefore, it's crucial to only use volume data from your broker as a confirmation and not the sole reason to be entering or exiting a position.

## 2. Lack of a central exchange
Unlike stock markets, where trading occurs on a single exchange, the forex market has no central marketplace. 

As it represents only a fraction of the entire market, this means that volume data in forex is fragmented between brokers and where they get their feed from

It's like the weatherman trying to tell everyone that it's raining in Sydney when they’re looking at the data for New York.

Consider volume data as a useful prediction tool within your kit.

But not for the entire forecast.

## 3. The role time zones play on volume 
The forex market operates 24/5 and volume can vary greatly depending on the trading session.

[The London open is typically the most active session](https://inleo.io/@forexbrokr/3-things-i-should-know-about-trading-the-london-open), while the Asian session tends to have lower volumes. 

So, if you're using volume as an indicator, be mindful of the time frame you're analysing, as it can significantly impact what you see.

For reasons completely unrelated to any increased or decreased action.

## 4. Influence of data releases and news events
Economic announcements, geopolitical events and market news can cause sudden spikes in volume, making it even more challenging to predict price movements solely based on volume. 

Keep an eye on the economic calendar and be aware of any significant events that might affect your trading pairs of choice.

There are just so many external factors that can have an effect on trading volumes in the forex markets.

Don’t get caught out!

## 5. Volume confirmation with other factors
To mitigate the inherent limitations of forex volume, you simply must use it in conjunction with other technical and fundamental indicators. 

A well-rounded approach that combines volume with, say, [moving averages or support and resistance levels](https://leofinance.io/@forexbrokr/simple-forex-support-and-resistance-trading-strategy-guide), can provide a more comprehensive view of market conditions.


## Final verdict on what to consider when using forex volume indicators
While forex volume can be a valuable part of your trading toolkit, it's essential to use it wisely. 

Recognise its limitations due to the decentralised nature of the forex market. 

Be aware of broker discrepancies, the lack of a central exchange, the influence of time zones and the impact of news events. 

To make informed decisions, always consider forex volume in conjunction with other indicators. 

Trading, like any skill, is about building a mosaic of insights to make the best-informed decisions possible.

Don’t be the *really dumb* money.

Best of probabilities to you.

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