1) What is Volume in Forex?

Spot Forex is decentralized. There is no single exchange reporting official traded volume. Most platforms therefore show tick volume: how many times price changed during a candle. More price updates ≈ more participation.

Reality check: tick volume is an excellent proxy for real activity. Many brokers aggregate liquidity from banks/ECNs; their tick volume strongly correlates with futures FX volume.

• Tick volume: number of price updates in the period (what your MT4/MT5 usually shows).
• Real volume: contracts or lots traded (available on exchange‑traded products like FX futures).

2) Feeds, Platforms, and Why It Matters

Your volume depends on the data feed. A top‑tier ECN/LP feed gives richer tick data than a cheap CFD feed. That said, relative patterns (spikes, dry‑ups) are what we trade, not absolute numbers.

• Consistency > Perfection: use the same broker/data source for all your analysis to keep comparisons valid.
• Timezones: reset times change perceived session volume. Keep charts in one timezone.
• Futures as benchmark: optional cross‑check on 6E/6B/6J etc. if you have access.

3) Core Principles — Read This Twice

• Effort vs Result: volume is effort; price range is result. Big effort, small result ⇒ absorption; small effort, big result ⇒ imbalance/air pocket.
• Context beats absolute: a high bar during Asia may be normal during London. Always compare volume to the last 20–50 bars of the same session/TF.
• Location matters: the same spike at resistance vs in the middle of nowhere means different things.

4) The Big Three Patterns

A) Spike / Surge — sudden volume ≥ 1.8–2.5× its recent average (50 bars typical). Often appears on breakouts, news, and tests of key levels.

• With range expansion (impulsive candle) ⇒ genuine participation, likely continuation.
• With narrow range near a major level ⇒ absorption: large orders are meeting and capping price.

B) Climactic Volume — a series of expanding candles ending in an exhaustion spike (huge range + huge volume). Often signals the end of a run and the beginning of consolidation or reversal.

• Look for a failed follow‑through after the climax (next bars cannot advance despite high effort).

C) Dry‑Up / Quiet — unusually low volume in a tight range. Energy is being stored. Expect expansion soon. If this happens under resistance or above support, it sets up quality breakouts.

5) Breakouts that Matter (Volume Confirmation)

For breakouts we want three yeses:

1. Close beyond the level (not on it).
2. Range expansion (candle larger than recent ATR).
3. Volume spike (≥ 1.8–2.2× 50‑bar average).

Two yeses can still work, but three yeses turn a good breakout into a great one.

6) Divergences, Traps, and Shakeouts

• Bearish tell: price makes a higher high on lower volume ⇒ lack of participation ⇒ vulnerable trend.
• Bullish tell: price makes a lower low on lower volume ⇒ sellers are tiring.
• Shakeout: fast move against the eventual direction with high volume, then reversal with even higher volume and range. The second leg is the trade.

7) Sessions & News Effects

• Asia: usually lower volume (except JPY/AUD/NZD), ranges and fakeouts more common.
• London: cleanest structural moves; best breakouts with volume confirmation.
• New York: continuation or reversal of London; watch overlap for the largest spikes.
• High‑impact news: volume surges; wait for the second impulse to confirm direction (post‑news shakeout rule).

8) Practical Rules You Can Trade

• Breakout rule (M5/M15): trade only with volume ≥ 2.0× and candle range ≥ 1.3× ATR14.
• Pullback rule: after an M15 pullback 30–60% into structure, wait for M5 spike + impulsive candle to resume.
• Stop placement: beyond the structure that was just broken or tested; never inside the noise.
• Scale‑out: take partials at 1R, let the rest target 2R or next structure.
• No confirmation, no trade: a breakout without volume is just a line crossing.

9) Checklists

Breakout Checklist

• Level well‑defined on M15/H1
• Dry‑up before the break
• Close beyond, range expands
• Volume ≥ 2.0× (50 bars)
• Clean space to the left (room to run)

Reversal/Shakeout Checklist

• Climactic bar into HTF level
• Failed follow‑through
• Opposite impulse with higher volume and range
• Entry after reclaim/break of trigger

10) Myths to Forget

• “Forex has no volume.” — It has tick volume. It works. Use it consistently.
• “Any spike is bullish.” — A spike into resistance that cannot advance is absorption, not strength.
• “Indicators replace reading.” — Indicators summarize; they do not think. Read price + volume together.

11) Quick FAQ

Q: Which timeframe for volume signals?
A: M5 for entries, M15/H1 for context. D1/W for location.

Q: What if volume contradicts price?
A: Stand aside or reduce size. When in doubt, wait for the next bar to resolve Effort vs Result.

Q: Can I use futures volume to time spot trades?
A: Yes, as a proxy. But keep your main read consistent on one feed.

12) How SAM Uses Volume (Your Edge)

• M15: detects pullbacks and compressions near structure.
• M5: confirms with spike (≥ 2.0×) and impulsive candle (≥ 1.3× ATR14).
• News handling: avoids the first spike, hunts the second impulse (shakeout rule).