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Why tradingview forex volume incorrec?

As a forex trader, you may have come across TradingView, a popular charting platform that allows you to analyze financial markets and make trading decisions. One of the key features of TradingView is its volume indicator, which is supposed to provide valuable insights into market sentiment and price direction. However, many traders have noticed that the volume data on TradingView is often inaccurate or inconsistent, which can lead to costly mistakes and missed opportunities. In this article, we will explore why TradingView forex volume is often incorrect and what you can do about it.

Before we delve into the specific reasons why TradingView forex volume can be misleading, it’s important to understand how volume is calculated in the forex market. Unlike the stock market, where volume represents the number of shares traded, forex volume refers to the total value of currency units exchanged in a particular time period. This means that forex volume is not a precise measure of the number of transactions or participants in the market, but rather a reflection of the overall liquidity and activity of the market.

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With that in mind, here are some of the main reasons why TradingView forex volume may not accurately reflect the true volume of the market:

1. Lack of centralized exchange: Unlike stocks, which are traded on centralized exchanges such as the New York Stock Exchange, forex is a decentralized market with no single exchange or regulator. This means that there is no central source of volume data that can be easily accessed and verified. Instead, forex brokers and liquidity providers collect and report their own volume data, which can vary widely depending on their client base and trading activity.

2. TradingView’s data sources: TradingView aggregates volume data from various sources, including forex brokers and data providers such as CME Group and ICE. However, not all brokers and data providers report their volume in the same way or at the same frequency. Some may report tick volume (the number of price changes) rather than actual traded volume, while others may only report volume for certain currency pairs or time periods. This can result in inconsistent and incomplete volume data on TradingView.

3. Time zone differences: Forex is a 24-hour market that operates across multiple time zones. This means that volume data can vary depending on the time zone and trading session. For example, the Asian trading session may have lower volume than the European or North American sessions, which can skew the overall volume data if not properly adjusted.

4. Volume manipulation: Finally, it’s worth noting that forex volume can be manipulated by market participants, especially in the spot market where there is no centralized clearing or reporting mechanism. Traders and brokers may engage in volume padding or spoofing, where they create fake orders or transactions to inflate the reported volume. This can make it difficult to differentiate between genuine market activity and artificial volume spikes.

So, what can you do to overcome these challenges and use volume effectively in your forex trading? Here are some tips to keep in mind:

1. Use multiple sources: Rather than relying solely on TradingView for volume data, consider using multiple sources to cross-check and verify the data. This could include your broker’s trading platform, other charting platforms, and market research reports.

2. Understand the limitations: Recognize that forex volume is not a perfect indicator and may not always accurately reflect market sentiment or direction. Use volume in conjunction with other technical and fundamental analysis tools to confirm or refute your trading hypotheses.

3. Adjust for time zones: If you’re using volume data that is reported in a different time zone than your own, be sure to adjust it accordingly to avoid misinterpretation.

4. Focus on price action: Ultimately, the most reliable indicator of market sentiment and direction is price action. Use volume as a supporting tool to validate or refute your price-based analysis, rather than relying on it as a standalone metric.

In conclusion, while TradingView’s forex volume indicator can be a useful tool for analyzing market activity and sentiment, it’s important to understand its limitations and potential inaccuracies. By using multiple sources, adjusting for time zones, and focusing on price action, you can minimize the impact of incorrect volume data on your trading decisions.

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