To understand price action in trading, you need to look at two types of volumes: tick volume and actual volume. While both volumes tell you how active the market is, they are different. Let’s go through each one and see how you can use them to understand price movements better.

What Is Tick Volume?

Tick volume shows how many times the price changes during a certain time period. It doesn’t show how many shares or contracts were traded, but instead, it tells you how often the price moves. In fast markets, tick volume can help you see how active the market is without waiting for actual trade data.

What Is Actual Volume?

Actual volume tells you the total number of shares or contracts that were traded during a specific period. This data shows real market activity and helps you understand the buying and selling pressure in the market. It gives you a clear picture of how many assets are being traded.

How to Analyze Tick Volume versus Actual Volume for Price Action?

Both tick volume and actual volume can tell you important things about price action. Tick volume shows how often the price is changing, and actual volume shows how much is actually being traded. Here’s how to use them together:

• Tick Volume: If tick volume is high, it means there is a lot of price action happening, which could indicate strong momentum in the market.
• Actual Volume: When actual volume is high, it shows that there are a lot of trades happening at those prices. High volume means there’s strong interest in the market, making the price move more reliable.
• Combining Both: If both tick volume and actual volume are high, it shows that the market is really active, and the price movement is likely to continue. If tick volume is high but actual volume is low, the move might not be as strong, and could reverse soon.

How to Use Tick Volume for Identifying Market Momentum?

Tick volume helps you see how fast the price is moving. If the price is moving quickly with high tick volume, it suggests strong market activity and momentum. But, if the price is moving fast with low tick volume, the move may not be real and could reverse soon.

How to Combine Tick Volume and Actual Volume for More Accurate Analysis?

By combining both tick volume and actual volume, you can get a better understanding of the price action. If both volumes are high, it shows strong market activity, and the price move is likely to continue. If tick volume is high but actual volume is low, it means the move might not be supported by enough trading, so be cautious.

What Role Does Volume Play in Price Action Trading?

Volume is a key factor in price action trading. High volume during a price move shows that the move is supported by many traders and is more likely to continue. Low volume means fewer people are involved in the move, and it might not last long. Always consider both tick and actual volume when analyzing price action.