Could someone define Volumes for me?

[sloshmaster]

When looking at a 5 min EUR/USD chart, the volumes report figures between 200 and 600 typically. what do these numbers refer to? lots? thousands of dollars?

 

Just so I have an idea.

 

Thanks in advance 

[Andriy Moraru]

It represents the amount of price changes during that period. It's not a "real volume".

[Brett Luedtke]

sloshmaster:

When looking at a 5 min EUR/USD chart, the volumes report figures between 200 and 600 typically. what do these numbers refer to? lots? thousands of dollars?

 

Just so I have an idea.

 

Thanks in advance 

Welcome to Forex. This is an enormous difference from any other market, there isn't any measurement given by the market data. So in Forex, as enivid mentioned, we can only take a count of how many times we were quoted a new price. This is called a tick, it is a crude way to measure the amount of activity on a pair (tick volume). Each broker quotes prices and calculates spreads differently. If spread changes and there is no change in quoted price, this is still a new tick.

The biggest concern for any in-depth analysis of this value:
some brokers offer fixed spreads while other brokers fluctuate. Because of this, fixed spread brokers will show disparities in the differences of higher-volume and lower-volume compared to varying spread brokers, while those will even be differing from one another. Due to this it is not reliable to make trading decisions based on this measured parameter.

P.S. At Forex Factory there is at least one popular strategy I have seen which utilizes both the tick volume and the spread to make its determination of actual volume on FX markets. I believe it is called Volume Spread Analysis. It is based on the assumption that spreads rise in periods of high volume (ie. news), and a higher tick volume than average confirms traders' presence in the market.  It has serious limitations - we can't know the spread for historical ticks (too much history info), so we can't calculate what the decision would have been in the past.

Each incoming tick replaces the spread's current value. On the opening of a new bar in the chart, the last recorded spread data on the previous bar remains the same as for the tick just before it closed. This spread value is used as an approximation of spread, and remains there as the measured value for spread for the duration of the historical period that bar represents. I hope this info helps you to realize an overall (lack of) meaning to tick volume.

Volume is an area of curiosity for many traders, so maybe you can find better resources. Just mind the differences! One is measuring and the other is counting.

Happy trading 

[MathQuant]

The word "Tick" has two meanings:

   1.  The smallest possible price move:  In the S&P Emini it is  0.25  index points.  In Forex it is  1 pip.

   2.  A Trade:  So, in Forex, when we talk about Tick Volume, say in one minute, we mean the number of trades that were executed during that one minute.

Now, a trade can be either a Buy trade or a Sell trade (i.e.  either  Bid or Ask).  If the number of contracts in each trade is included with the tick data, then we have what is called "Market Depth".  Market Depth, which will be available in MT5, is a very significant development in the Forex market.  Right now, the only Forex broker that I know of, offering Market Depth is FXOpen.

However, there is a serious error in all the Forex tick data files that I have looked at so far.  They show a Bid price and Ask price corresponding to every single time stamp.  This is incorrect.  If you look at a Forex broker's quote screen, you will see that sometimes the Bid price changes, and sometimes the Ask price changes.  Only occasionally, both Bid and Ask prices change at the same time.

A tick data file should show clearly the number of Buy trades and the number of Sell trades during any time period.  This is very important information, because the market is driven by supply and demand.  If there are more buyers than sellers, then we expect the market to go up.  If there are more sellers than buyers, then we expect the market to go down.

If anyone knows how to generate a correct tick data file, I would really appreciate the information.

Thanks