Introduction to the Ticks Volume Indicator
Most traders are often caught up in trying to identify trends, momentum, and potential reversal signals, and this is rightfully so. Trading is about entering at the right spot at the right time. However, aside from these indications mentioned above, volume is another key indication that could support a trade setup. The Ticks Volume Indicator is one of the few momentum indicators which take volume into account.
What is the Ticks Volume Indicator?
The Ticks Volume Indicator (TVI) is a momentum-based technical indicator which is an oscillator type of indicator. The unique thing about the Ticks Volume Indicator is that it uses volume based on tick price as a basis for identifying momentum, which makes the momentum or trend indication of this indicator more reliable.
How the Ticks Volume Indicator Works?
Based on the indicator’s script, the Ticks Volume Indicator measures each tick price movement, both the up ticks and the down ticks. It then uses the data to compute for an Exponential Moving Average (EMA) and a Double Exponential Moving Average (DEMA). It also uses volume, as well as open and close prices within its algorithm.
Using its complex formula, the Ticks Volume Indicator then plots a line which oscillates freely around a midpoint which is zero.
How to use the Ticks Volume Indicator for MT4
There are several variables within the indicator’s settings which can be modified in order to adjust the TVI line’s sensitivity. These variables include “r”, “s”, and “u”. It also allows traders to turn “alerts” on or off.
The Ticks Volume Indicator is mainly a momentum oscillator. As such, it can be used to identify the trend or momentum direction of price action.
This indicator can be used as a trend direction filter as the TVI line tends to stay positive during uptrends and negative during downtrends.
Traders can also anticipate potential mean reversals based on the curling of the TVI line back to its midpoint coming from an overextended level.
As an oscillator type of indicator it can also be used for identifying potential reversal signals based on divergences.
Buy Trade Setup
When to Enter?
Observe for bullish divergences on an uptrend market. Open a buy order as soon as the TVI line starts to curl up confirming the bullish divergence. Set the stop loss on the support below the entry candle.
When to Exit?
Close the trade as soon as the TVI line starts to curl back down.
Sell Trade Setup
When to Enter?
Observe for bearish divergences on a downtrend market. Open a sell order as soon as the TVI line starts to curl down confirming the bearish divergence. Set the stop loss on the resistance above the entry candle.
When to Exit?
Close the trade as soon as the TVI line starts to curl back up.
Conclusion
The Ticks Volume Indicator can be a very effective tool that traders can use for identifying potential trade setups. When used appropriately, this indicator can produce very reliable trade indications which traders can add as a confirmation for their trade setups.
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