Lesson 1 of 6 · 12 min
Reading Volume
Step 1
What it is
Volume shows how much activity took place during a candle. Taller bars mean busier candles. It tells you how much interest there was, not which way price will go next.
Rising volume in the direction of a move suggests more people are taking part. When volume is leaving the market, price can still creep on, but each candle has less behind it. Declining volume can work both ways: on a pullback, it can support the trend, and during the main move, it can warn that the move is running out.
One honest point. Spot gold and forex have no single central exchange, so most platforms show tick volume, which counts how many times the price changed. It is a stand-in for activity, not a count of contracts, and it can differ from broker to broker. The bars on our charts are illustrative.
Traders use volume to judge how much weight a price move deserves. It can support or weaken a trade idea, but on its own it is never a reason to enter.
Step 2
See it on a chart
Rising volume, a quiet pullback, a confirmed move, then volume leaving the market.
Illustrative chart with made-up prices and tick volume, built for teaching. It is not real market data and not a trade idea.
Step 3
The exact rules
What must be true before entry
- A move with rising volume behind it.
- A pullback with falling volume.
- A level where the pattern stays intact, such as a higher low.
What volume should show
Where to enter
Where the hard stop goes
Where the target goes
What invalidates the idea
- Volume surges against the move during the pullback.
- Price closes past the higher low or lower high.
When not to take it
- Volume has been falling throughout the move you want to join.
- A thin holiday session is making every bar look quiet.
- Major news is due soon, or you would be trading outside your planned hours.
- You have just taken a loss and feel the need to win it back.
Step 4
Your turn: plan the trade
Price fell on rising volume, then pulled back up on falling volume. Look at the volume bars, then mark your plan.
This setup is a short. Look at the candles and the volume. Choose a line below, then tap the chart to place it. You can also drag its label or type a price.
Illustrative chart with made-up prices and tick volume, built for teaching. It is not real market data and not a trade idea.
Step 5
The trap: using volume to justify a trade
If you want a trade, you can usually explain any volume bar in its favour. Decide before you look what volume would have to show for you to stay out, and write that down.
Read why journaling mattersStep 6