Posted by forex at 2:20 AM
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1. Log on to a free charting service such as freestockcharts.com. Press the 'new chart' button and a price screen will pop up on your screen. Input the symbol of a currency pair that you are tracking such as the U.S. Dollar/British Pound, for example.
2. Select the indicator button above your price screen and select the trading volume indicator that will appear at the bottom of the screen. Trading volume will reveal the buying and selling volume on the daily price bars, which will help you determine supply and demand.
3. Analyze the trading volume to determine which bars represent buying days and selling days. This will be revealed in the trading volume below the price bar by appearing green or red for that day. Green will represent positive buying volume and red will represent negative selling volume for the trading day. Make note of the trading volume for that price bar.
4. Observe the corresponding price action and to determine supply and demand for the Forex currency. If the trading volume is positive and the price bar has traded higher than the preceding trading day then the demand is higher than then available supply causing the rise in value. Conversely, if the trading volume is negative with the price bar trading lower than the preceding trading day then the demand is lower and supply is too high causing a decline in value.Spot price action as it moves upward through the current price point on higher volume. This means that the value of the currency is determined to be higher as more traders are taking positions which mans higher demand. Since there is a set limit to the available supply the value for the currency will go higher to meet demand with will be reflected in the increased trading volume.