Forex volume cannot be evaluated exactly as in the Equity market, where every share equals to one volume so that selling 200 shares is 200 in volume. In the forex market the number of contracts and their size is unknown because the market is wide and decentralized. Therefore to evaluate volume in Forex the number of ticks(changes in price is used). One tick equals to one unit of the forex volume. As it moves up and down volume adds up.
An increase in volume means that lots of participants are actively selling and buying currencies.
An experienced trader usually employs several indicators: one that is based on volume, one based on momentum (like the Stochastic Oscillator), and one based on volatility (Average True Range or Bollinger Bands). Combining these measures gives a “three dimensional view” of the market.
An often overlooked exit method presented in this review is to exit a position when the original entry criteria no longer exists. This is in particular practical when the forex trader uses technical indicator signals for entry.
Consider a trading strategy which is based on entering positions as volatility increases in an attempt to capture large quick moves. The forex trader may use average true range forex analysis to assess the a volatility. The figure below shows how the AUD/CAD volatility rises as a sell-off begins.
The “timed stop” forex strategy is relatively simple and is a good criteria for a beginner of forex. Prior to taking a position, the forex trader decides how long he/she would like to stay in the trade. The decision may be based on personal time constraints reasons it may be purely technical (and likely should be).
"Whipsaw" is the Forex jargon referring to a sharp price movement in one direction and an abrupt reversal.