Forex Market Volume – Where Is It?

When trade volume is low it’s not uncommon to see unusual swings in price, as with fewer market participants making trades – moves are often highly exaggerated.

Forex Market Volume has been trailing off fairly steady since June, with yesterday and the day previous scraping the bottom – as the “lowest of the low”. Where’s the volume? Isn’t everyone back to work , sitting in their cozy little cubicles staring into the abyss of their computer monitors, toiling over every little “tick”?

As I understand it, U.S equities trade volume has now hit a 15 year low!

Perhaps the number of “risk events” still out in front us, has a large majority of traders “sitting on the fence” waiting for clarification, or perhaps tomorrow being Sept 11th, or perhaps it’s that tapering thing, or the debt ceiling or Syria. With so many factors it’s obviously a difficult thing to put your finger on one way or another.

Bottom line – It’s a ghost town out there with the bulk of trade volume made up of HFT ( high frequency trading ) computers just buying and selling to each other.

One needs to be cautious, and not let these “low volume pump jobs” throw you off your game. I would have assumed we’d be back up n running here as it’s already the 10th but as it stands. Chop, chop, churn, churn on “yet another” low volume day.

I’ve got 1680 on /ES SP 500 as a reasonable “top” for this last correction upward, and will be watching this in conjunction with the usual intramarket dynamics as things start picking up again.

9 Responses

  1. JSkogs September 10, 2013 / 9:27 am

    Entered a small position in cadchf. Looks like a decent spot to start. Good rip on the yen pairs. I have learned over the last few months that when trading yen pairs cash is king. Meaning keeps lots of cash sidelined because you will get surprised. This looks like a good spot for a potential top in “risk” I would assume. Thanks for the posts.

    • Forex Kong September 10, 2013 / 9:34 am

      That’s exactly where I’m at with anticipation of a near term top in risk.

      Makes sense that JPY pairs would push to the limit, as things normally don’t “get sold from a low” ( why not take advantage of low volume trading and boost those pairs higher – all the better to “short from” ).

      AUD as well NZD have ripped it up here, but now look to be near exhaustion. This has been an absolute nightmare trading these last months – with things just creeping along intraday etc – as well the constant “indecision on USD”.

      Im going to take profits in USD pairs here any time today……lossen up more cash and see what’s what.

      • JSkogs September 10, 2013 / 9:42 am

        Ok thanks for the reply. I have a usdcad short still in play. You would book it today then? Are you thinking the Yen will rise against the USD in this environment or no?

        • Forex Kong September 10, 2013 / 9:47 am

          My USD/CAD is well in profit, and we’re still in a tricky spot fundamentally so…Im gonna book and set up a smaller reload “under current action”.

          This way….I get my 160 so pips, and can attempt to participate in further downside. Sometimes what I’ll do is take a smaller portion of profits from the trade and just reinvest / try again with it – knowing I’ve already banked, and if I catch more great.

          Then of course….if activity “really picks up” I will jump back on more agressively

          • Forex Kong September 10, 2013 / 9:50 am

            Im also gonna bank on long NZD/USD as well EUR/USD – while leaving the couple “long JPY’s” until I actually “see” a smaller time frame move, and evaluate from there.

            I’ve been caught with this recent move in Yen also – just with such small positions, that I don’t really mind. 11 days up…..I’m confident in retracement.

      • JSkogs September 10, 2013 / 9:53 am

        Ok yup makes sense to me. I got in at 1.05074 so I’m pretty pumped to take profits. Thanks again

        • Forex Kong September 10, 2013 / 9:54 am

          Great work.

  2. Eric S September 10, 2013 / 7:21 pm

    I would like to know what you use to gage the volume since there is no central clearing like the stock market.

    • Forex Kong September 10, 2013 / 7:24 pm

      HI Eric – Great question.

      I just use the “relative volume” provided in any / all of the different software platforms I use for charting and trading.

      And in this case – it’s not really even a measure of forex volume specifically, as trade volume in any/all asset classes is low, low , low low!

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