About the Volume Indicator
The Volume Indicator for Metatrader 4 is a fundamental technical tool that provides a visual representation of market activity for every price candle.
It functions by calculating the tick activity within a specific period and displaying it in a separate window below the main chart.
The primary benefit of the Volume Indicator is its ability to highlight institutional interest and market conviction.
When the indicator prints large bars, it signifies that the current price movement is backed by significant participation, making the trend more likely to continue.
By observing the relationship between the height of the bars and the direction of the price, traders can identify potential exhaustion points or high-probability breakouts.
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Key Features
- The indicator displays real-time tick volume in a dedicated histogram window.
- Blue histogram bars represent bullish candles where the close is above the open.
- Red histogram bars identify bearish candles where the close is below the open.
- Large bars highlight periods of high liquidity and strong market conviction.
- Small bars signal low participation and potential market consolidation phases.
Indicator Chart
The chart shows the Volume Indicator positioned in the sub-window, featuring a series of blue and red histogram bars.
Each bar corresponds directly to a price candle on the main chart, showing the intensity of the trading activity.
You can see how the bar height increases during significant price surges and decreases during quiet periods.
Guide to Trade with Volume Indicator
Buy Rules
- Identify a bullish price candle on the main activity chart.
- Check the Volume Indicator for a corresponding blue histogram bar.
- Look for a surge in volume where the blue bar is significantly taller than the previous ones.
- Open a buy trade to capitalize on the confirmed bullish momentum.
Sell Rules
- Identify a bearish price candle on the main activity chart.
- Check the Volume Indicator for a corresponding red histogram bar.
- Wait for a tall red bar that suggests strong selling pressure is entering the market.
- Initiate a sell trade when high volume confirms the bearish move.
Stop Loss
- Place your stop loss a few pips below the low of the high-volume breakout candle for buy trades.
- Position the stop loss a few pips above the high of the high-volume candle for sell trades.
- Set a dynamic stop loss at the level of the indicator signal line to exit if the trend shifts.
Take Profit
- Close the open position when volume begins to diminish significantly over several bars.
- Exit the trade when the price reaches a major psychological level or a previous daily pivot.
MT4 Volume and Cougar Indicator Forex Scalping Strategy
This MT4 scalping strategy uses two simple but effective tools. The Volume Forex Indicator shows the strength behind each candlestick with blue and red histogram bars.
Blue bars appear when the candle closes higher than it opens and red bars appear when it closes lower.
Large bars show strong volume, which is exactly what scalpers need to confirm momentum.
The second tool is the Cougar Forex Indicator.
It plots blue arrows for buy setups and red arrows for sell setups. When combined, both indicators create a fast and reliable system for short-term price movements.
This strategy is most effective on M1, M5, and M15 charts.
It is ideal for scalpers who prefer quick entries and exits backed by real-time volume confirmation.
The approach focuses on momentum bursts, so it fits pairs with tight spreads and active movement.
Buy Entry Rules
- Wait for a blue arrow from the Cougar indicator.
- Confirm that the Volume indicator prints a blue bar or a noticeably large volume bar, showing bullish pressure.
- Enter a buy trade at the next candle after confirmation.
- Set the stop loss a few pips below the recent swing low.
- Take profit when the next red volume bar appears or at a fixed pip target, such as 5 to 12 pips depending on the pair.
Sell Entry Rules
- Wait for a red arrow from the Cougar indicator.
- Confirm that the Volume indicator prints a red bar or a large volume bar indicating bearish strength.
- Enter a sell trade on the next candle after confirmation.
- Set stop loss slightly above the recent swing high.
- Take profit when the next blue volume bar appears or at a fixed target between 5 and 12 pips.
Advantages
- Fast signals designed for short-term trading opportunities.
- Volume confirmation reduces low-quality trades created by weak momentum.
- Clear visual rules that beginners can understand easily.
- Suitable for many pairs with active sessions including EURUSD, GBPJPY, and XAUUSD.
- Tight stop losses help control risk even during quick market moves.
Drawbacks
- Not ideal during quiet market hours when volume is low.
- False arrows may appear in choppy markets, so volume confirmation is essential.
- Quick execution is necessary which may not suit slower traders.
Case Study 1
On USDJPY M5 during the Tokyo session, a blue Cougar arrow appeared after a period of sideways movement.
The Volume indicator printed a strong blue bar, showing that buyers were entering the market.
The buy trade was taken at the next candle.
Price pushed up steadily for about 14 pips before a red volume bar signaled weakening momentum.
The trade closed safely with a solid profit.
The combination of the arrow and volume power confirmed the breakout early.
Case Study 2
On EURGBP M1 during the London session, a red arrow appeared at the top of a minor pullback.
At the same time, the Volume histogram printed a tall red bar, indicating heavy selling pressure.
A sell trade was executed at the next candle.
Price dropped quickly for about 10 pips before printing a blue bar.
This simple confirmation helped avoid buying into a retracement and kept the scalping entry aligned with real volume flow.
Strategy Tips
- Always check the Volume indicator first. The strongest trades happen when the arrow appears during a large volume bar.
- Use pairs with fast movements and tight spreads because scalping requires efficient entries.
- Avoid trading during extremely slow periods such as late New York session or holidays.
- Look for clean candle structures. Long wicks often signal hesitation, which is not ideal for scalping.
- Practice timing entries on a demo account to get used to matching volume and arrow signals with price action.
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Download the “aliev-fx-volumes.mq4” Metatrader 4 indicator
FAQ
What is the difference between blue and red bars?
Blue bars represent candles that closed higher than they opened, indicating bullish effort.
Red bars represent candles that closed lower than they opened, showing bearish effort.
How do I use volume to confirm a breakout?
A valid breakout should always be accompanied by a spike in the Volume Indicator.
If price breaks a resistance level but the histogram bars remain small, the move is likely a fakeout.
Strong, tall bars confirm that the breakout has institutional backing.
Does this indicator show real money volume?
In the forex market, the Volume Indicator tracks tick volume, which measures the frequency of price changes.
While it is not “centralized” volume, tick volume is highly correlated with actual traded volume and is a reliable proxy for market activity.
Summary
The Volume Indicator is a vital tool for any trader who wants to trade with the “smart money.”
Its primary benefit is the clarity it brings to price action by revealing the intensity behind every candle.
By focusing on large volume bars, you can filter out weak signals and focus on high-probability moves that have the momentum to reach your targets.
