You see bars at the bottom of a chart — some tall, some short. Most beginners ignore them. But those bars tell you whether a price move is real or fake. They are volume. And once you learn to read them, you will stop getting fooled by false breakouts.
Trading involves risk. Binary options and forex trading involve substantial risk of losing your capital. This guide is for educational purposes only. Never trade money you cannot afford to lose.
What Is Volume in Trading?
Volume is the number of contracts, shares, or lots traded during a specific time period. On a 5-minute chart, each volume bar shows how much was traded in those 5 minutes. High volume means many traders are active. Low volume means few are participating.
Think of volume as the engine behind price. Price tells you where the market is moving. Volume tells you how much conviction is behind that move. A price increase on high volume is meaningful. The same increase on low volume is suspicious — it might reverse quickly.
Here is the key insight: Volume confirms price action. Without volume confirmation, a breakout or reversal is just noise. Professional traders check volume before entering every trade. Beginners skip it — and that is one reason they lose.
How to Read Volume — Four Simple Rules
Rule 1: Rising Price + Rising Volume = Strong Trend
When price is making higher highs and volume is increasing, the trend is healthy. Buyers are stepping in with conviction. This trend is likely to continue. For binary options, trade CALLs with the trend.
Rule 2: Rising Price + Falling Volume = Weak Trend
Price is climbing but fewer traders are participating. The move is running out of steam. A reversal or pullback is likely. Consider taking profits or preparing for a PUT.
Rule 3: Breakout + High Volume = Real Breakout
Price breaks above resistance on surging volume. This is a genuine breakout — institutions are entering. Trade in the breakout direction with confidence.
Rule 4: Breakout + Low Volume = Fakeout
Price briefly breaks a level on low volume. This is a trap — retail traders got excited, but institutions did not follow. Expect price to reverse. Do not enter; wait for volume confirmation.
Why Volume Matters for Binary Options
Binary options have fixed expiries — you cannot wait indefinitely for a trade to work out. Volume gives you an edge by confirming the quality of the signal before you commit. A support bounce on rising volume is more likely to hold for 15 minutes than one on low volume. A breakout on high volume is more likely to reach your target before expiry.
Most binary options platforms show volume as bars at the bottom of the chart. Green bars for up-volume, red bars for down-volume. The height shows the number of contracts traded. It takes two seconds to glance at volume before entering a trade — and it can save you from countless fakeouts.
Common Mistakes Beginners Make with Volume
1. Ignoring volume entirely. Most beginners focus only on price and indicators. They enter breakouts that look great on the chart but fail because no volume supported them.
2. Misinterpreting high volume at tops. Very high volume at a price peak can mean exhaustion — everyone who wanted to buy has already bought. This is called “climax volume” and often precedes a reversal.
3. Not comparing to recent volume. A volume bar looks tall in isolation but might be average compared to the last 20 bars. Compare current volume to the recent average, not to arbitrary levels.
4. Using volume on very short timeframes. On 1-minute charts, volume is noisy and unreliable. Stick with 5-minute or higher for meaningful volume analysis.
FAQ
Can I see volume on binary options platforms?
Some platforms show volume. Pocket Option displays volume bars at the bottom of the chart. IQ Option includes volume with its TradingView charts. Forex brokers like IC Markets and Exness show volume through MT4 and MT5.
Is volume as important for forex as for stocks?
Forex is decentralized, so the volume you see on MT4 is broker-specific — not the global volume. However, it still shows relative participation and is useful for confirming breakouts and reversals within that broker’s ecosystem.
What is a good volume level for a breakout?
A breakout with volume at least 1.5× the 20-period average is considered strong. At 2× or higher, it is a very reliable signal. Anything below average — treat as a potential fakeout.
Next Steps
Now that you understand volume, here is what to learn next:
- Breakout Trading Strategy → — Combine volume with breakout setups for higher-probability entries.
- Support and Resistance Explained → — Volume confirms whether a support or resistance level will hold.
- Best Platforms for RSI and MA Strategies → — Find a platform with volume indicators built in.
Risk warning: Trading binary options and forex involves substantial risk of losing your capital. This guide is for educational purposes only. Never trade money you cannot afford to lose. Past performance does not guarantee future results.
Was this article helpful?