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.

Well tuned strategies require well tuned exits. These may include a combination of several exit or may include specific exits for differing scenarios.

As an example this review considers  a strategy based on major news announcement such as the Nonfarm Payroll (NFP) Report. In USD related pairs these reports often lead to large swings. A trader may wish to capitalize on a predicted currency pair movement once the report has been published.

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.