You first determine the range over your period of observation,.e., subtract the low of the period from the high of the period. There is a substantial risk of loss in futures trading. No matter how much some other analyst or trader recommends an indicator or strategy, the only way to build true confidence in a method is by establishing that it works for yourself. When you see a green dot it means that volume is rising as price moves in the direction of the trend. The chart below highlights the MFI and shows how the market is in a battle between buyers and sellers. You will notice that in our list of permutations, for the first and last combinations (a green light or a squat volume is increasing whichever one you are seeing. By looking at volatility and volume-based indicators, traders can often find out more about the driving force behind such price movements. This suggests it may be best not to enter trades in the direction of current moves a blue (fake) bar appears when price moves are growing and volume is down strong moves are the result of low volume and may not last long.
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The image below shows an hourly USD/JPY chart to which I have applied the Market Facilitation Index indicator. We suggest that you try both to see which one feels more natural to you and then see how the volume and volatility based indicators can add value to your price analysis. The appearance of several brown bars in a row may also indicate that the price is about to change direction. Market Facilitation Index Strategy, most technical analysts will agree that a change in volume is a key signal that we should look for. The final combination, where we see increasing volume but a decline in the MFI indicator, is known as a squat. The appearance of a blue (fake) bar indicates that there is a disconnect between price moves and the volume of trade. The MFI up algorithmic trading videos cryptocurrency with volume down shows as a blue bar in MT4.
It is a breakout signal and you should go with whatever direction the trend is (more players entering the market, arriving players biased in direction of trend, price movement picking up pace). The appearance of a pink (squat) bar suggests that traders are very enthusiastic about entering the market, but it is a battle between bulls and bears, meaning the price does not yet have a clear direction. A pink bar suggests a big price move is coming, but it will not determine the direction for you. In such a scenario, the market goes from having more sellers to seeing more buyers.