CFD Trading Volume Breakout Strategy

OBV Breakout Strategy is based on the popular stocks cfd strategy, where stock investors use volumes to predict cfd price direction, based on the concept "Volumes always precede cfd price", in cfd market, there is no central clearing house where cfd trading volumes are aggregated, so in cfd traders use a cfd indicator that will estimate the volumes. This cfd indicator is known as OBV - On Balance Volume.

Volume Precedes CFD Price

Volumes always precede cfd price, this makes volumes a leading cfd indicator. Knowing how to interpret this volumes indicator helps cfd traders make better decisions when it comes to predicting where the cfd market will be moving to next - volume indicators can be used by traders to come up with a cfd trading breakout trading strategy.

When volume rises this shows that money is starting to flow into a cfd. Because volumes will always precede the cfd price, the next thing is that the cfd price will then go up - CFD Breakout Strategy CFD Trading Indicator. When the OBV indicator is going up it shows there are more buyers than sellers.

When the cfd trading volume falls it shows that money is starting to flow out of cfd. Because volumes will precede the cfd price, the next thing is that cfd price will then go down. When the OBV cfd indicator is going down it shows more trading volume is selling than buying.

Subsequently, when a downwards trend line of the OBV indicator is broken it shows that sellers are starting to take profit & close their sell orders.

Likewise, when the upwards trend line of the OBV indicator is broken it shows that buyers are starting to close their buy cfds trades and take their profits.

Because the On Balance Volume indicator will add direction to the cfd trading volume and form a general trend direction, a trader can compare the two - the cfd price trend direction and the OBV indicator trend direction. The direction of these two should correspond and move in the same direction but when there is a disconnect between these two - the cfd price and the indicator trend direction - then a trader should pay attention to know when to exit the cfds trading market or when to open a new cfd trading order depending on the cfd signal.

On Balance Volume is a cfd trading leading indicator and a trader using this indicator can avoid entering the cfd market when it is too late. OBV Indicator is also a good cfd indicator to show when to take a profit early enough before the cfd market trend reverses and takes away all your profit.

Example of this Strategy

CFD Trading Volume Breakout Strategy - On Balance Volume Indicator MT4 - OBV Volume Breakout Indicator MT4