Commodity Trading Volume Breakout Strategy

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

Volume Precedes Commodity Price

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

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

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

Subsequently, when a downward trend line of the OBV indicator is broken it shows that sellers are starting to take profit and 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 commodities trades & take their profits.

Because the On Balance Volume indicator will add direction to the commodity volume and form a general trend direction, a trader can compare the two - the commodity trading 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 commodity price & the indicator trend direction - then a trader should pay attention to know when to exit the commodity market or when to open a new commodity order depending on the commodity trade signal.

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

Example of this Strategy

OBV Commodities Trading Break Out Indicator - Commodity Trading Volume Breakout Strategy - On Balance Volume Indicator MT4