Throughout my years as a trader one question that I have been asked multiple times is how to combine volume with candlesticks? It may of been suggested by other traders or it may of been read in a old technical trading book, either way it may of come across as a potential edge for a trader.
First of all, what is volume? Volume is the measure of buyers or sellers in the market, when volume is red it is bearish volume, more sellers than buyers and when volume is green it is bullish volume, more buyers than sellers, when the red bar for volume is large it indicates that a large amount of sellers are selling and vice versa if large and green it represents a larger amount of buyers are buying.
There is another way of easily reading volume though and that is looking at a candlestick, a strong bullish candle close represents bullish volume in that candle, a period of time ( based on that chart time frame ) of who had control. Just like a strong bearish candle close represents bearish volume, basically put a candlestick is directly representing volume on the chart.
A bullish or bearish pinbar or a bullish or bearish engulfing are two good examples of this.
Example - A bullish pinbar close representing more buying volume in that candle.
So, do you need something else to directly measure volume? Not in my opinion, my argument is that the candlesticks are representing volume directly right on the chart.
There is one form of volume reading that can give a bit of an edge to a trader, that is analyzing buy and sell order volume, this is where a trader analyzes where large amounts of buy and sell orders are on the chart, this can help a trader know where a larger amount of traders than usual are looking to enter a position on a market and where they are potentially placing stop losses. While this is beneficial to a trader, I will note that often, very often these large sell or buy order areas align with daily technical structure areas in the market.
