VROC indicator
Description
The Internet today is not only a means of communication and search for the necessary information, but also a source of income, both additional and permanent. No one will be surprised by the word “freelancing”, which firmly began to speak of the success of a person who works when it is convenient and where it is convenient, while earning good money. Many people strive for a free life, starting to master promising Internet professions, trading also applies here.
Binary options trading has a number of advantages over other professions: you do not need to sit all day at the computer and do monotonous boring work; You can work at a convenient time of day (morning, evening), you decide how much money you need to earn.
In addition, it is trading that should be considered the only legal quick money, that is, having received money in 30 seconds, you can safely withdraw it and spend it in any convenient way. To achieve even more in trading, you should pay attention to profitable strategies, use new indicators in your work, and always monitor the ratings of brokers. Even more useful materials are waiting for you on our resource. Today we will talk about an interesting VROC indicator.
The Volume Rate of Change (VROC) index is a profitable indicator that shows the development of the trend direction. His idea lies in the idea that graphical price formations (peaks, breakouts, etc.) are always accompanied by an increase in trading volume.
The instrument is the difference between the volume of the bar and the volume-n of the number of previous periods. When the volume is higher than n-periods ago, the VROC reading is positive, if the volume is lower, the VROC reading is negative. Thus, it clearly shows the rate of change in volume.
You can observe the principle of VROC operation on the MetaTrader 4 price chart in the image below. You can also quickly download the MetaTrader 4 platform and get acquainted with the indicator in more detail.
What is the working principle of the VROC indicator?
The Volume Rate of Change shows the direction of a specific trend in the volume of the exchange. The principle of operation of the tool was based on long-term observations, which showed that all strong graphical patterns (tops/bottoms), as well as significant price fluctuations (for example, breaking through levels, etc.), will always be accompanied by a sharp change in the volume reading – its increase or decrease.
If the price on the exchange starts to move up and reaches a maximum, this is always accompanied by an increase in volume. The same thing will happen in a downtrend. It is worth remembering that both in Forex and in binary options, the indicator of real volumes is not available to market players, these data are replaced by the concept of “tick volume”, which demonstrates the total indicator of the number of open buy/sell transactions.
On the chart, the Volume Rate of Change is usually located in a separate window, displayed as a volume curve. When using volume tools, numerical values do not play a role, the direction of movement of the VROC curve is significant: if it moves upwards, the number of transactions increases, if it moves downwards, the volume of transactions falls.
For the correct operation of VROC, the choice of period is important: short periods (10-15 bars) show sudden changes, among which there are many false signals. A more realistic picture of the market can be achieved by choosing 20-25 periods – the chart will be smoothed, which will simplify the analysis.
Calculation formula
VROC = ((VOLUME(i) – VOLUME(i – n)) / VOLUME(i – n)) * 100, where:
VOLUME (i) — volume of the current bar;
VOLUME (i – n) — volume n bars back;
VROC is the value of the Volume Rate of Change indicator.
Info taken from website forextimes.ru
Indicator signals
Trend signals:
- If there is an uptrend in the market, the volume is also upward, this indicates an interest in the asset, which means that you can buy call options,
- If there is a downtrend in the market, the volume of the asset is also falling, this indicates a loss of interest in the asset, you can buy PUT options.
Price divergence signals
Divergence and convergence often occur when the price chart shows the presence of a trend, and the Volume Rate of Change turns in the opposite direction, this indicates a possible trend change:
- VROC divergence occurs on an uptrend, you can buy call options,
- VROC convergence occurs in a downtrend, you can buy put options.
Do I need to install a VROC indicator in your platform?
VROC is a non-standard tool for working on the exchange, it is not one of the basic indicators of MetaTrader 4. You can download it for free from our website here. Next, install the downloaded file in the MT4 terminal, to do this, read the simple instructions here.
After installation, you need to add VROC to the price chart, for this:
- Click the “Insert” tab in the top menu of the platform
- Select the tab “Custom” – “VROC”.
In order for the tool to work correctly, it is necessary to configure the parameters of the data construction period. To do this, it is recommended to specify the indicator in the range of 25-30 bars, which will help to get the most smooth data. If you specify a smaller indicator (10-15 bars), the chart will show a large number of false signals, which will make trading unproductive.
Application of the indicator for binary options
By tracking the direction of the trading volume trend and demonstrating the interest of buyers and sellers in the asset, VROC is the most important tool for the trader. As mentioned above, its readings are the difference between the volumes of the current bar indicator and the bar for n-periods earlier. If the current indicator is higher, the indicator value is positive, if the indicator is lower, the values will be negative.
Thus, the Volume Rate of Change gives a clear picture of the dynamics of the exchange volumes, helping to anticipate the most important graphical transformations (breakthroughs, bottoms, peaks, etc.) and make money on it. Changes in volume readings occur with a sharp change in the trend – upward and downward. And yet, like most volume indicators, to determine the volume reading, it is worth confirming its data with additional technical tools.
VROC, being a reliable tool for analyzing market trends, works well in the financial markets, and is quite popular with traders.
Rules for concluding transactions (screenshots)
Trading when there is a trend signal
If there is an uptrend in the market, the volume is also upward, this indicates an interest in the asset, which means that you can buy call options. In the image, you can see the upward trend on the MT4 terminal chart:
Take advantage of the trend and place a CALL bet with the Olymp Trade broker by going to the olymptrade.com website and preparing an option, indicating:
- Type of option
- Expiration date
- Amount
- Prediction: up
- Next, click the “buy” button and wait for the results of the forecast:
If there is a downtrend in the market, the volume of the asset is also falling, this indicates a loss of interest in the asset, you can buy PUT options. In the image, you can see the downward trend on the MT4 terminal chart:
Take advantage of the trend and place a PCI bet with the Olymp Trade broker by going to the olymptrade.com website and preparing an option, indicating:
- Type of option
- Expiration date
- Amount
- Prediction: down
- Next, click the “buy” button and wait for the results of the forecast:
Trading with a divergence signal from the price
The VROC divergence occurs on an uptrend, you can buy call options. In the image you can see the divergence signal in the MT4 terminal (taking advantage of the trend, place a CALL bet on the olymptrade.com website, the instructions are indicated above):
VROC convergence occurs in a downtrend, you can buy put options. In the image, you can see the divergence signal in the MT4 terminal (taking advantage of the trend, place a PCI bet on the olymptrade.com website, the instructions are indicated above):
Money management
Significantly influencing the result of trading, the concept of money management is studied by market players in the first place. If you work with it correctly, it is much easier and faster to increase the productivity of trading. If a trader cares about stable earnings on the stock exchange, he will also have to master the rules of money management:
Minimum capital: working on the stock exchange, it is necessary to put a minimum of capital on the bet; its value should be no more than 5% of the amount of the deposit; It is worth buying inexpensive options, then trading will not affect the size of the account. Using these effective rules while trading, you will be able to save capital well.
Minimum deposit: working on the exchange, you need to participate in transactions that will help save the bill; when buying an asset, you should not transfer all the capital to it; In addition, it is necessary to maintain a positive state of the account for as long as possible, because Funds can still come in handy. By taking advantage of these effective rules while trading, you will be able to keep your account well.
Minimum of options: working on the stock exchange, it is necessary to purchase a minimum of options, for example, 2-3 assets; This rule is more suitable for new players on the exchange; As soon as you become more experienced, you can safely increase the number of transactions on different assets. By taking advantage of these effective rules while trading, you will be able to trade more effectively.
Minimum of emotions: working on the stock exchange, you must always tune in to work, serious analytical, requiring informed decisions; It is worth remembering that in trading it is not enough to rely only on experience, your mood is what will make trading more effective. By taking advantage of these effective rules while trading, you will be able to earn a decent income from options trading.
Expiration
Expiration is the moment when the trading of a particular asset ends, when the results of their forecasts are announced to the participants in the transaction. This is also one of the most important concepts of the exchange, capable, like money management, to make trading more successful and profitable.
Types of options:
- Ultra-short options – 30 seconds – 5 minutes.
- Short-term options – 10 minutes – several hours.
- Medium-term options – a day – a few weeks.
- Long-term options – a month – six months.
Is it allowed to extend the expiration?
Allowed, but not by all brokers. A convenient feature that allows, if during trading you realize that an incorrect forecast is indicated, to extend the expiration, which will reduce losses and allow you to make a profit.
Expiration rules:
- Newcomers to the exchange should start working with long-term transactions that guarantee the stability of the process and a minimum of losses.
- Professionals of the exchange should trade with such an expiration that will make the work more comfortable and effective. At the same time, choose a broker especially carefully. Also know if you will have access to the function of extending the expiration during trading, which guarantees a minimum of possible losses.
- Players of the exchange who need instant capital from work at the moment should trade short-term options that guarantee income in at least 30 seconds.
- Exchange players who need stable capital from work at the moment should trade long-term options that guarantee a decent income.
Expiration in VROC strategies
Expiration at a trend signal
Short-term trading: allowed; it is worth remembering that express trading is characterized by increased risks and in this case it is recommended to combine VROC with trend instruments, which will allow you to achieve good results in trading.
Medium-term expiration: allowed; For productive work on the exchange, it is recommended to combine VROC with additional tools for filtering false signals.
Long-term expiration: allowed; such long-term trading is possible, but in this case it is better to combine VROC with additional indicators; It is also recommended to rely on fundamental and technical analysis when forecasting market dynamics, which will make trading effective.
Trading with a divergence signal from the price
Short-term trading: allowed; it must be remembered that turbo trading is risky and in this case it is recommended to combine VROC with trend instruments to achieve good trading results.
Medium-term expiration: allowed; In order to get a good result on the exchange, it is recommended to combine VROC with additional tools for filtering false signals.
Long-term expiration: allowed; such long-term trading is possible, but in this case it is better to combine VROC with additional indicators; It is also recommended to rely on fundamental and technical analysis when forecasting market dynamics, which will make trading effective.
Expiration in the “VROC+Stochastic
“ strategy
Short-term trading: allowed; VROC, working with the popular Stochastic oscillator, will allow you to track high-quality signals and achieve good results in trading.
Medium-term expiration: allowed; the combination of VROC with oscillators will help you get a good result on the exchange, Stochastic, being an additional strategy tool, will allow you to filter false and high-quality signals.
Long-term expiration: allowed; such long-term trading is possible, by combining VROC with an additional indicator, you can clearly see false and productive signals; It is also recommended to rely on fundamental and technical analysis when forecasting market dynamics, which will make trading effective.
When starting trading on the options exchange, get acquainted with the possibilities of expiration, which, if used correctly, will help you achieve success faster. We recommend using the convenient terminal of the broker Olympus Trade, which offers a choice of expiration from 1 minute to 1 hour. Go to the broker’s website olymptrade.com right now and achieve success with trading.
Downloads
MetaTrader 4 (MT4) platform – download.
VROC indicator for the MT4 platform – download.
Tagged with: Binary Options Indicator
