Analysis of the Relationship between Price Volume and Position in Foreign Exchange Trading

The foreign exchange price, trading volume, and position volume are important indicators that reflect the competition for funds between the long and short sides in foreign exchange transactions. Generally speaking, the rise and fall of the exchange rate directly indicates the comparative characteristics of the strong and weak sides of the long and short sides; the expansion or reduction of the trading volume shows that the competition between the long and short sides tends to be intense or eased. The expansion or reduction of the position reflects the contrast between the entry of incremental funds from the long and short sides and the withdrawal of the precipitated funds in the market. Position squaring.

Only the correlation between the rise and fall of the exchange rate and the increase and decrease of the transaction volume, the rise and fall of the exchange rate and the increase and decrease of the position volume, the expansion or decrease of the transaction volume and the expansion or decrease of the position volume, etc., cannot fully draw the correct conclusion to judge the strength of the exchange rate trend. However, the correlation between the rise and fall of the exchange rate and the transaction volume and the increase and decrease of the position volume also needs to be based on various factors such as the formation of the exchange rate trend, the duration, and the price area where the exchange rate is located.

The relationship between volume and open position

Volume and position expansion, indicating that the long and short sides are competing fiercely for incremental capital expansion. Market capital energy continues to accumulate, and the exchange rate may fluctuate repeatedly. Volume expansion and position, volume reduction, reflecting that both long and short sides are actively positioning squaring to withdraw funds. The contrast between the strong and weak willingness of the two sides to position squaring has a negative effect on the exchange rate trend, that is, the willingness of the bulls to actively sell back is stronger than the willingness of the bears to cover. The exchange rate is easy to fall, and the willingness of the short to cover is stronger than the willingness of the long to sell back, so the exchange rate is easy to rise.

In this context, the capital energy accumulated in the market is gradually released, and the rise and fall trend of the exchange rate may gradually weaken. The reduction in trading volume and the expansion of positions show that although the competition between the long and short sides is gradually easing, they are still expanding their positions. The capital energy accumulated in the market is slowly increasing, and the exchange rate may still fluctuate violently.

On the whole, analyze the contrast between incremental rise and contraction rise, incremental decline and contraction decline, which is stronger and weaker.

In addition to paying attention to the rise and fall of the exchange rate, the volume of transactions, and the increase or decrease in the amount of positions, we should also pay attention to the difference between the sudden formation of the rise and fall trend of the exchange rate, the just start, or the continuation of a long period of time and the accumulation of a large margin. Only by comprehensive analysis and judgment can we draw a relatively correct conclusion on the market trend.