You must be at the top of your game when trading with a prop firm. You no longer only trade for yourself. You are under pressure to produce since you are managing someone else's money. Because of this, traders are always searching for anything that might offer them an advantage, whether it be an indication, a change in approach, or a more positive outlook.
However, volume is one issue that is sometimes overlooked. In particular, MetaTrader 5 (MT5) volume-based indicators. You have undoubtedly encountered these tools—Volume, Accumulation/Distribution, On-Balance Volume (OBV), and others—if you have used MT5 for even a little period of time. However, are they useful, particularly when trading with a prop firm?
Let's talk about what volume indicators are, how they function on MT5, and if they are truly helpful for traders with a lot of money like you.
What Are Volume-Based Indicators?
Volume-based MT5 indicators are tools that measure the amount of activity happening in the market. That’s it. They don’t care whether the price is going up or down—they focus on how much stuff is being traded. In theory, high volume means a strong move (lots of interest), and low volume means a weak one (meh, nobody’s really participating).
But here’s where it gets tricky—MT5 doesn’t show real volume for spot forex. Yeah, let that sink in.
What you’re seeing in MT5 for forex pairs is tick volume, not actual traded volume. Tick volume just counts how many times the price changes during a candle. More ticks = more activity, and that’s what these indicators run on. It’s a proxy. Is it perfect? Nope. But is it completely useless? Also nope.
For CFDs, futures, and other exchange-traded instruments on MT5, you can get actual volume data if your broker provides it. So the value of these indicators really depends on what you’re trading.
The Main Volume-Based Indicators on MT5
Volume
The most basic one. It simply shows a histogram of tick volume for each bar. No signals, no smoothing, just raw tick count.
Use it when:
- You want to confirm a breakout (Is the move backed by more activity?)
- You want to filter fakeouts (Low volume breakouts? Meh. Maybe skip it.)
On-Balance Volume (OBV)
This one adds volume when the price closes higher and subtracts it when it closes lower. The idea? Price and volume should move together. If the price is climbing but OBV is flat or falling, that’s a red flag.
Use it when:
- You’re checking for divergence (Price up, OBV down? Warning sign.)
- You want early trend confirmation.
Accumulation/Distribution Line (A/D)
A bit fancier than OBV. It factors in both price range and volume to guess whether money is flowing in or out.
Use it when:
- You want to gauge supply vs. demand.
- You’re spotting potential reversals before they’re obvious.
Money Flow Index (MFI)
Think of it like RSI but with volume included. It ranges from 0 to 100 and tries to measure overbought/oversold conditions based on price and volume.
Use it when:
- You want a more “volume-aware” oscillator.
- You’re trading reversals or bounces.
Do Volume Indicators Actually Work for Prop Firm Trading?
They Help Filter Noise
Volume indicators can be a great filter. Say you’ve got a setup that looks perfect on price action alone—a breakout, a pin bar, whatever floats your boat. But if the volume's weak, maybe the move won’t have legs. Prop traders live and die by high-probability trades. Volume adds context to help you pick the real setups from the fake ones.
They Shine in Conjunction with Price Action
No indicator should be used in isolation and that goes double for volume-based ones. But when paired with price action—say, a breakout backed by rising volume or a divergence between OBV and price—they can give you a solid edge. Prop firms love consistency. Volume analysis can help you stay consistent by reducing false positives.
They Can Confirm Trend Strength
This is where OBV and A/D come in. If the price is trending and the volume indicator is supporting it, that’s confirmation. If the trend is rising but OBV is falling? Something’s fishy. In a prop environment, catching weak trends early means fewer stop-outs and tighter control of risk.
But Here's the Flip Side…
Tick Volume Isn’t Perfect
For forex, MT5 doesn’t give you the real deal. Tick volume is okay, but it’s not the same as actual traded volume. That means there’s a risk of getting misled, especially in quieter markets or during off-hours. It’s good, not great.
They Lag, Like Most Indicators
Yup. Like everything else, volume indicators are based on past data. That means they lag. You won’t get a crystal ball—just another piece of the puzzle. Don’t base trades solely on volume. Use it to support your strategy, not drive it.
Overcomplicating Things
Sometimes traders slap on every volume indicator under the sun and hope it paints a clear picture. That’s a recipe for paralysis. Keep it simple. One or two well-understood indicators > five confusing ones you barely glance at.