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Volume in forex is a guess, and everybody is guessing

Spot forex has no central exchange, so there is no true volume figure. What the platform shows as volume is tick volume, the number of price changes, not the number of contracts traded.

That sounds like a fatal flaw, and for some uses it is. A single large order and a hundred small ones can produce very different real volume with the same number of ticks.

Even so, tick volume correlates decently with real activity over longer windows. Busy times produce more ticks, and quiet times fewer. Daily and hourly patterns usually line up well with actual volumes reported by futures markets.

Scalpers can use it to tell busy from quiet, spot sudden bursts of activity, and confirm that a breakout has some participation behind it. They cannot use it to measure how much was bought versus sold.

Currency futures volume, on the CME for example, offers a cleaner view of real activity for the major pairs and is worth keeping on a second screen.

A side by side check is easy. Plot a pair's tick volume per hour next to the CME futures volume for the same period. The shapes usually match closely, with peaks at the London open and the US morning, which supports using tick counts as a rough guide to activity. Differences show up around data releases, when the futures see a spike in real contracts and tick counts react in a more muted way.

That suggests a sensible use: tick volume for the shape of the day, futures volume when a more reliable read on size is needed. Nobody should treat either as a full picture of spot flows, which are spread across banks, brokers, and platforms that never report to a single place.

Is tick volume used in the process, and has it ever been compared with futures volume?

Spot forex is decentralised, so there's no single source of total traded volume. Volume figures on retail platforms are tick volume, the number of price updates, from that broker's feed. Some data providers publish volume estimates from large trading venues, and CME futures give real volume for currency futures, but none covers the whole market. Any volume based analysis in forex is working with an approximation. Keeping that in mind helps set realistic expectations. Treat it as a rough guide. Using it for relative comparisons is safer than reading it as real size.

I have compared them directly, and the result depended on the timeframe. I exported hourly tick volume for EURUSD from my platform and the CME euro futures volume for the same three weeks, and the correlation was high, above 0.85 for most days. But on the days with a major release it dropped, because my platform showed a rise of maybe 2x while the futures volume spiked to five or six times the normal level.

In my day to day process, I use tick volume in a very narrow way. I compute the average for each hour of the day over the last twenty sessions, and I take a breakout only if the current hour is running at least 30 percent above that average. It does not tell me who is buying, but it filters out the thin, drifting moves that tended to reverse on me.

When something important is coming, I open the futures volume as well and look at the size of the first one minute bar. A big bar there has told me more than my platform counts ever have.