Volume
Quick Answer
The total number of shares or contracts traded during a specific period.
Why Volume Matters
Volume is often called the 'fuel' of the market. It shows the level of interest and participation in a price move. High volume indicates strong conviction among market participants, while low volume suggests weak interest or indecision.
Volume confirms price movements. A price breakout on high volume is more reliable than one on low volume.
Volume and Trends
In Uptrends Healthy uptrends typically show increasing volume on up days and decreasing volume on down days. This pattern confirms buyers are in control.
In Downtrends Healthy downtrends show increasing volume on down days and decreasing volume on up days. This confirms sellers are in control.
Volume Divergence When price moves in one direction but volume doesn't confirm, it may signal a weakening trend.
Volume Indicators
On-Balance Volume (OBV) - Cumulative indicator adding volume on up days and subtracting on down days Volume Profile - Shows volume traded at different price levels VWAP - Volume Weighted Average Price, important for institutional traders Accumulation/Distribution - Measures money flow based on where price closes within its range