Importance of Volume in Trading

Discussion in 'Technical Analysis' started by MasterTrader, Mar 11, 2005.

  1. MasterTrader

    MasterTrader New Member

    Joined:
    Dec 4, 2004
    Messages:
    15
    Likes Received:
    5
    Trophy Points:
    3
    Importance of Volume in Trading​


    What is Volume?

    Volume is the number of shares or contracts traded during a given time frame. The time frame is usually one day, but can also be a week.

    The analysis of volume is basic and essential in technical analysis.

    Volume provides evidence of intensity with a given price move.

    As volume often leads price, it is a valuable indicator, especially for price peaks.

    The analysis of volume is basic and essential in technical analysis.
    Volume provides evidence of intensity with a given price move.
    As volume often leads price, it is a valuable indicator, especially for price peaks.

    Low volume levels are characteristic of the indecisive expectations that typically occur during consolidation periods (i.e., periods where prices move sideways in a trading range). Low volume also often occurs during the indecisive period during market bottoms.

    High volume levels are characteristic of market tops when there is a strong consensus that prices will move higher. High volume levels are also very common at the beginning of new trends (i.e., when prices break out of a trading range). Just before market bottoms, volume will often increase due to panic-driven selling.

    Volume can help determine the health of an existing trend. A healthy up-trend should have higher volume on the upward legs of the trend, and lower volume on the downward (corrective) legs. A healthy downtrend usually has higher volume on the downward legs of the trend and lower volume on the upward (corrective) legs.
     
    Last edited: Mar 11, 2005
  2. cmlee

    cmlee Member

    Joined:
    Jan 11, 2005
    Messages:
    126
    Likes Received:
    1
    Trophy Points:
    18
    how can we calculate what is the volume for 20days MA ?
     
  3. Traderji

    Traderji Super Moderator

    Joined:
    Jun 14, 2004
    Messages:
    1,825
    Likes Received:
    871
    Trophy Points:
    113
    The MetaStock formula for calculating 20 day average volume is:
    mov(v,20,s)
     
  4. cmlee

    cmlee Member

    Joined:
    Jan 11, 2005
    Messages:
    126
    Likes Received:
    1
    Trophy Points:
    18
    how can i write a exploration formula to detect if the volume for today is more than the 20 day average volume ?
     
  5. Traderji

    Traderji Super Moderator

    Joined:
    Jun 14, 2004
    Messages:
    1,825
    Likes Received:
    871
    Trophy Points:
    113
    Run this exploration:

    V>mov(V,20,S)

    You will then get a list of securities answering your query.
     
  6. sudoku1

    sudoku1 Well-Known Member

    Joined:
    Oct 23, 2007
    Messages:
    10,898
    Likes Received:
    17,351
    Trophy Points:
    113
    volms r imp during breakouts or breakdown !!;)
     

  7. batmandhaka

    batmandhaka New Member

    Joined:
    Jan 8, 2009
    Messages:
    10
    Likes Received:
    6
    Trophy Points:
    3
Loading...

Share This Page