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#1
11th March 2005, 12:22 PM
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Importance of Volume in Trading
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 by MasterTrader : 11th March 2005 at 12:30 PM. 
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#3
13th March 2005, 09:06 AM
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Re: Importance of Volume in Trading
The MetaStock formula for calculating 20 day average volume is:
mov(v,20,s)
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#5
13th March 2005, 01:03 PM
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Re: Importance of Volume in Trading
Quote:
V>mov(V,20,S) You will then get a list of securities answering your query.
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