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Importance of Volume in Trading

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Old 11th March 2005, 12:22 PM
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Default 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.


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Last edited by MasterTrader; 11th March 2005 at 12:30 PM.
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Old 12th March 2005, 09:07 PM
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Default Re: Importance of Volume in Trading

how can we calculate what is the volume for 20days MA ?
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Old 13th March 2005, 09:06 AM
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Default Re: Importance of Volume in Trading

The MetaStock formula for calculating 20 day average volume is:
mov(v,20,s)
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Old 13th March 2005, 11:56 AM
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Default Re: Importance of Volume in Trading

how can i write a exploration formula to detect if the volume for today is more than the 20 day average volume ?
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Old 13th March 2005, 01:03 PM
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Default Re: Importance of Volume in Trading

Quote:
Originally Posted by cmlee
how can i write a exploration formula to detect if the volume for today is more than the 20 day average volume ?
Run this exploration:

V>mov(V,20,S)

You will then get a list of securities answering your query.
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Old 20th April 2010, 03:29 PM
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Default Re: Importance of Volume in Trading

volms r imp during breakouts or breakdown !!
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Old 23rd April 2010, 06:23 PM
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Default Re: Importance of Volume in Trading

http://chartsonly.freeforums.org/index.php

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