Help- Monthly\Weekly Charts-Volume question

Hi All,

I am new to technical side of trading. Has been following the market for last 15 years and investing for last 8 years. That all is from fundamental side.

I recently started studying technical side of trading. Regarding the technical charts, I have one query.

For calculating volume for weekly\monthly charts , we need to add the volume of all trading days of week\month or should we need to take the average of the week\month.

Thanks in advance.
regards,

We don't have to do it manually, many charting softwares do it on their own. Just change the time frame and you will get it. Volume based analysis gives more advantages. Carry on with your study.

I am aware of some of these s/w. I want to know the rule underlying these charts. Tx

It just adds the volumes, does not average. You need to average, then use a moving average.

hmm...say there is only 3 trading day in a week. The vols will be surely less than the vols in the next week which can be 5 trading days. Does this not cause problem? Tx

This is really a nice thought, we have not given much importance to this idea so far. But, is it going to give any edge is the question here. Compared to full working days, holidays weeks tend to attract lesser volumes, most of the time a market is closed some corresponding global markets too follow. This adds up to weakness, traders tend to keep away because there are possibilities that any adverse news will gather momentum and strike when the markets open after a holiday.

Its more worse when there is a holiday combined with a weekly close. Volumes are better used in daily I suppose, not very sure about it.

Well thanks a lot for giving a wonderful input to have a research done on it Hari. This is what is called evolution, knowledge keeps flowing in thin air, if we are attentive we can catch the right chord and grow from it. I don't say every input will generate profits, but it goes a long way in you growth & development.

Thank you once again.

Not quite sure about what you are asking because this data is available in chart format. But for the sake of this discussion if you were calculating weekly volumes then the total volumes of all previous trading days falling within the range of the week are added up and not averaged.

Same is the case for monthly data , the only change is summation of weekly volumes within the range of the month.

In the above scenario the volumes may or may not be less. Although most of the times the volumes should ideally be less. But its during these times there are usually huge spikes in volumes (on daily charts) which could be due to compensation. In this case nothing can be done and the weekly data would now be a sum total of 3 trading days.

Fire away if you have any other questions regarding volumes , will try my best to help resolve the query.

Cheers And Happy Trading

I have seen two ways of displaying weekly and monthly volume. The usual way is just the simple sum of the daily volume during the time period. The other way is the average daily volume during the time period which I think has some merit.

Tx a lot. So this is standard practice (Summing the vols) while creating weekly\monthly chars. Any thoughts about taking avg. for these charts?

Average Volumes is a great idea in my opinion as long as they are used as a benchmark to draw valid conclusions. You could also try analyzing relative volumes to determine a point of imbalance between demand and supply. However this is just a very small part of a very large equation.

If you do undertake the trouble and pain of understanding the importance of volumes then combine it with price and price movement. After this is done start looking at the background where price has done something and the current one where price is doing something.

Most models and systems are laggard by nature and not to forget that they have an expiry date but using volumes , price and price movement will drill in a logical understanding of the functioning and movement of trends and help in forecasting a change in trend.

Hope This Helps

Cheers And Happy Trading