Stock Volume is the daily number of shares of a security that change hands between a buyer and a seller.
It is simply the amount of shares that trade hands from sellers to buyers as a measure of activity. If a buyer of a stock purchases 100 shares from a seller then the volume for that period increases by 100 shares based on that transaction.
Volume is an important indicator in technical analysis as it used to measure the worth of a market move. If the markets have made strong price move either up or down the perceived strength of that move depends on the volume for that period. The higher the volume during that price move the more significant the move.
Volume is a trader's best friend. Few technical indicators give the experienced trader a better feel for the minds of his fellow traders and investors. The heights of their greed, the depths of their fear, the loudness of their panic, and quietude of their ambivalence. All of these emotional states are seen with volume.
Volume also shows us the footprints of big money, and unlike footprints in the sand, these footprints are there for all to see...and long after the fact. More immediate and less ambiguous than any complex indicator, volume pinpoints extreme tops and bottoms -or the areas of them- with amazing accuracy.
Additionally, unlike many indicators, volume is applicable to every timeframe. How can this be? Simple. Volume is simply a measure of sentiment, of human nature. And fortunately for us, human nature is the one ever-present constant of the stock market. Never forget that fact. Once you have your own emotions under control as a trader, knowledge of this profound fact will guide you ever after as reliably as the Northern Star guides a lone sailor across a vast sea.
