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Volume


Volume is the number of shares traded during any certain time-period, (e.g., an hour, a day, a week, a month). It is one of the simplest but essential analyses of volume, which offers investors a tool of technical analysis and effective clues as to the intensity of a certain price shift.

High volume is characteristic of market tops when a consensus forms believing that prices will move higher. High volume is also typical while launching new trends as prices emerge from a trading range. Because of panic-driven selling volume often increases just prior to market bottoms, which usually happen during consolidation periods where prices move sideways in a trading range. Low volume also often appears during the indecisive period during market bottoms.

There is a majority of low volume levels during consolidation periods. This happens due to the indecisive expectations during consolidation periods, when prices shift sideways within any narrow trading range. Also low volumes may appear during market bottoms, another "indecisive period.

Volume can also be useful in defining the health of an existing trend. A healthy up-trend should have higher volume on the upward motion of the trend, and lower volume on the way down. A healthy lower volume on the upward corrective legs and downtrend usually has higher volume on the downward legs of the trend.



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