What is trading volume?
Volume is a number that shows how much a stock is bought and sold.
For example, a trading volume of 1 million shares means that 1 million shares were traded that day.
The higher the trading volume, the higher the interest from market participants.
Why is volume important?
Looking only at stock prices, it is difficult to understand the reliability of price movements.
By looking at the trading volume together, you can see how many participants are following the price movement.
| price movement | Volume | way of seeing |
|---|---|---|
| rise | increase | There is a high possibility that people are serious about buying |
| rise | decrease | Possibility of weak momentum |
| decline | increase | Possibility of strong selling pressure |
| decline | decrease | Possibility of temporary adjustment |
How to use it
Volume is especially useful in the following situations:
- Check the reliability of breaking the high price
- See buybacks when bottoming out
- Check for fire sales during sharp declines
- See capital inflows into theme stocks
Points to note
Just because the volume is high doesn't necessarily mean it's good.
Volume also increases when there is a rush of selling due to bad news.
The important thing is to look at the direction of stock prices and trading volume as a set.
Summary
Trading volume is an indicator that confirms the enthusiasm of market participants behind stock price movements.
When looking at chart patterns, you can improve the accuracy of your judgment by matching the trading volume.