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Trading Volume: Analysis and Interpretation

Trading Volume

An uptrend paired with increasing and/or above average volume implies investor enthusiasm for that stock or asset is strong, which could lead to more buying and even higher prices. In the perfect-market benchmark, the market is organized as a centralized exchange. Many markets, however, have a more decentralized form of organization. For example, in over-the-counter markets, https://www.bigshotrading.info/ investors negotiate prices bilaterally with dealers. Locating suitable counter-parties in these markets can take time and involve search. The above content provided and paid for by Public and is for general informational purposes only. It is not intended to constitute investment advice or any other kind of professional advice and should not be relied upon as such.

Trading Volume

For example, if XYZ has a total trading volume of 100,000 shares at $5, then the dollar volume is $500,000. Money managers use dollar volume metrics to determine whether a stock has enough liquidity to support a position.

What’s a Good Average Volume for a Stock?

However, volumes are not revealing of the reason for the market trend, so investors will have to research to find out why the trend is occurring. The first trader Trading Volume buys 500 shares of stock ABC and sells 250 shares of XYZ. The other trader sells those 500 shares and buys the 250 shares of stock XYZ to the first trader.

What does high trading volume mean?

If a stock with a high trading volume is rising, it usually means there is strong buying pressure, as investor demand pushes the stock to higher and higher prices. One the other hand, if the price of a stock with a high trading volume is falling, it suggests that there is a lot of selling pressure.

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How to Read Stock Charts and Trading Patterns

Yobit, Bittrex, C-Cex are exchanges which offer support for many altcoins. Both the desire to innovate and the ease of building on the Bitcoin implementation have thus led to the breadth of various altcoins available for investment and as media of exchange. A rise in volume tends to kick off significant price moves in many cases, however it is not a requirement. Many traders have gone bust shorting ‘light’ volume breakouts that continue to grind higher despite the lack of sustained heavy volume.

Trading Volume

But the shortened session after Thanksgiving is usually particularly light. In 2019, volume was less than one billion shares, a level already eclipsed in this Black Friday session. Price moves made on low volume may be said to “lack conviction” and could be viewed as being less predictive of future returns.


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