Thursday, June 18th, 2015

What does VOLUME have to do with stock trading?

I am a newbie to Quotation? N shares. Learn the concepts b? Musicians. But? Qu? average volume?

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4 Responses to “What does VOLUME have to do with stock trading?”
  1. Bernard Templeton says:

    To me volume is second only to share price…..if you have volume it allows you to buy and sell a lot easier than a stock that trades extremely low volume…..trust me volume will allow you to do a lot more in a position than one with low volume…

    Good luck and trade well…..

    BT

  2. Frugal says:

    If a stock is going up on increased volume that would be bullish, if the stock is going down on increased volume that would be bearish. There are many technical trading tools based on changes in volume relative to other factors to help with trading.

  3. SkoolofBiz says:

    Don’t read too much into volume. Yes, it’s a great indicator of how many shares are trading hands so if you ever want to buy or sell, you should do so easily, but it shouldn’t really be a deciding factor in buying a stock unless you’re a day trader.

    The real time volume helps you is if you’re trading, say…between Xmas and New Years and all the big traders are out of town. If stock X goes down, hypothetically, $5 in 3 days on low volume, it’s not as significant as if the volume were big. It just means that some people are dumping their shares to lock in profits or cut losses before the end of the year (in this example, since it’s near year end).

    If you see a high volume, it’s a “heads up” to you that something is probably going on with the stock. Either someone is buying or selling huge blocks of shares, or there’s some big news out that you might want to know about.

  4. Stock Trading Warrior says:

    Not sure exactly what you want to know…

    First, volume means the number of individual shares that are traded in a time period (usually daily or weekly). Trading a stock with an average daily volume over 100,000-200,000 per day will help to insure that there are an adequate number of buyers and sellers of the stock keeping it liquid. Otherwise, it would be an unhappy scenario if you wanted to sell a declining stock and there were no buyers.

    If you see unusually high volume that signifies that something is going on! It could be news or it could be institutional buying or could be earnings news. It frequently indicates a boost to the overall price trend. On the long side, take a look at any chart with good upward momentum and most likely you’ll see higher than average volume at the start of the trend. It matters too if there was a volume dry-up leading to the volume spike and what the prior price pattern looks like. All of these things can help to determine the strength of the price move with volume often a leading factor.

    Volume is a good thing to look at if you have to choose between a few stock trading candidates and one has substantially more volume than the others.

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