art3722, 749 Pa ‘Volume Definition = @ Investopedia Q TECHNICAL ANALYSIS > TECHNICAL ANALYSIS BASIC EDUCATION Volume by ADAM HAYES Updated March21, 2021 Reviewed by SOMER ANDERSON, Fact checked by KATRINA MUNICHIELLO What Is Volume? Volume is the amount of an asset or security that changes hands over some period of time, often over the course of a day. For instance, stock trading volume would refer to the number of shares of a security traded between its daily open and close. Trading volume, and changes to volume over the course of time, are important inputs for technical traders. KEY TAKEAWAYS, * Volume is the number of shares of a security traded during a given period of time. * Generally securities with more daily volume are more liquid than those without, since they are more "active". * Volume is an important indicator in technical analysis because it is used to measure the relative significance of a market move. * The higher the volume during a price move, the more significant the move and the lower the volume during a price move, the less significant the move. htps:wwwcinvestopedia.comferms/ivolume.asp 18art3722, 749 Pa ‘Volume Definition Volume Understanding Volume Every transaction that takes place between a buyer and a seller of a security contributes to the total volume count of that security. One transaction occurs whenever a buyer agrees to purchase what a seller is offering for sale at a certain price. If only five transactions occur in a day, the volume for that day is set at five. Each market exchange tracks its trading volume and provides volume data either for free or for a subscription fee. The volume of trade numbers are reported as often as once an hour throughout the current trading day. These hourly reported trade volumes are estimates. A trade volume reported at the end of the day is also an estimate. Final actual figures are reported the following day. Investors may also follow a security's tick volume, or the number of changes in a contract's price, as a surrogate for trade volume, since prices tend to change more frequently with a higher volume of trade. Volume tells investors about the market's activity and liquidity. Higher trade volumes for a specified security mean higher liquidity, better order execution and a more active market for connecting a buyer and seller. When investors feel hesitant about the direction of the stock market, futures trading volume tends to increase, which often causes options and futures on specified securities to trade more actively. Volume overall tends to be higher near the market's opening and closing times, and on Mondays and Fridays. It tends to be lower at lunchtime and before a holiday. Ao htps:wwwcinvestopedia.comferms/ivolume.asp 2aart3722, 749 Pa ‘Volume Definition Find out what a hypothetical investment would be worth today. SELECT A STOCK @rsia Omer One On | @wwr SELECT INVESTMENT AMOUNT SELECT A PURCHASE DATE $ | 1000 years ago v + CALCULATE Volume in Technical Analysis Some investors use technical analysis, a strategy based on stock price, in order to make decisions about when to buy a stock. Technical analysts are primarily looking for entry and exit price points; volume levels are important because they provide clues about where the best entry and exit points are located. Volume is an important indicator in technical analysis because it is used to measure the relative significance of any market move. If the market makes moves a large amount during a given period, then the strength of that movement either gains credibility or is viewed with skepticism based on the volume for that period. The higher the volume during the price move, the more significant the move is considered in this form of analysis. Conversely, if the volume is low then the move is viewed with less significance. Volume is one of the most important measures of the strength of a security for traders and technical analysts. From an auction perspective, when buyers and sellers become particularly active at a certain price, it means there is a high volume. Analysts use bar charts to quickly determine the level of volume. Bar charts also make it easier to identify trends in volume. When the bars on a bar chart are higher than average, it's a sign of high volume or strength at a particular market htps:wwwcinvestopedia.comferms/ivolume.asp aeart3722, 749 Pa ‘Volume Definition price movement. If volume increases when the price moves up or down, it is considered a price movement with strength. if traders want to confirm a reversal on a level of support-or floor-they look for high buying volume. Conversely, if traders are looking to confirm a break in the level of support, they look for low volume from buyers. If traders want to confirm a reversal on a level of resistance-or ceiling- they look for high selling volume. Conversely, if traders are looking to confirm a break in the level of resistance, they look for high volume from buyers. Other Considerations In recent times, high-frequency traders (HFT) and index funds have become a major contributor to trading volume statistics in U.S. markets. According to a 2017 JPMorgan analysis, passive investors like ETFs and quantitative investment accounts, which utilize high-frequency algorithmic trading, were responsible for about 60 percent of overall trading volumes while "fundamental discretionary traders" (or traders who evaluate the fundamental factors affecting a stock before making an investment) comprised only 10 percent of the overall figures. Compete Risk Free with $100,000 in Virtual Cash Put your trading skills to the test with our FREE Stock Simulator. Compete with thousands of Investopedia traders and trade your way to the top! Submit trades ina virtual environment before you start risking your own money. Practice trading strategies so that when you're ready to enter the real market, you've had the practice you need. Try our Stock Simulator today >> Compare Accounts Advertiser Disclosure htps:wwwcinvestopedia.comferms/ivolume.asp 48art3722, 749 Pa ‘Volume Definition V vantage () OANDK. Oo pepperstone Vantage Oanda Pepperstone Trade Oil CFDs in both Scan & analyse the Gold CFD Spreads av. 0.12 PART. directions from0.4 spreads intraday markets. Switch Pips with Pepperstone. with Vantage's RAW your broker now Losses can exceed Guic account deposits. CURRENTLY READING Volume Definition Gap Definition The | Tech 14 of 55 15 0f 55 16 of 5! Related Terms Average Daily Trading Volume - ADTV Definition Average daily trading volume (ADTV) is the average number of shares that change hands ina stock. The average can be calculated over any number of days, and is useful for determining which stocks are suitable for which investors/traders. more What Is Volume of Trade? The volume of trade is the total quantity of shares or contracts traded for a specified security during a set period of time. more Swing High Definition and Tactics Swing high is a technical analysis term that refers to price or indicator peak. Swing highs are analyzed to show trend direction and strength. more nips wnninvestopedia.comfermsivivckime asp seart3722, 749 Pa ‘Volume Definition Distribution stock refers to a large block of a security that is sold into the market gradually in smaller blocks rather than in a single large block. more Bullish Engulfing Pattern Abullish engulfing pattern is a white candlestick that closes higher than the previous day's opening after opening lower than the prior day's close. more Accumulation/Distribution Indicator (A/D) Definition and Uses The accumulation/distribution indicator (A/D) uses volume and price to assess the strength of a stock's price trend and spot potential reversals. more Partner Links Related Articles e:image of TECHNICAL ANALYSIS technical analysis Top 7 Technical Analysis Tools stock chart STRATEGY & EDUCATION htps:wwwcinvestopedia.comferms/ivolume.asp oeart3722, 749 Pa le-Technical indicators for options trading (6°10 Day Trading Strategies for Beginners le:Businesswoman with colleague discussing graph on desktop computer ‘Volume Definition STOCK TRADING STRATEGY & EDUCATION Volume vs. Open Interest: What's the Difference? TRADING SKILLS 10 Day Trading Tips for Beginners ADVANCED TECHNICAL ANALYSIS CONCEPTS. Stochastics: An Accurate Buy and Sell Indicator STOCK TRADING STRATEGY & EDUCATION How to Use Volume to Improve Your Trading (TRUSTe Orsi, Investopedia is part of the Dotdash Meredith publishing family. hitps:wwwcinvestopedia.comferms/ivolume.asp 78art3722, 749 Pa ‘Volume Definition htps:wwwcinvestopedia.comferms/ivolume.asp ae