The Importance of Volume in Stock Market Analysis
What is Volume in the Stock Market? Volume refers to the number of shares traded during a specific period. It reflects the level of participation and interest in a stock, making it an essential indicator in technical analysis.
How Volume Affects Price Movements
High Volume: Confirms the strength of a price move. When prices rise or fall on high volume, the move is considered more reliable.
Low Volume: Indicates weaker market participation and may suggest a lack of conviction behind price moves.
How to Use Volume in Trading Traders often use volume to confirm trends and breakouts. For example, when a stock breaks out of resistance on high volume, it indicates strong buying interest, making it more likely to continue its upward trend.
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