Volume Analysis

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Dictionary Says

Definition of 'Volume Analysis'

The examination of the number of shares or contracts of a security that have been traded in a given time period. Volume analysis is used by technical analysts as one of many factors that inform their trading decisions. By analyzing trends in volume in conjunction with price movements, investors can determine the significance of changes in a security's price. Volume typically increases as price increases and vice versa; when the opposite occurs, it's called divergence.
Investopedia Says

Investopedia explains 'Volume Analysis'

A significant price increase along with a significant volume increase, for example, could be a credible sign of a trend reversal and could incite an investor to buy or sell. On the other hand, a significant price increase with low volume might just be a temporary uptick in an otherwise downward trend. In this case, the investor may not want to act.

Articles Of Interest

  1.

    Using Volume Rate Of Change To Confirm Trends

    Wise traders rely on indicators that show a trend in volume, because without supportive volume, a price movement has no conviction.

  2. Confirming Price Movements With Volume Oscillators

    Use this indicator to validate a change in price direction and moving averages.

  3. On-Balance Volume: The Way To Smart Money

    This momentum indicator was designed to predict when major market moves would occur.

  4. How To Use Volume To Improve Your Trading

    Volume is a simple yet powerful way for traders and investors to increase their profits and minimize risks.

  5. How To Read The Market's Psychological State

    Discover what on-balance volume, accumulation/distribution and open interest can tell you about the market mood.

  6. Interpreting Volume For The Futures Market

    Learn how to read the volume reports, look at the relation to liquidity and interpret volume using open interest.

  7. An Introduction To The Relative Strength Index

    Learn the difference between relative strength and the relative strength index, a frequently used technical analysis oscillator.

  8. A Primer On The MACD

    Learn to trade in the direction of short-term momentum.

  9. When To Short A Stock

    Learn how to make money off failing shares.

  10. A Top-Down Approach To Investing

    Use a global view to determine which stocks belong in your portfolio.
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