Institutional Volume Profile Indicator by padavans

October 3, 2024Forex TradingAdmin Manish

It could mean there’s not enough interest to trigger a real move. In other words, it is easy to buy or sell without seeing a transaction impacting the price. Volume patterns on a 1-minute chart won’t behave the same as on a daily chart. InvestingPro offers detailed insights into companies’ Trading Volume including sector benchmarks and competitor analysis. When I’m looking to play a reversal in the market I want to see capitulation.

Volume and Reversal Signals

Overall trading volume can provide insights into market sentiment and the strength behind price movements.
Thus, the total volume of shares traded on this particular day is 2,000 (1,000 of Apple+ 500 of AT&T+ 500 of Verizon).
The volume of trade in the stock market measures the activity prevailing in the market, and the liquidity available.
Finally, it helps traders understand how many interested buyers and sellers are present for a particular stock and at what prices one can enter or leave the stock or contract.
Trading volume has a significant impact on the movement of shares.

This happens because there are a large number of investors tracking the stock and they can make rapid assessments of the impact of such news. Copyright © 2025 FactSet Research Systems Inc.© 2025 TradingView, Inc. Volume should be considered alongside its history, but more importantly, its relevant and recent history. The more recent the history, the more effective and relevant the data will prove to be.

If a stock is having a high trading volume that continues to rise, investors can presume that there is buying pressure. This is because the demand of investors tends to push a particular stock to higher prices. It gives an idea of when an investor should book profits and sell particular security as a result of low activity. Investors use volume in conjunction with other indicators, rather than alone.

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This is common near the end of bullish trends or during consolidation periods, where prices drift higher on light volume. When volume increases alongside rising prices, it’s a strong bullish signal. It shows that more traders are participating in the rally, thus reinforcing the price increase.

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Trading volume has a significant impact on the movement of shares. Since thinly traded stocks have wider spreads between bid and ask prices, their prices move in a knee-jerk manner. On the other hand, stocks having higher trading volumes have smoother movements. Trading volume is defined as the total number of shares that were traded during the given time period.

If a stock is having a high trading volume that continues to rise, investors can presume that there is buying pressure.
When volume increases alongside rising prices, it’s a strong bullish signal.
Above, Netflix Inc. (NFLX) rose with falling volume from April to the end of June 2024 with a 27% rally.
Do high box office sales pique your curiosity about a movie?
Indeed, the downtrend could be losing momentum, but it does not guarantee a reversal immediately.
For example, imagine a stock trading between $8 and $10 in a particular session.

Traders usually have their own definitions of good trading volume. It’s best to do your research to determine your preferred volume or consult a trading or investing professional. At Cashtopedia, we take pride in our commitment to transparency and editorial integrity. The opinions expressed on our site are solely those of our expert finance editors and analysts, and they are not influenced by advertisers or external sponsors. Cashtopedia is independently owned and operated, and our dedicated team adheres to strict publishing standards to ensure our content remains unbiased and reliable. Please note Banco chase más cercano that while we strive to cover a broad range of financial offers, not every market offer is featured here.

Price Trend Confirmation

High trading volume often signals strong market interest, while low volume may indicate weak momentum. In this guide, we’ll break down what trading volume is, why it matters, and how you can use it to improve your trading decisions in forex, stocks, and cryptocurrencies. The Volume indicator measures how much of a given financial asset has traded in a specific period of time. Volume is measured by shares traded for stocks, whereas for futures, it is based on the number of contracts.

It’s not always a reversal signal — but it can be a sign to manage risk more tightly. Before acting on a support or resistance zone, check the volume. A rising market with strong volume usually means buyers are active and engaged. Volume is one of the most widely observed — and often misunderstood — data points on a stock chart. While price shows where the market is moving, volume reveals how much participation is behind that move. Pre-market I would have looked at this chart and recognized that yesterday we broke out of the range on higher than average volume.

In simple terms, it shows how many units of an asset — like shares, contracts, or tokens — changed hands, and how active the market is during that time. When a breakout occurs, volume helps confirm whether the move is supported by real interest or is likely to fade. And at turning points, volume often shifts before price does. Volume doesn’t directly predict prices but confirms the strength of price trends. High volume in the direction of the trend suggests sustained momentum.

This can again lead to sudden price changes, change in interest rates and the market trends may be reversed. Trading volume plays a crucial role in understanding market activity, but its characteristics differ significantly across financial markets. The volume trends in forex, stocks, and cryptocurrencies are shaped by liquidity, volatility, and market participants. Trading volume is often used as an indicator of market interest and liquidity.

The indicator can alert traders of market activity, sentiment, and trading activity in a specific asset. However, volume of securities traded in the financial market also ifc markets review indicates investor sentiments. Any positive or negative news may impact the view of the investors which may again increase of decrease the trading volume. It can be said to be an ideal measure of total number of securities traded, which can be daily, weekly, monthly or yearly. The volume of trade in stock market can be directly related to the liquidity level, where a higher volume signifies more buy and sell going on because the market is liquid. But this high trade levels can also lead to heavy price fluctuations.

It is a technical indicator as it gives an idea about the overall activity of a security or market. When price approaches a key level, rising volume is a sign that traders are reacting. keltner channel mt4 That activity suggests the level matters — and increases the chance of a technical bounce or rejection.

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Each bar represents the total volume traded during a specific time frame (like one minute, one hour, or one day). The taller the bar, the more activity there was during that candle. Volume is the number of trades that take place during a specific period.

You’ll also find real-world examples to illustrate how volume can support your decision-making — without relying on guesswork. Cedric is an experienced investment strategist with over 10 years at TTUTC. If you enjoyed this post, you probably will be interested in order flow trading. Volume analysis and auction market theory are at the core of order flow trading. Now this doesn’t mean I’m just going to go short on the open.

It shows there’s sustained interest behind the price action. Trading carries significant risks, including the potential loss of your initial capital or more. Most traders lose money, and trading is not a guaranteed path to wealth. Products like FOREX and CFDs are complex and involve leverage, which can magnify gains and losses. CFD trading is banned in many countries, including the United States. High volume in futures contracts reduces bid-ask spreads, making them more attractive to traders.

It also points out how easy it will be for a trader to enter and come out of stock or contract based on the level of activeness of the asset. Finally, it helps traders understand how many interested buyers and sellers are present for a particular stock and at what prices one can enter or leave the stock or contract. The volume of trade is a very important parameter for trading. It acts as one of the important technical indicators for traders based on which they can decide whether to enter into a trade or exit from a business. All the stock market exchanges calculate and provide this information.

Volume provides you with logical insight into the activity of market participants at varying price levels. The VMA creates an average price that is constantly being updated. Volume is the amount of an asset or security that changes hands over some period of time, often over the course of a trading day. For instance, a stock’s trading volume refers to the number of shares traded between its daily open and close. Trading volume, and changes in volume over the course of time, are important inputs for technical traders. Let us take the example of the New York Stock Exchange to understand the concept.