How To Interpret Volume On A Stock Chart (MA Trading School)

Published: Dec. 24, 2020, 7 a.m.

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Volume indicates shares trading hands. There has to be an exchange in order for volume to be recorded. 

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When traders hold their position, no volume is registered.

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No such thing as more buyers or more sellers, always equal.

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Volume reveals enthusiasm on either or both sides

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Volume supports strong trends or reveals weakness

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Decreasing volume with consistently new highs shows weakening

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Increasing volume with lower lows shows potential selling reversal

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Volume tends to increase at trendline points and other indicators due to emotions and computer algorithms, shorts covering or longs trying to break even

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Pro-tips:

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A 2nd bottom or top with less volume than it\u2019s parallel 1st bottom is a reversal sign.

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High volume on a bottom typically shows a selling climax

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Volume is a basic indicator that reveals emotional price points of market participants and computer algorithm positions

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