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trading volume: How to read trading volume data to understand stock price direction


Along with stock price action, trading volume can be one of the most significant technical parameters to determine where a stock may be heading. The overall market activity in a security gets reflected in trading volume, which indicates investor interest and how they perceive an asset at a given point of time. It is one of the most closely watched indicators after price action.
Trading volume is considered a solid technical indicator, because it represents the overall market sentiment around a security or the market. Investors frequently use trading volume to confirm the existence, or continuation of a trend or trend reversal. Unlike stock prices, trading volume can also move up and down sharply within a short time. Volume can change drastically from few thousands to lakhs on any particular day. By using the average, for example 10-day average, one can get a fair idea of the available liquidity on the counter. ....

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