![]() The more fuel, so the thinking goes, the more likely the move will be sustained. Think of volume as the fuel behind a price move. That’s especially true if the move is at a critical point like a support or resistance level, a moving average, or after an earnings announcement. Volume analysis is most informative when it’s considered in conjunction with a move in price. If the net price move is lower, then it’s considered “down” volume. If the net price move during a specific time frame is higher, the volume during that time is considered “up” volume. Simply put, volume is the number of trades, or transactions, that take place in a stock. But understanding how to interpret volume (vertical bars you sometimes see below the price chart) is a skill that could benefit traders in the long run. That’s probably because price directly affects portfolio values. Most technical indicators or studies are based on price or volume data, yet price always seems to get more attention. Sometimes we take things for granted without realizing their importance. Learn to analyze volume with respect to its average to identify trends.Understand the relationship between price and volume using the VolumeAvg indicator ![]() ![]() Know the importance of monitoring volume because it can provide insight into trading activity and sentiment. ![]()
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