i dont understand volume

[longandshort]

As mentioned by a few posters above, price moves as a function of the balance of volume. There is a lot of research showing that price and volume are cointegrated. Higher prices tend to see volume increase, while falling prices tend to see a decrease in volume. So a big move in price without much volume is usually considered as weaker than a move in price with an increase in volume.

Frankly, it’s not a great trading or timing indicator, but it is useful as an additional signal and bit of information you use in your analysis.

 

[SunTrader]

There are also orders sitting on Broker servers that are not on the Exchange servers, only to become "live" on the Exchange after some condition is met. Iceberg, Hidden, Market or Limit if Touched are examples. These can also fill at the current price action and absorb any liquidity needs.

Computers... They do the darn-est things.

Volume, not orders.

 

[Handle123]

i dont get this

many sources say to look at the volume and chart
but when i look at the volume it doesnt seem to work at all

sometimes i see volume spike massively and stock barely move in price
other times i see wild chart moves and almost no volume change
other times i see volume move with stock price

can anyone explain how it works? im not getting it how can stock move without volume and volume spike without price movement to match it

I never been able to use volume as an leading indicator for trend, but ...these are my opinions.

Volume is an indicator used to make comparisons, but not with trend, I have found it is better near turning points, but of course you will have to spend time digesting, reviewing charts to better understand what is considered turning point in high/lows, and these areas usually in uptrend be pullbacks within a trend.

Without volume price stalls, as volume reduces, interest in that instrument alters. Volume often not to be used when huge gaps occur.

Not every signal is a winner, so always have answers of what to do when price went wrong way.

 

[HolyGrailSeeker]

i dont get this

many sources say to look at the volume and chart
but when i look at the volume it doesnt seem to work at all

sometimes i see volume spike massively and stock barely move in price
other times i see wild chart moves and almost no volume change
other times i see volume move with stock price

can anyone explain how it works? im not getting it how can stock move without volume and volume spike without price movement to match it

Volume just shows how many people are buying and selling. Price can move without much volume too. Price moves because of imbalance of demand and supply. If there is more demand than supply it moves up. There can also be large volume without much movement as there is a balance in supply and demand. Just that they are more buyers and sellers trading.

 

[SunTrader]

I never been able to use volume as an leading indicator for trend, but ...these are my opinions.

Volume is an indicator used to make comparisons, but not with trend, I have found it is better near turning points, but of course you will have to spend time digesting, reviewing charts to better understand what is considered turning point in high/lows, and these areas usually in uptrend be pullbacks within a trend.

Without volume price stalls, as volume reduces, interest in that instrument alters. Volume often not to be used when huge gaps occur.

Not every signal is a winner, so always have answers of what to do when price went wrong way.

Actually that top had increasing, not decreasing volume - until last 2 days. Spikes are often meaningless, and not a good point to draw tl's off of.

 

[KCalhoun]

Volume is HIGHLY overrated and really does nothing in terms of determining or confirming or denying a trend in contrary to what pretty much all of the technical analysis material claims.

When you have a large price move, 99% of the time it will be accompanied by heavy or at least a spike in volume. It's a chicken-and-egg effect. It's because of the heavy volume of large number of people transacting that price went one way or another but that in no circumstances confirm with any certainty that there would be a trend in the direction of the price movement or how strong or weak that trend is. If there happened to be, it's purely coincidental and is really not reliable. Mho.

I trade with a chart with volume removed; it gives me more space to put more useful indicators on or simply see the PA better and it's been serving me well.

Interesting idea re no volume on chart, thanks, I'll try that. I'm 100% price action focused, that'll help me see 1minute candles better.

 

[SunTrader]

Interesting idea re no volume on chart, thanks, I'll try that. I'm 100% price action focused, that'll help me see 1minute candles better.

Seriously Ken, someone who says they take volume off and puts other indicators on has no clue.

But keep in mind, you play the inverses so what you need to look for (for instance with UXVY) is low volume to signal a lull in selling intraday to enter a new long.

 

[KCalhoun]

Seriously Ken, someone who says they take volume off and puts other indicators on has no clue.

But keep in mind, you play the inverses so what you need to look for (for instance with UXVY) is low volume to signal a lull in selling intraday to enter a new long.

Right....since I use 5 monitors I'll use both. I'm doing a lot more daytrading stocks like CCL and less inverses except on red days. Main indicator is time &sales, which shows high volume block trades

 

[JSOP]

Interesting idea re no volume on chart, thanks, I'll try that. I'm 100% price action focused, that'll help me see 1minute candles better.

Trust me, volume adds nothing but clutter to your charts. You can see for yourself. Put one chart on with volume and put the same chart on without volume and see how well the volume showing in one chart predicts the trend and/or the strength of it. You will see it makes no difference and sometimes it will even be misleading because there are a variety of reasons for a change in volume.

And think of it this way, there are instruments that have no volume. People still make money trading them. What then? That means volume is not needed. It's a nice-to-have piece of information there but it cannot be relied upon for making trading decisions, imo.

 

[KCalhoun]

Many thanks, I'm trading much better and profitably today without using volume, because I can see the one minute candles much more clearly since they are expanded. Much appreciated, wish I'd thought of that years ago.