The volume of trade is a measure of securities (shares, bonds, options, futures and/or commodities) traded during a day. In other words total number of buyers and sellers exchanging securities over a period of time, which is usually a day.
In other words, it means the total number of shares that changed hands between the buyer and seller. Their volume is high if shares are more actively traded. Conversely, their volume is low if shares are not much traded or not traded at all.
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Say for example if share volume of the day for a particular company was 1,00,000. It meant that there were 1,00,000 sold by someone and bought by someone on that day. Combining all the listed companies whose share had been traded is called volume of the exchange.
The volume gives only the information of market activity and liquidity. A higher trade volume for a specific company means higher liquidity, and the share is active. For example, usually, blue chip companies have high trade volume and penny stocks have low trade volumes. You can also get the list of high trade volume companies from any stock advisory company.
Though volume alone does not provide any important information as such, when volume data is read in conjunction with support and resistance levels, plays an important part.
Data regarding volume trades of a share is available on the exchange website. Along with its present price. It is for a day, 5 days, 1 month, 3 months, 6 months and 1year are available, of all listed company at the exchange. Or else you can get from firms providing nifty future tips.
Example – Let us take a scenario that company breaks a ‘resistance level’ and moving up further. And since it has broken through the critical level, prices are expected to go up more in the future.
Volume traded on the day is suppose 3.5 lacs were exchanged. Assuming, the company under consideration on a normal day trades 10 lacs shares. Now traded volume, which is 3.5 lacs is way below average. That means big traders are not trading. Next, say if traders decide that they are bearish on the share. They sell their lot and cause panic. You can get volume list from firms providing nifty option tips. And share prices go down the next day. Vice versa is also true. This is the importance of volume.
Volume is one of the important factors for technical analysis. They work both for resistance and support levels. Generally speaking if the price is showing an upward trend, volume should also rise, and vice versa.
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