Trading Volume: Analysis and Interpretation
Millions of shares change hands each day on the world’s stock exchanges, but not all price shifts mean the same thing. A stock rising on heavy trading volume tells a different story than one climbing on light volume. Trading volume—the total number of shares traded during a specific period—offers a crucial sign of market activity, helping investors distinguish between meaningful price moves and potential head fakes.
Heavy trading volume typically signals strong conviction behind a price move, while light volume can suggest uncertainty or lack of commitment from market participants. This relationship between price and volume helps investors validate trends and spot potential reversals. Below, we take you through how to analyze…
