What volume tells you about the stock market?

Question

what exactly the volume tells you in the stock market. I want to know no.of shares bought and sold based on the volume.Volume tells us no of shares thats been traded.but how do we find out how many shares bought and sold exactly.give an example.tell something more about volume .........like how it helps a day trader to trade...........thanks

Answer 1

Assuming the stock is liquid enough, then volume and volume change can confirm a price movement.

Examples:

- A breakout should have increased volume as well

- A flag is validated by the decreasing volume

- Resistance and supports are validated by increased volume when the stock trades in those areas

An example of an indicator based on volume is the volume weighted average.

Answer 2

If the market or a particular stock etc falls significantly and the volume is say 50% or more higher than normal- it generally means that institutional investors (i.e mutual funds) are either dumping or decreasing their percentage of ownership. It means just the opposite if the stock goes up and the volume goes up.