Why do they say its a bad thing when the stock market moves on low volume?

Question

pls explain

Answer 1

It means that there were large changes in smaller transactions. This could be the result of good or bad news.

Answer 2

Volume is like votes or opinions. If you have changes based on fewer opinions they are more likely to be wrong.

In the case of stocks many traders take the summer off or vacations. Lower volume creates greater volitility because fewer people can move the market.

Low volume moves have a greater chance of reversing.

Answer 3

Low volume usually indicates a lessing of conviction of either  the buyers or sellers.  For example, if the market edged higher on low volume it would indicate that buyers are running out of steam and that a reversal could be in the cards if catalyst fails to appear.

Answer 4

Often, when the trading is slow, it is because either folks selling aren't finding many bidders for higher prices, if the price is high, or conversely, the sellers aren't finding many buyers when the price is too low. So, if the buyers are thinking it is too high, they stop buying until they can get it cheaper, likewise, if the price is too low and no one is trading, then you have to offer it for still lower in order to get someone interested in taking it off your hands.

It all comes back to the supply being there if the demand is good, but if the demand to sell is too good then the supply of buyers will need some incentives.

Answer 5

Active trading makes for bigger swings in trades, you make more money if you know what you're doing.

Answer 6

Volume is the fuel that drives prices higher.  You always like to see the market rise on higher volume, as that indicates that most market participants are confident that the market will continue to rise.  

Scott Cole

www.kungfutrader.com

Answer 7

because it means that nobody is trying to take advantage of the weakness, which means that investor confidence may be low.

Answer 8

Who says this?  Most people I know think that a move on low volume is basically meaningless, therefore neither bad nor good.

Answer 9

The more volume the more liquid the market.  Its easier to buy and sell at a given price.