What Is Volume In Stock Market And Why It’s Important?
13 December, 2024
Synopsis
- Trading volume helps investors analyse the trends and patterns in the share market.
- Determining trading volume is beneficial for short-term, intraday traders.
- High volumes are not always the primary reason for a stock moving up.
Trading volume in the stock market refers to the number of shares traded over a certain period. For technical traders, trading volume and changes are important factors to consider when planning their future investments. In this article, you will learn about what is volume in the share market, where to find volume, the technical analysis and how price and trading volume are related.
A Detailed Understanding of Trading Volume
Trading volume in a security is the volume of trades done in a security in a given period, such as during a day.
For example, if a day records four transactions, each with 100 shares, the total trading volume for the day would be 400.
Traders and investors can get detailed trading data for each exchange. Trade volume is reported every hour throughout the day. The final volume in the stock market, which is reported the next day, is a key piece of information for investors.
Where Do You Find Trading Volume As An Investor?
Trade volume in the stock market is generally tracked by all stock market exchanges and accessible to all investors. However, there are other easier ways to keep track of trading volume, such as keeping a tab on stock market news and websites.
Some investment platforms use candlestick charts to depict the volume of a particular stock over a certain time frame—daily, hourly or monthly. Note that the trading volume of the Bombay Stock Exchange (BSE) will always be different from the National Stock Exchange (NSE). Here are some other factors to take into account.
High volume for a particular stock may indicate to high liquidity in the stock.
Trading volume data is a useful input for intra-day trading and technical analysts.
What is the Relationship Between Stock Trading Volume And Price?
If both stock price and trading volume in a stock are rising, then it may indicate to an upward trend in the price of that stock. If both stock price and trading volume in a stock are declining, then it may indicate to downward trend in the price of that stock.
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*Disclaimer: Terms and conditions apply. This is an information communication from HDFC Bank and should not be considered as a suggestion for investment. Investments in securities market are subject to market risks. Read all the related documents carefully before investing.
