VOLUME & PRICE ACTION
Plain English
Volume is how many shares traded. It's the conviction behind price moves. A big price move on high volume is convincing. A big price move on low volume is suspicious. Volume confirms or denies what the price chart is telling you.
Going deeper
Volume represents the total number of shares exchanged during a given period. It measures the intensity of trading interest. Volume analysis works alongside price action: rising prices on rising volume confirms an uptrend (buying conviction). Rising prices on declining volume suggests weakening momentum. Falling prices on rising volume confirms a downtrend (selling conviction). Volume spikes often occur at trend reversals, breakouts, and breakdowns. Average volume provides a baseline for comparison. Unusually high volume often signals institutional activity — big money is moving in or out.
Examples
Volume Confirmation
A stock breaks above $80 resistance. On the breakout day, volume is 3x the 50-day average. This high volume confirms that many participants believe in the move, increasing the probability that the breakout is genuine.
Low Volume Warning
A stock rallies 5% but volume is 30% below average. Few traders are participating. This suggests the rally may lack conviction and could reverse quickly.