Glossary

Trading Volume

Easy

Тrading volume refers to the total number of shares (or tokens/coins) that have been exchanged between buyers and sellers of a given asset during trading hours of a certain day.

What Is Trading Volume?

Trading volume is the number of completed trades in a single security or across the whole market in a given time period. If shares in security are traded 500 times a day, the total volume for that day is 500.

However, if a number of traders took positions in the security during the same day and closed them out by the end of the session, the trading volume has the chance of potentially being greater than the total of positions open at either the start of the closing of that specific day’s trading.

That being said, trading volume is a technical indicator due to the fact that it represents the overall activity of a security or a market, and investors often use trading volume to confirm the existence or a continuation of a trend or trend reversal. Trading volume can legitimize the price action of security, and this can then aid an investor when it comes to buying or selling the specific security in question.

Trading volume can help an investor identify momentum in a security and confirm a trend as a result: if the trading volume increases, then the price will move in a similar direction most of the time. This is the case if security is continuation higher in an uptrend, and the volume of the security will also increase.

When you analyze the trading volume, there is a basic framework that you can adhere to with respect to using volume in order to improve your trading. You can use the volume to determine the weakness or strength of a move, and the stronger the moving volume, the stronger the momentum. The idea here is that a trader should be a lot more inclined to join stronger moves and avoid weaker moves.

As such, trading volume refers to the total number of shares (or tokens/coins) that have been exchanged between buyers and sellers of a given asset during trading hours of a certain day. This volume is a measure of liquidity and activity.