Stock Market | Stock Market Technical Analysis Will Tell You The Secret Volume

Trading volume is defined as the number of shares or contracts traded during a specified period, a value or a complete change. This is an indication of the interest investors have in a given value to its current price.

Volume is the best measure of supply and demand. It measures the intensity of buying and selling pressure. Volume proper analysis will let you know how much conviction and enthusiasm behind a price movement. The higher the volume, the greater the importance of price movement. This is the key to winning consistently in the market, analysis and understanding of technical stock market.

During a normal and healthy upward trend, the volume increases when prices rise. Volume disappears when prices are falling or correct. When this pattern changes of volume, a warning of a possible change in trend, even before it actually takes place. Once you recognize the details of this type, which are in the way of trade competition.

Signs or evidence offered by the volume of shares traded is of great importance. Large institutions such as mutual funds, pension funds and hedge funds represent approximately 75% of all trading in the stock market. The trading volume of these large institutions are the fuel behind the major price advances. If a stock normally trades 300,000 shares a day, suddenly, trades 2,000,000 shares, and closes the day with a significant price hike, you know this town is in the accumulation of the greats.

A change in volume is a signal to be alert. Something unusual is happening. The dynamics are changing. Perhaps the major institutions are beginning a phase of accumulation or distribution. Traders familiar with riding the coattails of the large institutions. They do not fight against them. This is true for an individual stock or the market as a whole. This is a key factor in the analysis of technical stock market.

There are many different scenarios where the volume will give a valuable clue that will save or make you a lot of money. A good example would be large, but the price of the stock positions, and will not climb to highs. There is a very good chance of this population has topped out and should be closely monitored.

Volume is critical. While one can interpret the action of volume, which is well on its way to the possibility of making a fortune in the stock market.

My next article in the technical analysis of stock market will support and resistance.