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Technical Studies: Volume and Volume+

Volume is a lower chart indicator that displays the number of shares traded for each period (minutes/hours/days/weeks/months) for a particular security over a specified time frame. Volume may confirm the health of a price breakout above a trading range, may confirm the health of an uptrend, and can indicate a market bottom or top.

High Volume: High volume relative to previous levels often occurs at the beginning of a new uptrend in a security's price, particularly when the price breaks out of a trading range. Some technicians distrust price breakouts that occur without a significant increase in volume. High volume levels are also common during an uptrend in the security's price, as demand from buyers increase trading levels in the security. In addition, volume spikes often occur when sellers, overcome by fear, overwhelmingly decide to push the security's price lower.

Low Volume: Low volume often occurs when a security is locked in a trading range or is drifting towards a price bottom.

Volume+: The Volume+ indicator contains all the attributes of Volume and adds the following:

  • an n-period Simple Moving Average (SMA) of the Volume
  • periods in which the security's price closes above or equal to the previous period's price are marked with black bars while periods in which the security's price closes below the previous period's price are marked with red bars.

The number of periods (minutes/hours/days/weeks/months) in the SMA is customizable.

 
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