Volume
Updated on March 10, 2023
In stock markets, ‘Volume’ or ‘Trading Volume’ is a measure of trading activity or of ‘buy’ and/or ‘sell’ transactions for a financial asset for a given period of time. For traders, volume is quite significant and a prominent indicator which they use along with other parameters for trading in stocks, futures or options. Trading volume along with price movements over a period of time also gives an indication of the market direction, sense of conviction and strength for specific stocks and overall markets.
Features of Volume
Some features of Volume are:
1. Volume is indicated as the number of shares that are traded (bought and sold) during the trading period.
2. It is the measure of the total turnover of shares or securities under consideration.
3. Volume is counted on each transaction basis as the same stocks may be traded multiple times.
4. Volume is a measure of interest in actively traded stocks.
Importance of Volume
Importance of Volume
1. High volume indicates greater interest and vice versa.
2. Volume is an indicator of liquidity in a stock as well as in stock markets.
3. Stocks with high liquidity gives traders the flexibility to buy and sell shares more easily because of the availability of a large number of buyers and sellers.
