Trading volume: the fuel behind every price move

Trading volume (Volume) is the number of units that changed hands in a given period. It answers a question that price alone cannot: How many players are really behind this move? A rise in volume double the average is a statement; the same rise on thin volume is a whisper.

The basic reading: volume versus its average

Volume is a relative figure — "high" is always relative to that asset's norm. The practical metric: today's volume versus the average volume of the last 20 days. 1.5x or more = a day of heightened activity worth noting; 3x = something happened.

• Price rising + volume rising: A healthy move — real buyers are joining in.
• Price rising + volume fading: The rise is continuing on inertia — a sign of exhaustion.
• Price falling + volume rising: Real selling pressure, not just a lack of buyers.
• Record volume after a long move: Sometimes it's actually a sign of exhaustion — "everyone" is already in (Climax).

The most important test: volume on the breakout

The main practical use of volume is confirmation BreakoutsA resistance breakout on high volume says the market voted with its feet — many buyers were willing to pay the higher price. A breakout on normal or thin volume is inherently suspicious: it's easy to move price when there's hardly any trading, and that's exactly the environment for false breakouts.

So in every breakout setup it's worth checking: what did volume do on the breakout day versus the 20-day average? This is a two-second check that filters out a large portion of the traps.