Volume is the total number of shares or contracts traded on any given asset.
The volume of trade is the total number of shares and contracts exchanged between buyers and sellers, during the trading session on any time frame.
Volume indicates the amount of liquidity in a market.
Liquidity is important, high trade volume means greater liquidity, and greater liquidity provides you with better execution on your trades.
Volume is the total number of shares or contracts traded on any given asset.
The volume of trade is the total number of shares and contracts exchanged between buyers and sellers, during the trading session on any time frame.
Volume indicates the amount of liquidity in a market.
Liquidity is important, high trade volume means greater liquidity, and greater liquidity provides you with better execution on your trades.
Volume is essential for confirming a trend, reversal, and breakouts.
Inexperienced traders will rarely think to consider volume.
Remember, the market is made up of buyers and sellers. Use volume to identify other players in the game.
Key Points of the Lesson
UTILITY
Volume is a great metric to confirm a trend, a trend reversal and the original breakout/breakdown point from the range.
Useful to monitor the health of a trend ⇒ check reactions at key levels.
High volume = liquidity ⇒ can fill orders with little to no slippage.
IMPLEMENTATION
Volume = number of contracts bought and sold added together (per time or volume candle).
Focus on assets with high traded volume in the last 24 hours.
For detailed volume information: Exocharts, Atas.
PRACTICAL EXAMPLE
TIPS & TRICKS
Use volume to confirm the trend health and breakouts/breakdown of a range.
Recommended Volume Moving Average settings = 30, histogram (on Tradingview).
Price rising, volume increasing ⇒ strong uptrend, bullish.
Price rising, volume decreasing ⇒ weak uptrend, bearish.
Price declining, volume increasing ⇒ strong downtrend, bearish.
Price declining, volume decreasing ⇒ weak downtrend, bullish.
Spread = difference between sell and buy limit orders in the order book closest to current price ⇒ should be as low as possible = good liquidity.
Slippage = orders get filled at different prices than expected due to low liquidity.
TAKE HOME MESSAGE
Powerful metric to confirm trend, trend reversal, breakout/breakdown.
Footprint software provides detailed volume statistics.
Liquidity and high volume are crucial.