A Beginner's Guide to Volume
🧵⬇️
🧵⬇️
Volume Definition
Volume is the number of shares traded over a period of time
For example, each daily candle contains the number of shares traded on that day
Wordy definition👇
Volume is the number of shares traded over a period of time
For example, each daily candle contains the number of shares traded on that day
Wordy definition👇
When Bill sells 1 share of $TSLA to Sally that counts as 1 volume
Each of these bars at the bottom of your screen represents the volume for one period of time
If I'm on a daily chart, one bar represents the volume from one day
If I'm on a 5 min chart, one bar represents the volume from one 5 min candle
If I'm on a daily chart, one bar represents the volume from one day
If I'm on a 5 min chart, one bar represents the volume from one 5 min candle
Why Volume Is Important
Traders can determine the significance of price action based on volume. We can pair it with other indicators to determine strength, reversals, trend, etc
Traders can determine the significance of price action based on volume. We can pair it with other indicators to determine strength, reversals, trend, etc
Volume is also real time, or very close, which is different than many other trading indicators
Many indicators lag, but volume can be seen as it's happening, which is huge for scalpers
Many indicators lag, but volume can be seen as it's happening, which is huge for scalpers
The importance of knowing how many shares are being bought/sold is IMMENSE
Just think about it... we are getting to see how many buyers and sellers are present (after we analyze price paired with volume)
Just think about it... we are getting to see how many buyers and sellers are present (after we analyze price paired with volume)
How Traders Use Volume
1) Volume Price Analysis
2) Volume Surges
2) Relative Volume
3) Confirmation
1) Volume Price Analysis
2) Volume Surges
2) Relative Volume
3) Confirmation
Volume Price Analysis is using volume to validate and predict future moves (I will create a whole thread about VPA in the future)
It includes examples like these👇
It includes examples like these👇
Volume Price Analysis combines candle size & formation with volume
Large volume + lower wick = bullish
Large volume + large body = strong candle
Small volume + large body = weak candle
(there are hundred of examples like these^)
So many top tier setups use this strategy
Large volume + lower wick = bullish
Large volume + large body = strong candle
Small volume + large body = weak candle
(there are hundred of examples like these^)
So many top tier setups use this strategy
Read the book 'A Complete Guide to Volume Price Analysis' by Anna Couling
Volume Surges are candle formations that include an increase in volume
Majority of traders look for volume surges, they just interpret them differently. I prefer to interpret them using the rules from VPA
Majority of traders look for volume surges, they just interpret them differently. I prefer to interpret them using the rules from VPA
Relative Volume is simply comparing current volume to recent volume. There is an indicator called relative volume, I'm not talking about that
Many day traders prefer to compare volume to the first hour of the day. If we are significantly lower, they will avoid trades
Many day traders prefer to compare volume to the first hour of the day. If we are significantly lower, they will avoid trades
Low volume time periods are usually tougher to trade, and are often rangebound
Waiting for a volume surge is a common strategy
Waiting for a volume surge is a common strategy
Confirmation is one of the best ways to use volume
If a move happens with high volume, it is usually confirmed. Not always, but usually. Some moves require low volume, like a bullflag.
If a move happens with high volume, it is usually confirmed. Not always, but usually. Some moves require low volume, like a bullflag.
You'll need to research individual patterns, and/or experience them yourself to determine what volume is required to confirm the setup
Volume can also be used to confirm losses, when a setup fails
Volume can also be used to confirm losses, when a setup fails
My Volume Settings are basic
My Thoughts
Volume is the one indicator that EVERYONE should have
Read VPA. Read it a second time. And then read it a third time
Focus on high volume candles first
Study lots of charts to see real examples of volume surges/VPA
Volume is the one indicator that EVERYONE should have
Read VPA. Read it a second time. And then read it a third time
Focus on high volume candles first
Study lots of charts to see real examples of volume surges/VPA
I hope this thread helped you understand Volume🙏
If you're looking for a trading community with a mix of education and trading, check out my discord👇
upgrade.chat
If you're looking for a trading community with a mix of education and trading, check out my discord👇
upgrade.chat
Loading suggestions...