Trading Volume
Original schematic showing the guide's principal visual relationships.
Period volume = sum of executed share or contract quantities during the interval.
Formula and components
The number of shares or contracts traded during a period, used to assess participation.
Period volume = sum of executed share or contract quantities during the interval.
How it works
The indicator transforms price, range, or volume observations over a selected lookback. Shorter settings react faster but create more noise; longer settings respond more slowly and emphasize the underlying regime. Always compare the reading with price structure and timeframe.
How to read it
Expanding volume can confirm breakouts and trend participation; declining volume can indicate a move lacks broad commitment.
Practical example
Price breaks resistance on volume well above its recent average and then holds the breakout. That participation supports the move; a single spike caused by an index rebalance or earnings event needs separate interpretation.
Confirmation checklist
Confirm that participation supports the price move and compare like-for-like sessions. One unusual print or event-driven spike should not define the entire signal.
Limitations and false signals
Volume varies by venue, session, seasonality, corporate events, and market structure, so raw values require historical context.
Limitations and false signals
Frequently asked questions
What does this pattern or indicator describe?
The number of shares or contracts traded during a period, used to assess participation.
How should the signal be confirmed?
Expanding volume can confirm breakouts and trend participation; declining volume can indicate a move lacks broad commitment. Confirm that participation supports the price move and compare like-for-like sessions. One unusual print or event-driven spike should not define the entire signal.
What can cause a false signal?
Volume varies by venue, session, seasonality, corporate events, and market structure, so raw values require historical context.