- Trading volume refers to the total number of shares or contracts exchanged between buyers and sellers of a security within a given day or time period.
- High trading volume often indicates high interest in a security, potentially leading to stronger price movement and better liquidity for traders.
- Analysts use trading volume to assess the strength or weakness of a market trend, as rising volume can confirm a trend and falling volume may signal its end.
Yo, so I've been digging into this whole trading thing, right? And there's this term that keeps popping up - 'trading volume'. And honestly, it's a bit puzzling. Like, I get the basic idea that it's about the number of shares or contracts traded in a security or market during a specific period. But could somebody break it down for me a little more? Like, why does it matter? How does it affect the market or individual stocks? All that kinda stuff. Cheers!
Sure thing, mate. So, higher trading volume? It usually means a lot of traders are active in that particular stock, which can indicate there's a significant event or news related to it. But here's my question - what happens when the trading volume is low? I mean, are there any specific strategies for trading in such a situation? And also, do online trading platforms use this trading volume information in any way for their analytics or predictions? Just trying to wrap my head around it all.
Low trading volume typically points to less liquidity, meaning it can be harder to buy or sell without affecting the price too much. As for strategies, some might avoid trading during these periods due to potential price volatility. Online platforms often display volume data, which can be used for technical analysis but doesn’t necessarily drive their predictions.
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