Trading Volume

Understanding the concept of Trading Volume

In the wide world of trading, there are numerous terms to learn and understand. One critical term is the Trading Volume. So what exactly does it mean? Let's delve deeper into this term and make it apprehendable.

Basic Definition of Trading Volume

Trading Volume is a measure of how much of a specific financial asset has been bought or sold in a given time period. It's usually measured in shares for stock markets and in lots for Forex markets.

Why is Trading Volume so important?

Why should a trader focus on the trading volume? Well, the Trading Volume holds great value as it provides a deep insight into the strength or weakness of a market trend. A high trading volume often indicates strong investor interest and can indicate the start of a new trend. Whereas, a low trading volume might show a lack of investor confidence.

Role of Trading Volume in Trading

Remember, in the theater of trading, the volume plays an instrumental role that cannot be overlooked. The Trading Volume not only reflects investor interest but it can also help traders to confirm the trends and chart patterns. For instance, a price rise coupled with rising trading volume is often viewed as a valid move, making it more trustworthy.

Bottom Line

To sum up, Trading Volume is a vital indicator in trading, providing a snapshot of activity levels, trend legitimacy, and investor interest. Make sure to keep an eye on the trading volume while making trading decisions.