Volume and it's importance in markets explained. A Thread 🧵🧵

Volume — Volume measures the total number of shares traded (bought and sold) in a given period of time. Example: Mr. Michael bought 100 shares of ABC from Mr. Dwight at a price of 150. So here Michael and Dwight together have created a of volume 100.

• Volume showcases strength or weakness of any trend. • Volume showcases liquidity. • Volume showcases what “smart money” is doing. Here smart money means capital of institutions and big players in markets.

Only volume doesn't make any sense. Price and volume has to go hand in hand.

As I earlier said, volume showcase what big players (institutions) are doing, they make smart move with smart money. Big institutions don't buy or sell 500/1000 shares of any company. They buy or sell shares in large quantities, which creates high volume.

And with help of volume analysis we can follow big players. They have legit reasons for buying or selling any shares. Remember, “being a retail trader we can't win against big institutions, so it better to follow them and make money with them”

1. When volume increases with price it indicates bullishness in stock. Green bars is showing buying volume.

2. Price is increasing but no increase is volume, this means buying is there but smart money is not involved/interested in this buying. Their is no promising confirmation of buying any stock.

3. When price decreases with rising (selling) volume. It indicates bearishness in stock. Red bars is showing selling volume.

4. Price is decreasing but volumes are constant, this means selling is there but not so strong, as smart money is not interested in this selling. No confirmation of selling. Price might reverse any time in between.

How Volume helps in Breakouts — When is stock is giving breakouts check whether volumes are in our favour or not. If price is breaking any support or resistance, look whether volumes are increasing at that time or not. If it is increasing then it's a successful breakout.