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Trading volume refers to the total number of shares or contracts traded in a security or market during a specific period, usually one trading day. It is a key indicator of market activity and liquidity, providing insight into the strength of price movements. High trading volume indicates strong interest in a security, often accompanying significant price changes, while low volume suggests less market interest or indecisiveness.
A stock experiences a sharp increase in price accompanied by a surge in trading volume, signaling strong market interest and potential for further price movement.
• The total number of shares or contracts traded in a security or market.
• A key indicator of market activity and liquidity.
• High volume often signals strong interest and price movement, while low volume indicates less activity.
It provides insight into the strength of price movements, indicating whether a price change is backed by strong market interest or weak activity.
High trading volume increases liquidity, making it easier for traders to buy and sell large quantities of a security without significantly affecting its price.
Low volume may indicate uncertainty or lack of interest, suggesting that price movements are less reliable and could reverse easily.
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