VolumeVol
Volume is the number of shares, contracts or coins traded during a given period.
Price tells you where the market went. Volume tells you how many people came along. A rise on heavy trading involves far more money and conviction than the same rise on a quiet afternoon. Volume is usually drawn as bars beneath the price chart, and learning to glance at them alongside the candles is one of the simplest upgrades to reading any chart.
- Category
- Technical Analysis
- Reading time
- 6 min
- Also called
- Trading volume, Volume bar, Volume bars
- Updated
Volume in plain words
If 2 million shares of a company changed hands today, its volume for the day is 2 million. Every trade has a buyer and a seller, so volume counts the shares traded once, not twice.
High volume means many participants are active; low volume means few are. When price moves strongly on high volume, many traders agree with the move. When it moves on thin volume, the move may not have much behind it.
How to read volume, step by step
Find the volume bars
Most charts show volume as bars beneath the candles, one bar per period, often coloured to match the candle.
Compare with the average
Raw numbers mean little on their own. Compare today’s bar with the recent average — many platforms draw a moving average over the volume bars. Today’s volume divided by the average is often called relative volume.
Check volume on the trend’s moves
Above-average or rising volume can signal that traders are committed to a price move; below-average or falling volume can signal a lack of enthusiasm.1
Watch for extremes
Very large volume after a long move can mark exhaustion as well as strength — a surge can mean conviction, but that momentum can also reverse sharply.2
Consider why volume changed
Earnings, index rebalancing, the market open and close, and holidays all change volume for reasons that have nothing to do with a chart pattern.
Worked examples
Example 1 — A breakout with volume
ConfirmedA stock that averages 1,000,000 shares a day breaks above resistance at $102 on a day when 2,700,000 shares trade, and closes near its high.
| Average daily volume | 1,000,000 |
| Breakout-day volume | 2,700,000 |
| Relative volume | 2.7× |
Nearly three times the normal participation suggests many traders acted on the break — a stronger signal than the price move alone.
Example 2 — A breakout without volume
FailedAnother stock with the same average breaks the same kind of level on 850,000 shares, then drifts back into its range two days later.
| Breakout-day volume | 850,000 |
| Relative volume | 0.85× |
| Outcome | Back inside the range |
Below-average volume on a breakout signals little enthusiasm.1 Many traders treat such breaks with suspicion or wait for a retest.
Example 3 — Rising price, falling volume
DivergenceOver three weeks a stock climbs from $80 to $92, but each week’s volume is lower than the one before: 6.1M → 4.8M → 3.5M shares.
| Price change | +15% |
| Volume change, week 1 to week 3 | −43% |
| Reading | Rally losing participation |
Price still rising on shrinking volume suggests fewer buyers are driving the move. It is a warning, not a sell signal on its own.
Breakouts with and without volume
Reading price and volume together
| Aspect | Common reading |
|---|---|
| Price up, volume up | Buyers committed; move supported |
| Price up, volume down | Rally losing participation |
| Price down, volume up | Sellers committed; decline supported |
| Price down, volume down | Selling pressure fading |
| Huge volume after a long move | Possible climax or exhaustion |
Why traders watch volume
Confirming breakouts
Volume helps separate genuine breaks of support or resistance from brief moves that quickly fail.
Judging trend health
In a healthy uptrend, advances tend to come on higher volume than pullbacks. See Trend.
Gauging liquidity
Higher volume usually means tighter spreads and easier execution. See Liquidity and Bid-Ask Spread.
Spotting unusual activity
A sudden spike in volume without news can be the first sign that something is changing.
Advantages and disadvantages
Advantages
- Adds a second, independent dimension to price.
- Easy to read: a bar per period beneath the chart.
- Helps judge both the strength of moves and the ease of trading.
Disadvantages
- Volume can surge for reasons unrelated to direction, such as index rebalancing or option expiry.
- Different exchanges and data feeds report different volume for the same asset.
- In spot forex there is no central volume figure; charts often show tick volume instead.
- High volume can mark the end of a move as well as its strength.2
Going deeper
Read as far as you need. Each level builds on the one before it.
Always compare with the average
Beginner
One million shares is huge for a small company and tiny for a mega-cap. Judge volume against the same asset’s own recent average.
Volume patterns within the day and the year
Intermediate
Volume is usually highest near the open and close of the regular session and lower around midday. Comparing a morning bar with the full-day average overstates how unusual it is.
Volume also changes with the calendar: earnings days, index rebalancing dates and the days around holidays all distort it. Context explains many spikes.
Fragmented and derived volume
Advanced
US shares trade on many venues; consolidated volume combines them, while a single exchange’s figure shows only part. In crypto, each exchange reports its own volume, and figures from less reputable venues can be unreliable.
Spot forex has no single exchange, so many platforms display tick volume — the number of price changes — as a proxy. Volume-based indicators such as OBV and VWAP inherit whatever limitations the underlying data has.
Common mistakes
Reading volume in isolation
A volume spike tells you activity rose, not which way price will go. Read it with the candle and the level it formed at.
Treating every spike as confirmation
Spikes at the end of long moves can be climaxes rather than starts.
Comparing different assets’ volume directly
Compare an asset with its own history, not with another asset.
Trusting one crypto exchange’s volume
Volume differs between venues; use reputable exchanges or aggregated data.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- Volume is how much of an asset traded in a period.
- Compare volume with the asset’s own average; relative volume = today ÷ average.
- Above-average volume supports a move; thin volume questions it.
- Extreme volume after a long move can signal exhaustion as well as strength.
- Volume data differ between venues, and spot forex charts often show tick volume.
Frequently asked questions
Does high volume mean the price will go up?
What is a good volume for a stock?
Why does my chart show different volume from another website?
Further learning
- Support and Resistance
Volume helps judge whether a level is really breaking.
- Trend
How volume confirms or questions a trend.
- Bid-Ask Spread
Why higher volume usually means cheaper trading.
- Trading Chart
Where volume sits on a standard chart.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- Charles Schwab. Trading Volume as a Market Indicator (opens in a new tab) Checked .
- Charles Schwab. 3 Ways Volume Can Help Confirm Price Trends (opens in a new tab) Checked .
Read more elsewhere
- Trading Metrics (our sister site): Volume Indicators (opens in a new tab)
- Investopedia: Volume (opens in a new tab)
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. Trading Metrics is our sister site, under the same ownership; we are not affiliated with any other publisher linked above. Last reviewed . Report an error or request a source credit.