Meaning of VOLUME in Stock Market.
Volume in Stock market means - the total number.
And in relation to the stock market, volume refers to the amount of buy and sell (total number of volumes) in a stock.
Volume of stock in Stock market.
If I ask you - the 20 shares of MRF that I bought were sold by my friend, then what should be the trade volume of the stock after both these deals-
The answer for some people would be 20 shares were bought and 20 shares were sold, it would mean volume 40, which is a wrong answer.
The correct answer is that - if I looked at the number of shares that were sold 20 shares, then if you look carefully, it is known that - friend sold 20 shares and I bought the same 20 shares and therefore the volume of the stock was 20.
Because in reality, only 20 shares have gone from here, not 40.
Stock Volume can grow in both bullion and recession -
Note that a stock may slow down or accelerate in the market, in both cases, the stock's VOLUME can increase, if the volume increases in a recession, it means more and more people want to sell that stock.
And if the volume increases in the BULLISH MARKET, then it means that more and more people want to buy that stock.
How does VOLUME become a stock in the stock market -
From the above example, we should understand very well how the volume is formed in the stock market, and we should keep in mind that -
The same number of shares can be bought in the market, as many shares have been sold, ie if 10 lakh shares were bought on any day, it means 10 lakh shares have been sold from the other side, and in this way, a total of 10 lakh shares are sold here.
Lending transfers are not from 20 lakhs, and therefore the trade volume of the stock will also be 10 lakh on that day.
Volume is actually the total number of shares transferred in a trade, that is, the number of shares being transferred is called the volume.
And the volume is made such that -
A single transaction is called trade and the total number of shares traded and sold in a trade is the total number of shares traded in that trade.
For example, if 10 shares are being bought and sold in a transaction, then the trade-in of that stock is 1 and the volume of that trade will be 10, which will be called the volume of that stock on that day.
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| How Volume in Stock market works? |
The story behind becoming a VOLUME
Volume increases only when people take more or more trades, so it is important to keep in mind that there can be two main reasons for increasing the volume -
Retail Investor's Interest - When you want to buy more and more retail investors of stock, or you want to sell more and more retail investors of stock, then there is a spurt in the volume of the stock,
Large Financial Company / Investing House Interest - When a stock is bought or sold by a large market player, such as FII, or DII, or MUTUAL FUND HOUSE often buys or sells a large amount of stock, which is Increases the volume of that stock.
In this way, whenever a strong (STRONG) VOLUME appears in stock, then one should try to understand what kind of people are increasing this volume, and accordingly, a common investor should know the direction of the volume and the fluctuations in PRICE. According to the trend, you should make your position in the market.
Importance of VOLUME in TECHNICAL ANALYSIS
The importance of volume is considered to be very important in technical analysis because we get to know these major things with the help of volume.
Stock Insights: How much of the logo is above a stock, how much trade people are taking in stock, it can be easily determined by looking at the trade volume of a stock,
Technical Pattern and Trend Confirmation: - In Technical Analysis, the volume is given more importance because by looking at the trade volume in a stock, it can be easily ascertained how strong or weak the trend of that stock is. (Weak), in addition to all the tools used in technical analysis, whatever signal is extracted, how strong or how weak that signal is, it is also known by volume.
The actual indicator of time or time frame in stock - In technical analysis, the volume is given more importance because it can be easily ascertained by looking at the trade volume in a stock, that a stock During which time people are making the most purchases, or between which time the stock is getting more.
Indicator of Stock's Active or Not Active - Within the Technical Analysis, special care is taken to check that while taking the transaction, it is checked whether the company whose stock is being claimed has sufficient volume. , Ie whether the share is well active from the point of view of the deal.
Nowhere is it that people are buying and selling that stock in very small quantity, how much quantity people are buying or selling, it can be ascertained only by looking at the trade volume of the stock.
The thing to note is that - the stock in which most people take trades, that is, the stock with a higher volume of trade, is considered to be a more active stock.
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VOLUME INCREASE or VOLUME DECREASE
Another important thing regarding volume is that -
How do we know whether the volume is decreasing or increasing, or the volume is equal?
So for this, it is generally the rule, from which we know when the volume of stock will be considered to be increased and when it will be considered decreased -
Volume Decrease
The volume of a stock is decreasing, it will be considered when the volume of today's stock of that stock is less than the volume average of the previous ten days.
Volume Increase
If the volume of a stock is increasing, it will be considered when the volume of today's stock of that stock is higher than the volume average of the previous ten days.
No change in volume in Stock Market.
The volume of a stock will be considered equal when the volume of today's trade of that stock is equal to the volume average of the previous ten days.
Practical use of VOLUME in transaction
It is worth noting that whenever you mix the volume and price of stock together, you will understand a lot,
Volume and price together make a really strong trend.
Volume + Price = Trend (Strong)
Keeping this relationship of volume and price in mind, you can set your position in the market-
Let us try to understand the relationship between Volume and Trend through a table and the Trend of the market based on it -
Sr. No. Volume Price Expected Trend (Strong).
1 Increase Increase Strong Bullish - Go Long
2 Decrease Decrease Strong Bearish - Go short
3 Increase Decrease Currently in Bearish (Big Investor Involvement) One should plan for Short Selling.
4 Decrease Increase Currently in Bullish (Retail investor Involvement) Take Caution.
Now let's try to understand these four patterns of volume and price in detail and try to know how we can use the volume practically -
When the volume of the stock also increases, the price also increases.
If the chart shows that - the stock volume is also increasing (more than the average of the last ten days) and the price of the stock is also increasing, it means, the stock is in the Bullish Trend, and the price and Increasing the volume in this way suggests that - it is possible that an increased investor (such as FII, DII, MF) is buying that stock.
Hence the price of the stock will continue to rise for some time, and because of this we must buy the stock, keeping the STRONG BULLISH in mind, or keep in mind the increasing price and volume if the stock is purchased, and as soon as the price and VOLUME correction starts, we should book enough profit from the transaction.
When the volume of the stock also decreases, the price also decreases.
If the chart shows that the stock volume is also decreasing (less than the average of the last ten days) and the price of the stock is also decreasing, it means, the stock is in a Strong Bearish Trend.
And thus the price and volume decrease in this way tells us that - it is possible that an increased investor (like FII, DII, MF) is selling that stock, and hence the stock due to Strong Bearish Trend Prices will continue to decrease for some time, and due to this we may have a chance of Short Selling in the stock keeping in mind the Strong Bearish and we should think about short selling.
Also, in this way, we should keep in mind the decreasing price and volume, and as soon as the correction in the price and VOLUME starts, that is, the price and volume go down very low, then we should book enough profit and get out of the deal.
And if the fundamentals of the stock are good, then we should think about long position trade,
When the stock volume increases, the price decreases,
If the chart shows that the stock volume is increasing (more than the average of the last ten days) but at the same time the price of the stock is decreasing.
So this means, there is a big selling current in the stock, i.e it may happen that a big investor (like FII, DII, MF) is selling the stock.
Now because the big player is selling, and that is why the stock volume is increasing, but the buyers are less and hence the stock prices are not increasing.
The rule in such a situation is that - the common investor should walk with these big players and look for the Opportunity of Short Selling.
And if you already have stock, then you should note why big players are doing this, and should you also get out of that stock, try to understand this.
When the stock volume is decreasing, but the price is going up.
If the chart shows that the stock volume is decreasing (less than the average of the last ten days) but at the same time the price of the stock is increasing.
So this means, the stock has more interest in the retail investor in the stock, and the retail investor is buying in that stock, but because there is no big investor (like FII, DII, MF), there is no volume in the stock.
And in such a case the common investor should be careful, selling the stock,
Because there is not a big investor, and small investors are buying the stock, the price is increasing, and in such a situation, there is a bullish trend,
But such a bullish trend is considered a weak bullish trend because the volume is decreasing in this trend.
In such situations, the rule is that
The common investor should walk with these big players and be very careful about that stock,
And if you already have stock, then you should note why big players are doing this, and should you also get out of that stock, try to understand this,
It is mandatory to keep VOLUME in mind when taking TRADE,
Take any kind of trade, buying stock or short selling, whether you are doing intraday, swing trading, or investing for the long term,
Due to the reasons given below, it is considered mandatory to keep the volume in mind while taking a trade,
The volume clearly shows that whatever trend is made, whether it is bullish or bearish, how strong or weak is that trend,
Higher volume means that - whatever trend is made, whether it is Bullish or bearish it is Strong, and we should do deals with Strong trend, whether it is about buying stocks or short selling.
By looking at the volume, we can avoid any kind of swing trap of Bullish or Bearish Trend, because it may be that the trend is showing in the market, but it may be for some time only and it will give us that It is understandable by looking at the volume of the stock.
STOCK VOLUME (Stock Quantity) - SUMMARY
If we summarize this large article of the volume, we should keep the following points in mind-
1. If one buys shares on the one hand, then, on the other hand, one sells the shares, so the same share can be bought as the shares are being sold from the other side.
2. So buying 100 shares and selling 100 shares means - the trade volume of the stock is 100.
3. The volume of a stock is the number of shares being transferred during the day's trade.
4. Volume confirms the trend of any stock, if strong, then how strong is strong, and if it is bearish then how much is strongly bearish.
5. The high volume shows that large investors in the stock are buying or selling.
6. The low volume shows that small retail investors are working rather than big investors in the stock.
7. The day stock has a low volume, we should be very careful in taking trades, and stay away from the trade.
8. Whenever you buy or sell stocks in the market, keep the volume in mind, the volume tells a lot.
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