Trading volume is a quantitative representation of the results of the trading of stocks on the same day. Therefore, trading volume can judge how the stock is responding to the current market. In other words, using this trading volume and candlestick chart expressing the stock price flow, you can analyze the stock price information more abundantly.
For example, if you know only the flow of stocks, there is no way to know the trading strength of the stocks. You can only see the fact that the price goes up or down significantly.
However, we can analyze the stock trading volume by hourly or daily stock trading together with the trading day of the trading day and derive a more precise and meaningful trading day. You can also identify market changes in stocks based on their trading dates.
The stock trading volume index has various auxiliary indicators such as a bar chart showing the trading volume and a chart using a mathematical formula. In other words, there may be a variety of indicators to analyze stock trading volume. Nevertheless, it is important that you have a thorough understanding of the fundamentals of stock investment, as the fundamentals are most important in any discipline.
The volume of stock trading also needs to be judged on the numerical content and meaning of the graphs, so other additional indicators can provide more information.
For example, if the stock price has risen sharply and the volume of trading has increased significantly, you should have time to imagine what it means.
Analysis of Trading Volume
If the trading volume has risen sharply, you have to numerically check how much it has increased significantly. When stock prices move heavily, we need to make sure that the volume of transactions has moved significantly or that very small volumes have been recorded.
If the stock price moves heavily, you will see a blue long stick or long red stick on the candle chart. In addition, if the transaction volume increases greatly, it is highly likely to have a strong meaning.
Especially if you see a red long stick or blue long stick on a candlestick chart, this is especially important if the trading volume has increased by more than a dozen times before, or if you have recorded a high volume that has never been seen before.
Unless you are constantly watching the market, you do not know if someone bought a lot of stock at a time, or if a little trading was done very often. However, if you look at the end result, you can see that the total trading volume of the stock has overwhelmed previous trading days.
If so, it is possible to imagine that most of the stock trading on the day of the long rising graph and the long trading graph appeared to have been made by buy orders. In other words, it is easy to deduce that a buyer’s stock has flocked to the stock, regardless of whether the stock is more expensive.
In this way, trading volume can be inferred from various scenarios when analyzed together with the results shown in the stock price graph. It is not enough that fragmentary information such as the fact that a lot of stocks are traded just because there is a lot of trading volume.
The basic analysis of trading volume should begin with imagination through the relationship between chart and trading volume.