🌊 The Importance of Volume in Trading: Temporary Success, Permanent Failure! 📉
Introduction 💡
Every trader looking at a trading chart sees the Price, but the thing that actually moves the price is Volume. The price does not move on its own; it moves due to the pressure from buyers and sellers. Volume is the tool used to understand this pressure.
🎯 Why is Volume Essential?
If you only trade by looking at price movement, you can often fall victim to deception. Volume clarifies three important things for traders:
Confirmation of Breakouts:
If a significant Resistance Level or Support Level is broken with low Volume, it may be a Fakeout.
A breakout occurring with high Volume confirms that the move has the support of large investors and is likely to be sustainable.
Understanding Market Strength:
A price move upward (Bullish Move) accompanied by increasing Volume suggests that buyers are strong and further rise is expected.
A price decline (Bearish Move) accompanied by decreasing Volume means that selling pressure is reducing, and a Reversal may occur soon.
Exhaustion and Reversal:
When a large rally or drop approaches its end, it often concludes with very high Volume, known as a 'Climax'. This indicates market exhaustion and signals that a reversal is imminent.
🛑 The Danger of Trading Without Volume
Ignoring Volume can lead to permanent failure because:
You mistake the minor moves of small traders for a major market trend.
You enter positions without confirmation, which increases the likelihood of your Stop-Loss being hit.
Conclusion: A successful trader always makes decisions by comparing Price and Volume. Always remember: "Volume tells the story; price completes it."
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