What Is Volume of a Stock, and Why Does It Matter to Investors?
In the stock market, "volume" refers to the total number of shares of a particular stock that were traded within a specific period, usually a single trading day, indicating how actively a stock is being bought and sold, essentially showing the level of market interest and liquidity in that stock; a higher volume means more shares were traded, signifying greater activity.
Key points about volume:
# measurement
Volume is displayed as a numerical value on stock charts, often represented by bars where the height of the bar corresponds to the trading volume for that time period.
# Interpretation:
High volume with a price increase suggests strong buying pressure, while high volume with a price decrease indicates strong selling pressure.
# Importance for traders:
Traders use volume analysis to confirm price trends, identify potential reversals, and gauge the strength of market sentiment.
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