Out of many methods, volume analysis is the method of reviewing the strength of a trend, based on volume activity. It is said that the volume is one of the oldest day trading indicators used by market technicians. Besides traders, analysts also consider the volume or the number of shares traded for a given security.
Analysts believe that the higher the volume the easier it is to buy and sell large quantities of stock because other traders are there to fulfill the other side of the trade. We know that for each transaction, there must be a buyer and a seller. For you to buy a seller must sell to you, and for you to sell a buyer must buy from you. When you get to know from your analysts that the buying volume is outstripping selling volume. It’s a heavy buy volume day.
Is also believed that the buyers are in control when the price is getting pushed higher. Buying volume is the volume that occurs at the offer price. This is the lowest advertised price sellers are willing to sell it. When someone buys at that price it shows the stock is desired and is called buying volume. Therefore, it can be concluded that the volume indicator is one of the simplest methods for observing the buying and selling activities of a stock at important levels. On the other hand, the trickiest part is that a volume can provide conflicting messages for the same setup. Yet, the deciding factor to turn a profit in the market can be calculated based on your ability to judge what the volume is telling you in combination with price action.
Some believe that the volume is a very powerful tool, but many traders and technical analysts do not use it, as this is a simple indicator. While others believe the strength of using the volume indicator and use it to get maximum profit. Actually, the volume is the most popular indicator used by the technicians. Keep in mind that the volume is a tremendously valuable tool and is used in different ways.