Volume measures how many units of an asset are traded within a specific period. It provides insight into market activity and the strength of price movements. High volume during a price move suggests conviction and validates breakouts or breakdowns. Conversely, low volume often accompanies false moves or consolidation. Volume can be displayed as bars on charts or integrated into indicators like On-Balance Volume (OBV). By analyzing volume alongside price, traders identify potential reversals, confirm trend strength, and assess liquidity conditions. Volume analysis enhances trade timing, entry confirmation, and helps distinguish between genuine market shifts and false signals.
Example:
High trading volume confirms strong interest during a breakout.
