What is volume in stock market

The change in hand of an asset or security over a given period of time, usually a day, is known as its volume. The trading volume of a stock denote the number of shares or stocks traded between the daily opening and closing. Trading volume is considered as a very important parameter by technical traders.

All the transactions which take place on a daily basis between the buyer and seller of a security contribute to the volume of that stock. A transaction is set to be complete when a buyer agrees to buy what a seller is offering. If ten such transitions occur in a day, the volume of that security for the day will be ten.

The volume of every security is usually maintained by the stock exchanges. The volume of stocks is frequently updated as well. However, these trade volumes are only estimates. The volume of trades which is reported at the end of market day is also an estimate. The final and precise volume figures are updated on the next market day.

The volume of a security provides an idea about its liquidity and market activities. The higher the volume, the better will be the liquidity. Higher liquidity means better order execution and a highly active market.

Volume is considered to be a very important factor in technical analysis because it helps in measuring the relative significance of market movements. The higher the volume during a particular price movement, the more significant is the movement. Also, a lower volume will denote a less significant market movement.

•        Volume is defined as the total number of securities which are traded during a specific period of time.
•        Securities with high volume offer high liquidity when compared with those with low volumes.
•        Volume is one of the most important factors considered during the technical analysis of a security.
•        The higher the volume during a particular price movement, the more significant is the movement.