Trade The Journey

Trade The Journey

Volume?

Do you use Volume in your stock analysis? Those bars at the bottom of the candlestick chart mean something as do the candlesticks. I prefer to use a candlestick chart because it provides me with a visual picture detailing the buying and selling that took place for the day.

Technical Analysis can at first seem daunting with all of the indicators you can add to your chart. Each indicator, you hope fulfills its promise as an accurate predictor of the stocks’ movement.

Looking through the indicators and the vast amount of data that is collected to try and predict movement can be overwhelming. Which indicator works best? Should I try to learn about every indicator?

For now, I have decided to stick to the basic technical indicators until I develop a better understanding of technical anaylsis.

Volume is an indicator I have added to the toolbox for stock analysis.

“Volume is the number of shares or contracts traded in a security or an entire market during a given period of time. For every buyer, there is a seller, and each transaction contributes to the count of total volume. “

With the candlestick chart, you’re able to see the bulls and bears battle to control the movement of the stock. What volume allows you to see, is the strength of the movement of the stock’s price. Is there volume supporting the movement up or the movement down? Is the momentum of the stock declining? Volume can provide you with insight into what is really happening behind the movement.

Behind the indicators are people interested in making a profit and avoiding a loss. Volume can give you an indication of what the market is thinking and what openings may be available to you. This is known as trading with the trend.

Remember the old saying: The Trend is your friend.

The Dow Theory written by Charles H. Dow is a good starting point to begin and a small tutorial is available here.

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