What is the volume in trading?

In this guide, you will learn:What is the volume in trading,Why volume is important,How to read volume on charts
How to use volume in intraday trading,Best volume-based strategies,Common mistakes beginners make.

Introduction

In the stock market, price tells you what is happening, but volume tells you how strong that move really is. Many beginners focus only on charts and indicators, but professional traders always keep an eye on volume because it shows the real interest of buyers and sellers.

If you trade intraday using tools like VWAP, Pivot Points, or MACD, understanding volume will dramatically improve your trade accuracy and help you avoid false breakouts.

Volume in trading

What Is Volume in Trading?

Volume in trading means the total number of shares, contracts, or lots traded in a stock or asset during a specific period of time.

For example:

• If 1,00,000 shares of Reliance are traded today, then today’s volume = 1,00,000
• On a 5-minute chart, volume shows how many shares were traded in those 5 minutes.

👉 In simple words:
Volume shows how many people are participating in the market.

Where Can You See Volume on a Chart?

On most trading platforms like TradingView, Zerodha Kite, or Upstox:

• Volume is shown as vertical bars below the price chart
• Each bar represents volume for that candle
• Green volume = more buying pressure
• Red volume = more selling pressure

The taller the bar, the higher the activity in that candle.

Why is volume important in trading?

Why Is Volume Important in Trading?

Volume is important because it:

1️⃣ Confirms Trend Strength

• Price going up + Volume increasing = Strong uptrend
• Price going down + Volume increasing = Strong downtrend
• Price moving but volume is low = Weak move (can reverse)

2️⃣ Helps Identify Big Players (Smart Money)

→ Institutions and big traders always trade in large quantity.
When you see sudden high volume, it usually means big money is entering or exiting the stock.

3️⃣ Confirms Breakouts

• Breakout with high volume = Genuine breakout
• Breakout with low volume = Fake breakout (bull trap or bear trap)

4️⃣ Shows Market Interest

• High volume = High interest in that stock
• Low volume = No interest, risky for intraday trading

How to read volume correctly

How to Read Volume Correctly (Price + Volume Analysis)

Price movements

• price ↑

• price ↓

• price ↑

• price ↓

Volume Behavior

• volume ↑

• volume ↑

• volume ↓

• volume ↓

Meaning

• Strong bullish move

• Strong bearish move

• Weak rally, can fail

• Weak selling pressure

Volume in Intraday Trading (Very Important)

For intraday traders:

✅ Always trade high volume stocks
❌ Avoid low volume stocks (they move slowly and give false signals)

Best Uses of Volume in Intraday:

• Finding strong breakouts
• Confirming support and resistance
• Spotting trend reversal
• Avoiding fake moves

Volume + VWAP Strategy (Matches Your Trading Style)

Since you already use VWAP, here’s a powerful logic:

🔹 Buy Setup:
• Price above VWAP
• Volume increasing
• Strong bullish candle

🔹 Sell Setup:
• Price below VWAP
• Volume increasing
• Strong bearish candle

👉 VWAP + Volume = Institutional trading confirmation

Volume + Breakout Strategy

🔸 Bullish Breakout:
• Price breaks resistance
• Volume should be at least 2x higher than previous candles
• Then breakout is reliable

🔸 Bearish Breakdown:
• Price breaks support
• Volume should expand strongly

Volume Spike – What Does It Mean?

Volume spike = Suddenly very high volume

It usually means:

• Big news
• Big operator entry/exit
• Trend starting or ending

⚠️ If volume spikes after a long trend, it can also mean trend exhaustion.

Best Volume Indicators You Can Use

1️⃣ Volume (Basic)
→ Simple volume bars.

2️⃣ Volume Moving Average
→ Shows average volume to compare current activity.

3️⃣ On Balance Volume (OBV)
→ Shows whether money is flowing in or out.

4️⃣ Volume Profile
→ Shows price levels where maximum trading happened.

Common Mistakes Beginners Make With Volume

❌ Ignoring volume completely
❌ Trading low-volume stocks
❌ Not checking volume on breakouts
❌ Thinking price alone is enough

Pro Tips for Using Volume Like a Professional

✅ Always compare current volume with previous volume
✅ Use volume with price action, VWAP, pivots, and MACD
✅ Focus on liquid stocks only
✅ Watch volume near support and resistance levels

Is Volume Enough for Trading?

No. Volume should be used with:

• Price Action
• Support & Resistance
• VWAP
• Pivot Points
• Indicators like MACD or RSI

👉 Volume is a confirmation tool, not a standalone system.

Final Thoughts

Volume is the heartbeat of the market. If you learn to read volume properly, you will:

• Avoid fake breakouts
• Enter strong trends early
• Trade with smart money
• Improve win ratio in intraday trading

Remember:
→ Price shows the move, but volume shows the power behind the move.

If this blog makes sense to you give your feedback in comments and stay tuned.

In the next blog i will share about the fundamental analysis for beginners.

At the end of the day

trading isn’t about timing in the market it’s about time in the market.