Price shows where the market is going. Volume shows how convincing the movement is. Without volume analysis, you see only half the truth.

Core Principles of Volume Analysis

Trading volume measures the number of shares or contracts traded in a given period. The basic rule: Volume confirms the trend.

Rising price + rising volume: Healthy uptrend — buyers dominate with conviction
Rising price + falling volume: Weak uptrend — fewer buyers. Warning signal for an impending correction.
Falling price + rising volume: Strong downtrend — panic selling or institutional liquidation
Falling price + falling volume: Weak downtrend — sellers exhausted. Possibly near bottom formation.

Key Volume Indicators

On-Balance Volume (OBV)

Cumulates volume: On up days volume is added, on down days subtracted. OBV rising before price = bullish. OBV falling before price = bearish. One of the most reliable leading indicators.

Volume Profile

Shows at which prices the most volume was traded. Price areas with high volume (High Volume Nodes) act as magnets — price often returns to them. Price areas with low volume are traversed quickly.

VWAP (Volume Weighted Average Price)

The volume-weighted average price of the day. Institutional traders use VWAP as a benchmark: Price above VWAP = bullish for the day, below = bearish. Ideal for intraday trading.

Recognizing Volume Anomalies

Blow-off top: Extremely high volume at a price high. All buyers have bought — who is left to buy? Often the beginning of a sharp correction.
Climax selling: Extremely high volume at a price low. All sellers have sold — capitulation. Often the beginning of a recovery.
Unusual volume without news: When a stock suddenly trades 5x its normal volume without apparent reason, insiders may know something you do not.

How AI Uses Volume

Our system analyzes volume on three levels:

Absolute: Is volume above or below average?
Relative: How does it compare to volume of the last 20 days?
Contextual: Does volume match the price movement? (Price-volume convergence/divergence)

Signals with matching volume (convergence) receive a higher confidence score than signals with contradictory volume (divergence).

Bottom Line: Volume is the voice of the market. Price tells you what is happening — volume tells you whether it is serious.