Volume in Stock Market
In the stock market, volume or trading volume refers to the number of shares traded during a specific period of time. Trading volume is always measured over a specific period of time.
What is Trading Volume?
Volume in the stock market is the total number of shares traded in a specified period of time. This will include every share bought and sold during the review period. Suppose 100 stocks of a company are bought and resold, in a trading day, the trading volume of that stock will be 200 even if the same 100 stocks are traded in the market.
Therefore, volume means the total number of active participants. It can be a buy order or a sell order.Volumes are excessive whilst shares are actively traded. Similarly, if the stock is not behaving actively then the segments are short.
Trading volume can be calculated for any type of financial instrument: stocks, bonds, derivatives (futures and options contracts), gold, and most other commodities.
Stock exchanges publish the trading volume in the stock market for each trading session. Volumes are reported for individual stocks and for the total volume of all stocks traded on the exchange. Volumes can also be reported for indexes. Like, we can know the volume of stocks traded on Nifty 50 or Sensex for a particular trading session or any other period.
Where do you find trading volume?
All stock market exchanges track the volume of stocks. Hence the information about the stock market volume of any particular share is easily available. Exchanges, news websites, third party websites with stock market information can be viewed.Investors also can take a look at buying and selling volumes with agents and funding platforms. The platform also uses candlestick charts to show volume for a specific time period. Green bar shows buy volume and red bar shows sell volume.
There are also period-wise volume charts that one might want to keep in mind. There can be hourly volume chart, daily, monthly, 200-day volume chart etc.
The trading volume of a particular stock is often different between the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). This is also one of the reasons why the prices of Sensex and Nifty 50 for the same stock are slightly different. Logically, for this to happen, the stock must be listed on both exchanges.
Why is trading volume important?
Trading volume is important because it reflects investor interest in a particular company. Momentum reflects when a particular sector or stock is trending higher. It is important to note that a volume also represents a trend when it is about to close.
