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Everything About Volume Trading
The NYSE is the largest stock exchange in the world and it set a record on September 15th, 2008, when an aggregate of 8.14 million...
The numbers of shares that are traded of a particular stock is defined as its volume. This term is relevant to individual stock and stock markets as well. For instance, when the volume of the NYSE on a certain day is said to be one million shares and is equivalent to the total number of shares that were traded on that particular day of all companies that are listed on the NYSE. This is the largest stock exchange in the world and it set a record on September 15th, 2008, when an aggregate of 8.14 million shares was traded.
It is essential to have knowledge about this tool before investors start trading volume. Here are some details provided:
Reporting
This is done on a daily, weekly and monthly basis and is done in conjunction with daily, weekly and monthly charts. Furthermore, the average volume for the past 50 days is also calculated on a daily basis.
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Volumes and Liquidities
It becomes easier to buy or sell the shares of a particular stock if it has a high volume and it becomes even more efficient in pricing.
Volumes and Indicators
When the number of shares is multiplied by the share price, people will be able to calculate the total sum of money that exchanged hands on a specific day. For instance, if 50 thousand shares of a $10 stock are traded on average, this means that the total is $500,000. If 1.7 million shares of a $50 stock are traded, the total will amount to $85 million. Institutional involvement is indicated in a particular stock through a large dollar volume. When the number of shares of a stock rise from 50 million shares to 200 thousand shares all of a sudden, this is an indicator of a change that has prompted the interest of investors.
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Volume for Confirming Trends
The trend usually has an impact on the volume. An upward trend is confirmed when high volume causes the stock price to rise and low volume causes it to go down.
Volumes and Imbalances
On a normal day, the number of shares that are sought for purchase and offered for sale is more or less the same. However, there are situations when the number of shares that are available for sale is higher than the number of shares that investors are willing to purchase and vice versa. Price dislocations can be created by these imbalances and they cause the stock to go up and down. This can balance the buy and sell orders.
Bulls and Bears
Increasing stock prices coupled with rising volume is considered as bullish strategy in the stock market. It is called a bullish sentiment when stock prices are on a decline. Bearish sentiment is defined as the situation when stock prices decline on high volume. It will still be a bearish sentiment when volume drops, but there is a rise in stock price.
High volume trades can be an excellent way of lending support when there are dramatic swings in stock prices.
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