Understanding Trading Volume: What It Tells You About a StockChapter II - Sec III
How Do I Know If This Stock Move Was Just Noise Or Something Bigger? You just saw a stock increase in value by 5%. That sounds exciting, does it not? Before you rush to buy-in, there is an important number you should know: the volume. The volume tells you how many shares were traded during a certain time period. In other words, the volume tells you the difference between a legitimate price change and a false or “noise” price change. Understanding the volume has helped me to stay away from chasing after “fake breakouts,” and also given me more faith in my trades. ...