Volume measures the total number of shares or contracts traded during a specific time period. It reveals the level of market participation and conviction behind price movements. High volume confirms price moves; low volume suggests weakness. Volume is called the “truth serum” of price action—it validates or questions what price is doing.
- Total shares/contracts traded in a period
- High volume confirms moves; low volume questions them
- Volume spikes often indicate reversals or breakouts
How Volume Works
Volume shows participation behind price moves:
Volume Analysis:
Scenario 1: Breakout with High Volume
Price: Breaks above ₹100 resistance
Volume: 3x average (1.5 crore vs 50 lakh)
Interpretation: Many buyers agree it's worth buying
Result: Likely to continue higher
Scenario 2: Breakout with Low Volume
Price: Breaks above ₹100 resistance
Volume: 0.5x average (25 lakh vs 50 lakh)
Interpretation: Few buyers participating
Result: Likely to fail, retrace back below ₹100
Quick Reference: Volume Signals
| Volume + Price | Interpretation | Signal |
|---|---|---|
| High volume + Up | Accumulation | Bullish |
| High volume + Down | Distribution | Bearish |
| Low volume + Up | Weak rally | Caution |
| Low volume + Down | Weak decline | Less bearish |
| Volume spike | Climax possible | Watch for reversal |
Example: Volume Confirming Breakout
Breakout Analysis:
| Day | Price | Volume | Avg Vol | Analysis |
|---|---|---|---|---|
| 1-5 | ₹95-99 | Normal | 1 Cr | Consolidation |
| 6 | ₹101 | 2.5 Cr | 1 Cr | Breakout! 2.5x volume |
| 7 | ₹104 | 1.8 Cr | 1 Cr | Continued buying |
| 8 | ₹108 | 1.5 Cr | 1 Cr | Strong follow-through |
Conclusion: High volume breakout confirmed—valid long entry.
Volume measures trading activity—how many shares changed hands. High volume confirms price moves and breakouts. Low volume suggests weak conviction. Watch for volume spikes at potential reversals and use volume to validate your analysis.
Volume Analysis Techniques
Volume Confirmation
- Uptrend: Volume should increase on up days
- Downtrend: Volume should increase on down days
- Divergence: Rising price + falling volume = weakness
Volume at Breakouts
- High volume breakout: More likely to continue
- Low volume breakout: More likely to fail
Volume Spikes
- Extreme volume often marks reversals
- Climax volume: Exhaustion of buyers or sellers
Relative Volume
- Compare today’s volume to average
- 2x average is significant
- 3x+ average is very significant
Volume Indicators
| Indicator | Purpose |
|---|---|
| OBV | Cumulative volume by direction |
| Volume MA | Average volume for comparison |
| VWAP | Volume-weighted average price |
| A/D Line | Accumulation/distribution |
Volume and Price Patterns
Healthy Uptrend
- Price up on higher volume
- Pullbacks on lower volume
- New highs on expanding volume
Weakening Uptrend
- Price up on declining volume
- Rally attempts on low volume
- Distribution days (down on high volume)
Reversal Signs
- High volume at support (buyers stepping in)
- High volume at resistance (sellers unloading)
- Volume climax (exhaustion)
Common Mistakes
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Ignoring volume – Price without volume is incomplete analysis.
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Trading low-volume breakouts – These frequently fail.
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Not comparing to average – 1 crore volume means nothing without context.
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Volume alone – Volume confirms price; use together.
How JournalPlus Tracks Volume
JournalPlus logs volume conditions at entry, helping you analyze whether high-volume entries outperform low-volume ones in your trading.
